The Neiman Marcus shopper fondled a stylish Prada handbag, then asked if the $895 price tag — $300 below what the most basic Prada bag cost a year ago — was a sale.
"No, that's the new full price," assured Patty Masin, manager of the luxury retailer's Tampa store.
Indeed, Neiman is stocking top-tier designer brands like trendy Manolo Blahnik shoes at a starting price of $395, roughly $150 less than a year ago. Cashmere sweaters that started at $295 this fall start at $195.
It's all part of some big changes sweeping through a retail world that's starting to adjust to the reality of a frugal post-recession consumer.
Take a shopping trip today and the first wave of changes are subtle. But they will become more noticeable, reaching far beyond luxury stores, forcing shoppers to reassess what have been rote choices.
After dramatically cutting their inventory to match today's reduced demand, mass retailers, supermarkets and the consumer packaged goods industry have embarked on a storewide re-evaluation of what they sell. The goal: Chop an overloaded selection. In the average supermarket, for instance, the selection ballooned 50 percent in 13 years to 47,000 items. Less popular sizes, colors, flavors, and ingredients are on the chopping block, too. And don't expect stores to take as many fashion gambles as in recent years.
"Short term, I think you will see 1,000 fewer items in a supermarket, longer term, about 2,000," said Geoff Waldau, senior vice president of merchandise for Sweetbay Supermarket. "Suppliers are asking, 'Do we really need six types of corn flakes?' "
Wal-Mart cut its microwave popcorn selection to three brands — one of which is a new store brand — and offers fewer sizes. Target is weeding a wall of 88 Pantene hair care products. And Walgreens, which is eliminating 4,500 items sold in its drugstores, will shrink a 12-foot array of shampoo and skin care oils by wiping out two shelves of products and compacting them into a 3-foot-wide display.
With debt-riddled Americans saving more, earning less and unable to use their devalued homes as piggybanks, experts who track consumer spending see no return to the go-go days of consumption.
"There's little question the post-recession consumer will be fundamentally changed, a different shopper looking for value," said Bill Lucas, group president of retail for market research firm NPD Group. "What's happened to the baby boomers' wealth alone guarantees it."
"It's going to be a decade before we see the kind of consumer spending we saw in 2007 again," said Deborah Weinswig, retailing securities analyst at Citi Investment Research.
Lower prices, fewer choices
High-end retailers reduce entry level prices to wean shoppers out of their "wait for a sale" mentality. Midpriced department stores hope to reel in the deepest discounts by offering fewer choices.
And the choices promise to be less flashy in an era when conspicuous consumption is so out of style that Coach Inc. not only cut prices, it stopped putting its once cherished show-off logo on the exterior of many handbags.
"Department stores aren't dropping brands, but instead of buying 20 dresses a store, it will be more like 15," said Chris Donnelly, a partner in the retail practice at Accenutre. "They'll stick with conservative sure bets rather than try something new."
The drugstore chains are cutting back, including Walgreens, which is eliminating 18 percent of what's found in its 7,500 stores.
"Instead of a store that stocks a little bit of something for everyone, we're returning to the best products that our best customers expect to find in a drugstore," said George Reidl, executive vice president of merchandise. "Our emphasis is on essentials, not discretionary items. We had become too much a sea of options."
Banned as clutter are automotive accessories, hardware like hammers and most of the 23 kinds of dishwashing gloves stocked. There's a 40 percent reduction in baby care products and glues and a third fewer electronic gadgets like radios.
The Florida stores are being converted, with the rest of the chain set for a roughly $50,000-per-store overhaul in 2010.
On the plus side, customers will have fewer bewildering choices to wade through, which can get them in and out of the store faster. The move will also allow Walgreens to lower its cavelike aisles by about 3 feet, making the stores more open.
In 35 test stores, Walgreens sales and traffic both increased. And profit soared because the cost of keeping shelves filled with slow-moving products dropped.
Burst of store labels is good for the wallet
Among grocers, the continued growth of store label brands priced 20 to 25 percent less than branded rivals shows no sign of slowing down. At Sweetbay, its Hannaford brand has grown to 19 percent of nonperishables, up almost 5 percentage points from five years ago. Wal-Mart is adding 5,000 products to its Great Value line, and Target promises more than 100 new home care products in its own new Up & Up brand.
So major branded product makers are creating new formulations to better compete on price. Procter & Gamble upped the presence of Charmin Basic toilet paper and Bounty Basic paper towels and now is testing Tide Basic. Each line is priced 20 percent below the original brand formulation but has fewer noncritical additives.
Procter insists it's not trying to get back shoppers lost to store labels, only angling for new fans unwilling to pay more for the most popular brand.
"Basic" products look different, so they don't undermine what they mimic. Tide Basic detergent, for instance, only comes in powder and is packaged in bright yellow, not Tide orange.
Packaged goods giants expect to gain shelf space in the rush to squeeze less popular products from the shelves. Procter & Gamble, for instance, owns 40 percent of the laundry detergent market with its stable of Tide products. But that grows to three-quarters of the market if you add the company's Cheer, Era and Gain. Unilever and Church & Dwight split up the rest with supermarket brands.
"We generally end up with (more market) share and sales growth, and it's all, of course, a lot more profitable," A.G. Lafley, Procter & Gamble chief executive officer, said at an investment conference in June. "It benefits the leaders in the industry, and it disproportionately benefits P&G."
Product launches are way down
Meanwhile, recession-driven cost-cutting capped the endless gusher of new product launches by 51 percent this year, says Mintel's Global New Products Database. Lynn Dornblaser, who maintains the database, pointed out that new product growth often rebounds quickly after a recession.
"Consumer confidence leveled off for the time being," she said. "So now is the time for creating ideas and innovations that answer shoppers' desire for value, quality and pleasure."
Mark Albright can be reached at firstname.lastname@example.org or (727) 893-8252.