Jan 12, 2009

Cheap is chic in recession, NRF chief saysBy Karen JacobsUK.Reuters.com

New York, NY – Price has become the most important factor in U.S. consumer purchase decisions and retailers must adapt to that new reality if they are to be successful, the head of a key retail group said on Sunday.

“What’s so intriguing these days, whether you work on Wall Street or in Wal-Mart, is that it has absolutely become chic to be cheap,” National Retail Federation President and CEO Tracy Mullin said during a session at the group’s annual trade show in New York, which runs through Wednesday.

“It’s all about price. Factors like quality, selection, store location and customer service are taking a back seat,” said Mullin. “We believe this will continue for the foreseeable future.”

Citing a survey from BIGresearch, Mullin said half of Americans believe they are now worse off. Consumers are deferring purchases, paying more with cash and reducing their reliance on credit in the U.S. recession, she added.

Programs such as layaway, expanded last year by retailers such as Sears Holdings, have gained a following, she said.

When consumers do shop, they are seeking information about products beforehand by doing “aggressive” online research.

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