It is interesting to see how the complex system of consumer spending, retail and the general economy are playing against each other this holiday season. Helen Bulwik, our retail expert at Bedrock Dissero, was recently interviewed for an ABC-TV report on retail trends in 2009. In this she pointed out that in 2008, there were 70+ percent discounts on products prior to Christmas. This was necessary to get shoppers into stores and behind the scenes, there was a great amount of excess inventory that retailers knew needed to be reduced quickly in the face of weak consumer demand.

The business model for retail success has changed dramatically in 2009. Retailers have trimmed inventories both in terms of overall levels as well as focused on far fewer product categories in favor of highly targeted offerings to their core customer base. I can’t help mentioning that this is yet another proof point for the need for businesses to continue to stay focused on doing more on fewer high impact customer need areas.

The good news for retailers is that there are not the drastic discounts necessary to attract shoppers in 2009. For the economy it is a good sign to see pricing stay firm, yet have consumer demand remain strong enough to result in higher retail sales this holiday season despite fewer discounts. There may still be some major retail failures in 2010, but the pricing and sales trends are a good indication of strength of the sector after coming through a devastating 2009.

Michael Kanazawa is Chief Executive of Bedrock Dissero and co-author of Big Ideas to Big Results.

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