When times get tough, stores find creative ways to save money, but they also try to reduce the visibility of it as much as possible. One trick that has always worked was lowering the amount of inventory that they carry on hand.
This can be accomplished a number of ways, such as “fronting shelves”, which means to bring products that are pushed to the back of the shelf to the front so it doesn’t look like the shelves are empty.
A more severe version is when you front shelves, but also spread the products out more. Instead of having one row of a specific cereal on a shelf, you might have what appears to be three rows of that specific cereal (even if you have enough boxes to fill only one row completely.
While retail sales have recovered slightly, and inventories have risen a bit, it appears that many stores are continuing to ride the economic situation out, and who can blame them. Cash is king in times like these, and having products sitting in a back room waiting to be stocked doesn’t help anyone.
Store Aisle Expansion
The fact of stores continuing to ride the recession out was made no more plainly clear than when I went shopping with my wife this past weekend. Every store that we went into had noticeably wider aisles. This included clothing stores where I previously had to tuck my arms at my side and walk nearly sideways through the aisles (and I’m not a terribly wide person).
Expanding aisles is another trick of the retail trade. By removing aisles and widening the remaining ones a bit, you can give a more open feeling while decreasing the amount of inventory that you must have on hand. Usually, stores can do this without people noticing, but I can’t recall ever seeing such drastic changes.
I suppose if I were a more frequent shopper, I may not have noticed as the changes were introduced gradually. These were not mom & pop stores either, these are national, publicly traded chains, and there were a few of them that all had the same situation.
Leading or Lagging Indicator?
I’m not sure if this would be considered a leading or lagging indicator. My initial belief is this would be considered a leading indicator as stores will want to forecast their sales and squeeze every penny possible out of their customers.
This could also be a lagging indicator assuming stores want consistent foot traffic through their stores before they start buying up new inventory to keep in a back room.
Whether it lags or leads, it probably isn’t by a long expanse of time which furthers the argument that our recovery is probably as strong as the talking heads would have us believe.
What Do Wider Aisles Mean?
I can’t say for sure if this means stores are pessimistic about the future, or if they’re just waiting for the sales, but one thing is clear to me, we’re still in the middle of a poor economy, and the stores know it too.
There is a lot of cheerleading on the television about the recovery, but on the ground, it seems tenuous at best. I think everyone just needs to remain cautiously optimistic, and remain careful in their decision-making.
The people on TV are paid to pump their biases, and you have to remember which companies own which news stations. Continue saving, continue investing intelligently, and enjoy the wider aisles (at least you can get by other people now).