How has the credit situation affected your business?

Retail Q and A

-- Kids Today, 11/1/2008 12:00:00 AM

Phil Wrzesinski

Toy House and Baby Too

From a customer’s standpoint we have seen a slow-down on big ticket purchases. While our juvenile accessories business has remained steady, furniture sales have dropped off dramatically. In toys we have seen the same thing, play houses and ride-ons sales have been slow, while other toy sales are strong. We believe some of this is due to the current financial crisis and some of it is due to the election. Presidential elections tend to affect October sales negatively, especially the more expensive items as people are often in a wait-and-see mode.

From a business standpoint, the credit situation has not affected us personally, as we had secured the necessary credit for our business months ago. Unfortunately, it has had an effect on our local market. We have lost three downtown businesses in the past four weeks because of lack of available credit/slowdown of sales.

Of more concern to us is our vendors’ viability in this market. We hope that our vendors are not hurt by this and therefore unable to provide the goods we need for our customers. This will be a difficult year for manufacturing start-ups as most retailers I know are sticking with tried-and-true vendors and taking fewer risks with unknown product lines.

Right now, however, it is too soon to say what long-term affects the credit crisis will have, who will be hurt the most, and when the economy will recover. Only time will tell.

Ali Wing

giggle

Among the more important impacts on our business of the current credit crunch has been in lease negotiation processes for new stores. The shifting landscape of mortgages for new and existing developments has taken a heavy toll on landlords. This translates to both a new and added complexity in our store expansion process, and often slows even the otherwise most straightforward lease negotiations. The upside is that this also puts retailers with strong performance in a better negotiating position and that is not all bad news.

Mike Schaul

Lone Star Baby & Kids

Simultaneously with the U.S. credit crisis this past month, we saw an immediate drop in traffic through our front doors and on our Web site. Although Texas has not been affected as badly this past year as other markets, the current credit crisis has the public worried. Our customers are spending less and/or deferring purchases. Our hope is now that the election is over and some of the uncertainty about our future has been resolved, things will improve.

However, only time will tell how quickly the new administration will get the economy moving in the right direction. As we wait for those better days ahead, we will continue to promote value, provide exceptional customer service and go after every sales dollar available.

Jami Myers

Jami Bz

This is a tough question and I think we would have to be sitting in a cave if anyone says they are not affected by the current credit situation. The consumer is scared and definitely more conservative in spending their money.

We definitely saw a substantial slow-down in traffic starting in the third week of September which lasted through mid October. During that time, customers were only purchasing what they needed. For example, if they have a toddler with a new baby on the way they purchased a bed only and not the accompanying pieces to complete the room.

Recently we have seen traffic pick up and the consumers overall mood seems lighter. Personally, I feel that if a consumer is in need of children’s furniture they will make quality minded decisions. Thankfully that is what our store is made up of. We explain daily to our customer that the collections we carry will be around so that in six months or a year’s time they can always add a piece. Am I concerned? Absolutely. Am I buying a little bit more cautiously for the store? Yes, unfortunately. I am still hopeful for the future and I look forward to every day when I walk through our doors. All we can do is live one day at a time. So, if this slowdown lasts for six months or even another year we have to be tough and as positive as we can be. And, of course, hope that if customers are still making furniture buying decisions they’re buying for their kids’ rooms!

Karen Scott

One Step Ahead

I think it’s too soon to tell how the tightening of credit will affect our business. During the most volatile three weeks of stock market activity, we saw a shortfall to plan of 20-30%. However, our first holiday promotion exceeded plan, which (optimistically) may indicate that our customers were reacting to the uncertainty of the market and not the tightening of credit. Average order has slightly improved, and there has been a marginal increase in the use of Bill Me Later, but nothing dramatic. I have read several articles and a quantitative survey supporting the fact that consumers plan to reduce their adult gifting in order to not scrimp on the kids, and that value means more than a low price. All to say we are cautiously optimistic.

Our company is not leveraged so the tightening of credit will not have a direct effect on our business. However, we anticipate that some of our vendors will be impacted, and the sourcing of new items will assume greater risk.

Visit www.kidstodayonline.com for more, exclusive retail answers to this month’s question.