Bankruptcy

Recession Changing the Face of Retail?

By Meaghan Olson

After decades of continuous consumption and expanding credit, Americans are now learning a new way to shop.

And many retailers are suffering because of it.

Well, Maybe Not?

According to an article from the Associated Press, U.S. retailers have seen a jump in shoppers who decide against purchasing one or more item before they reach the checkout counter.

It?s apparently happening everywhere from the grocery store to upscale clothing outlets, and it?s affecting retail in two major ways:

• Decreased consumer spending: When we buy less, companies pull in less revenue. And these days, it seems like no company is immune to the belt-tightening undertaken by the American people. But that?s not the only way abandoned purchases hurt retailers.
• Increased labor costs: When we leave those iced oatmeal cookies in the dairy aisle, realizing we need milk but only want the sweets, someone has to put them back with the desserts. And, sources indicate, retailers have seen higher labor costs because of all the restocking such behavior requires.

Tightened Credit Means the Revival of Layaway

It?s no wonder that we?ve become more cautious about lugging a lot of stuff to the checkout counter: nowadays, many credit card issuers will deny over-limit purchases rather than allow them to go through and charge a fee.

And, because of the shrunken credit market, many retailers are reporting an upswing in layaway, which allows consumers to make gradual, interest-free payments and pick up items when they?re paid in full.

• K-Mart shoppers have reportedly taken to buying even low-cost items on layaway, including pencils, notebooks and other back-to-school supplies.
• Sears Holdings apparently re-introduced its layaway program, which had been defunct for twenty years. Sources indicate that the company will also bring back its Christmas Club savings accounts for shoppers interested in saving money for gifts.
• Google Insights for Search reports that the search term ?layaway? was twice as popular among U.S. users this August than a year ago.

Have you scaled down your spending, but you still can’t make ends meet? It may be time to consider filing bankruptcy.

Full post as published by The Bankruptcy Blog on August 28, 2009 (boomark / email).