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The Professionals wholesale CAMEO EZ^© website has had a facelift. The Professionals features Michigan-shaped oven mitts, Tea and Kitchen towels, canvas bags, diaper bags, Grosgrain ribbon and more. The company’s products are made in USA.

With Apologies to Shakespeare

The title of this article is both bad Shakespeare and bad grammar, but nevertheless, it is the question on the minds of U.S. consumers, small business owners and politicians: Are we in a recession or not? And what can retailers do, whatever we call the current economic environment?

You will get different answers to the question, “Are we in a recession?” depending on who you ask. The answer may be moot when costs are rising due to record-high fuel prices and container shipping costs increasing by a factor of 10 or more from two years ago. Those factors alone will impact retailers both large and small, whether it’s defined as a recession or not.

A recent survey of 133 CEOs found that the majority believe the Federal Reserve’s plan to raise interest rates to curb inflation will spark a recession, but they think it will be mild. Some, like Elon Musk of Tesla and SpaceX, believe we are already in a recession. On the other hand, Best Buy CEO Corie Barry sees an economic slowdown, but not a full-on recession.

Some point to the technical definition of a recession as two quarters of negative GDP growth, which is what we have just seen, but Biden administration officials insist we are not in a recession. When all is said and done, does it really matter if we are technically in a recession?

Marcus Sheridan, of River Pools and Spas, writes that small businesses are more nimble than larger ones – like a David among Goliaths – and so can respond more quickly. He says the economic crisis of 2007-2009 was “a truly formative one in my own development as a businessman and leader,” but no two economic downturns are the same.

Sheridan advises “seeing opportunity in every challenge.” Economic downturns are inevitable and a natural part of the business cycle. While you can’t control the economy, you can prepare during the good times, knowing the good times won’t last forever.

Transparency is important, Sheridan adds, and small retailers have an advantage over larger businesses with big bureaucracies. If owners and managers are transparent with employees about the status of the business, they will be more likely to be understanding and cooperative when changes are necessary to deal with a shifting economic environment.

Despite recession talk, the largest mall owner in the U.S., Simon Property Group, says in a CNBC report that mall and outlet center occupancy has increased from 91.8% June 30, 2021 to 93.9% as of June 30 of this year. “Even with with what’s going on in the world, we really haven’t seen anyone back out of deals,” Simon Property Chief Executive Officer David Simon said.

Photo by Photo by Brett Sayles, Pexels

Oatmeal Studios’ (opens in a new tab) wholesale site has a new look.  Oatmeal Studios has been in the business of making people laugh for more than 40 years! What started in Rochester Vermont back in 1978 when artist Helene Lehrer created simple silkscreen cards featuring her pet rabbit Oatmeal has grown into one of the top humorous greeting card companies in the world.

D & D Distributing (opens in a new tab) wholesale CAMEO EZ© website has had a facelift. D & D features Seasonal Ornaments, Toys, Seasonal Jewelry and Gifts, Novelty Jewelry and Watches, Sunglasses and more.

The problems with the supply chain may benefit Mexico, according to an article by Forbes (opens in a new tab) magazine. What could this mean for retailers?

With shipping from China becoming more expensive by a factor of 10 or more (as we referenced here (opens in a new tab)), wholesale vendors, manufacturers and importers are looking closer to home and Mexico seems like a good option. According to Forbes: “Fed up with astronomical container costs, having their goods stuck in L.A.’s ports, ships stuck sideways down the Suez Canal or endlessly disrupted by fresh Asian Covid lockdowns, manufacturing is shifting closer to consumer markets.”

Toymaker Mattel recently announced a $50 million investment to expand its plant in Monterrey, Nuevo Leon, Mexico. This expansion will make it the company’s largest plant, passing manufacturing facilities in China, Vietnam and Malaysia. Mattel also closed two Asian factories in 2019.

Other industries as diverse as fashion and auto parts are affected as well. Other countries which may benefit from the shift away from East Asia include Turkey, North Africa and Central and Eastern Europe.

Before Christmas, the situation at Los Angeles’ port got so bad President Biden brought together large retailers and union leaders to get more trucks in and goods out. Meanwhile major retailers Costco and Walmart chartered their own planes to keep their stores stocked.

With shipping costs from China skyrocketing, if smaller vendors follow Mattel’s lead and invest closer to home, the cost of inventory could be eased and supply increased, but finding new sources takes time.
Photo by Pixabay

For the first time in a long time, online sales decreased even as in-store sales increased during the first quarter of 2022. Is this phenomenon a lagging indicator of post-pandemic store reopenings or indicative of a larger trend?

In March, 2022, retail sales increased in all but two categories: Health/personal care stores and online/other non-store sales. The later fell 6.4%, year over year, whereas general merchandise store sales increased 5.4% (source(opens in a new tab)). These figures do NOT include gasoline retailers.

Was this predictable, since brick-and-mortar retail was just emerging from the enforced lockdowns of the pandemic a year ago and online ordering was for many the only option until early 2021 as the vaccines rolled out? Perhaps, but the vaccines became available in December, 2020 and we are comparing March, 2021 and March 2022. The 15 months between December, 2020 and March, 2022 are enough time to get back to a normal pattern.

For years, growth rates in relatively new online retail have far outstripped the well-established, brick-and-mortar store sales performance. The pandemic just intensified this difference, leading some prognosticators to predict the end of in-store transactions. Yet, online sales were surpisingly weak 15 months after the effective end of the lockdowns.

While the pandemic lockdowns greatly benefitted online retailers at the expense of brick-and-mortar stores, it may have also removed the novelty of online and created a yearning for the experience of shopping in-store. It shouldn’t be surprising if an equilibrium between the two is reached at some point. Those who say online retail will completely eliminate in-store greatly underestimate the importance of “going shopping” for many consumers. Compared with the sensory experience and social interaction of a shopping trip, online ordering can be relatively lifeless and boring.

The results of one month are not a trend, so future results will need to be taken into account. It may be that we can say that the rumors of the death of brick-and-mortar retail are greatly exaggerated.