How Retailers are Surviving the Economy

With the current economic slowdown, high fuel prices are pushing consumers to cut back their spending.  No industry is recession-proof, but teenagers still reach a bit deeper to buy their favorite brands. Julian Geiger, chairman and CEO of the New York-based retailer Aéropostale, said on Nightly Business Report,

“Parents tend to sacrifice [for] themselves before they sacrifice [for] their kids”    

He should know. Aéropostale’s second quarter was up 43% versus the previous year, while other retailers like Abercrombie & Fitch are suffering through stagnant or declining sales to prevent jeopardizing their brand’s authority and reputation for a temporary situation. Other shops have found a new solution to increasing revenues during a recession, and it doesn’t involve manipulating prices. Erin Armendinger, managing director of Wharton’s Jay H. Baker Retailing Initiative, Wharton’s retail program, writes in an article for Knowledge@Wharton:

Noting that some teens are unaffected by the economy and will continue to shop where they want, Armendinger says that to be popular, teen retailers must offer something unique and desirable. “If you’re differentiated, you’ll win,” she says, pointing to the example of Philadelphia-based, multiple-brand retailer Urban Outfitters, which reported in early August that its second-quarter earnings were up 79%. “Urban Outfitters has very little competition in terms of their store design and products —and guess what, they are doing very well.”   

Armendinger’s examples offer hope for all executives that some businesses can survive while maintaining their premium prices.