Retail woes: Thinner retail profit margins

Retailers are experiencing a very difficult time to make sales as consumers tighten up budget on spending. Recent retail sales up mainly due to the deep discount by the retailers, but how is that going to help retailers survive in the recession as profit margins getting thinner.

Every store I’ve seen is having a 50% off sale or buy 1 suit get 2 suits for free. And everyday on the tv, in the mall or driving by stores since January I see it. So sales may be up, but what about profits on those sales? And whose to say once the store runs low on inventory the demand will return for those higher prices. Especially with all the credit card defaults, reduced lines of credit, lost jobs, and reduced wages, Just falling into another bull trap.

From my perspective we are still seeing businesses failing each week. This time of the year retail is soft with people spending their money and time outside. I never really knew until I went into the restaurant business that for most restaurants summer is soft as well. I assumed more people were out and thus more customers. Our town gets hit even harder because it is a college town. Everybody is gone. Things are quiet.

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