Retailers cut inventory to address shift in consumer spending

NEW YORK -- — For years, retailers could afford to be sloppy about running their businesses because customers kept buying.

No more.

Stung by the worry that shoppers -- who cut spending by the most dramatic amount in at least 39 years this holiday season -- may not start spending again for a long time, stores are making drastic changes. They are cutting out marginal suppliers, hiring outside experts to keep inventory lean, holding special events for those who are still buying and making extraordinary efforts to gauge customer satisfaction.

The new discipline will be mostly good news for shoppers, who will find stores less cluttered and see an array of products at lower prices, including groceries and jeans from brands they could once only aspire to.

Of course, the downside is that consumers who want something out of the ordinary -- an olive green prom dress, for example -- may have to look harder. Stores are rooting out offbeat, unpopular colors and styles, which will mean fewer choices.

Sales clerks are also checking back with customers to see whether they're satisfied with their purchases.

"We are in a sea change," said Millard "Mickey" Drexler, J. Crew Group Inc.'s chairman and chief executive.

Pricing goods within reach of strapped consumers is also a big focus, given the way nervous consumers have stopped shopping. Same-store sales, or sales at stores open at least a year, fell 2.3% in November and December combined, according to the International Council of Shopping Centers. And the worsening sales slump in January has many worried about the industry's prospects over the next few months.

J. Crew is working with its factories to adjust its prices on certain key items such as ballet flats, which now start at $98 rather than $118. It's also stocking fewer of its high-priced items, such as $1,300 leather trench coats, and slashing expenses.

Status denim brand Rock & Republic will ship a new Recession Collection this spring that runs about half the usual $200 price tag for its jeans.

Even supermarket chain SuperValu Inc., which operates stores including Albertsons and Bristol Farms, has promised lower everyday prices on groceries and more promotions.

Chief executives from such companies as Crate & Barrel and J.C. Penney Co. acknowledged during the National Retail Federation meeting this month that they were navigating new territory, predicting that the fundamental shift by consumers to spend less and save more would linger.