AMES, Iowa – Turbulent economic conditions in the United States may not yet meet the official definition of a recession, but it is apparent that the Iowa retail industry is entering difficult times, according to an Iowa State University Extension researcher.
Meghan O’Brien, an economics program specialist with Extension’s Regional Capacity Analysis Program (ReCAP), has just published an analysis of the challenges facing Iowa retailers titled Retail Economics 101: Lessons and Strategies of a Recession. The seven-page document is available online at http://www.econ.iastate.edu/research/webpapers/paper_12995.pdf.
The paper offers tips for consumers and retail shoppers on what they can expect during a recession and how to get the best value for money spent. It includes an explanation of how consumer spending patterns affect the nation's economic health. There also are tips for retailers on how to manage business operations to avoid the most severe problems associated with recessions.
O’Brien says consumers may have less money to spend, but retailers are competing more than ever to attract buyers. She advises taking time to shop around for the best prices, environment and service, and to keep in mind that how dollars are spent will have an impact on which retailers will continue in business. “If you really enjoy shopping at a local retail store, don’t expect it will be waiting for you to come back if you switch your shopping habits,” she said.
Retailers and business owners can take several steps to avoid the worst effects of an economic downturn. O’Brien says good inventory information will help, including knowing what sells well and to whom, and what competitors are offering. Avoiding debt to finance unnecessary inventory will help, and it may be necessary to offer your customers some lower cost options. Raising prices may not work if that causes a loss of volume.
The report also offers information on how employment and labor costs can affect business operations, and O’Brien noted that employment in Iowa’s retail sector began declining in 2007 while it was still rising in the rest of the nation.
The information collected by ReCAP is used for a variety of statistical analysis purposes, focusing on issues related to regional economic and demographic change. Services are designed to to inform local decision-making, policy development and strategic planning processes. ReCAP is administered by the Departments of Economics and Sociology and Extension Community and Economic Development. A Web site is available at http://www.recap.iastate.edu