Retailers presented a recession scenario

A woman carries bags of J.Crew, Nordstrom, UGG and Victorias Secret merchandise at the King of Prussia mall on December 11, 2022 in King of Prussia, Pennsylvania.

Mark Makela | Getty Images

The US economy may not be in recession, but it feels that way in many stores across the country.

Take Kroger for example. Inflation-hit customers are downloading more coupons, cooking at home and switching to cheaper private labels to save money, food giant CEO Rodney McMullen told CNBC’s “Squawk on the Street” earlier this month.

“What clients are telling us is they are already acting like they are in a recession,” he said.

Now the big retailers are bracing themselves for a recession, or at least a period of slower sales. In recent weeks, companies have unveiled their strategies in a more challenging environment, reporting holiday quarter earnings and sharing guidance for the full year.

Target is building up stocks of food and household items to encourage walking. Macy And walmart trying to win more sales from their most loyal customers. Best Buy and others are chasing new and exclusive products that can push customers to open their wallets and even pay full price.

As the travel and restaurant sectors bounce back, it looks like a “continuous recession” is coming to the retail sector, even if the economy remains strong. Many retailers are calling for lower sales this fiscal year, especially once the rise in inflation is ironed out. This is a sharp reversal from the early years of the pandemic, when retail spending was booming.

Let’s take a look at some retailer strategies.

Customers shop in the grocery section of a Target Corp store. in Chicago, Illinois, USA on Saturday, November 16, 2019

Daniel Acker | Bloomberg | Getty Images

Focus on everyday things

A shopper carries a Bloomingdale bag on Broadway in the Soho neighborhood of New York, USA on Wednesday, December 28, 2022.

Victor J. Blue | Bloomberg | Getty Images

Building on loyal customers

The situation is getting more complicated, and retailers are turning their attention to a familiar audience: loyal customers.

Macy and Costco are among the retailers who want to get more sales from time-tested products. Some have even turned membership programs into money-making tools. Walmart is trying to attract more customers to its Walmart+ subscription service, which costs $98 per year or $12.95 per month. Best Buy has a Totaltech program that costs $199.99 per year. Lululemon has a free and paid membership program that debuted in the fall.

Costco, a membership-based warehouse club, is seeing more customers moving up to Executive, its top membership level. Chief Financial Officer Richard Galanti told investors during a phone call in early March that he had 30.6 million paying Executive members as of the end of the last quarter, about 45% of the total paying members and accounting for about 73% of global sales.

At Macy’s-owned Bloomingdale’s, Loyallist members accounted for more than 70% of sales in the same store, including their own brands and third-party brands. Participants in the program were spending 7% more year-on-year as of the end of Macy’s fourth quarter, CEO Jeff Jennett told investors.

Kroger’s McMullen said Wednesday at the Bank of America investor conference that his regulars tend to spend 10 times more than casual shoppers. He said the company wants to get more of its dollars by engaging “people in the reward cycle” and better personalizing their experience.

TVs are sold at Best Buy in New York.

Andrew Kelly | Reuters

In pursuit of novelty and value

Marco Geber | DigitalVision | Getty Images

Savier about discounts

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