Price has become the most important factor in U.S. consumer purchase decisions and retailers must adapt to that new reality if they are to be successful, the head of a key retail group said on Sunday.
"What's so intriguing these days, whether you work on Wall Street or in Wal-Mart, is that it has absolutely become chic to be cheap," National Retail Federation President and CEO Tracy Mullin said during a session at the group's annual trade show in New York, which runs through Wednesday.
"It's all about price. Factors like quality, selection, store location and customer service are taking a back seat," said Mullin. "We believe this will continue for the foreseeable future."
Citing a survey from BIGresearch, Mullin said half of Americans believe they are now worse off. Consumers are deferring purchases, paying more with cash and reducing their reliance on credit in the U.S. recession, she added.
Programs such as layaway, expanded last year by retailers such as Sears Holdings, have gained a following, she said.
When consumers do shop, they are seeking information about products beforehand by doing "aggressive" online research.
Last year marked a low point for many retailers as the recession and tighter credit led many chains to close stores and cut jobs, while others filed for bankruptcy protection.
Many more retailers are expected to take similar measures this year, after late 2008 presented them with the worst holiday shopping season in decades.
"The only thing I want to do with 2008 is celebrate its passing," Mullin said.
The NRF CEO said Internet shopping would continue to be the bright spot in retail, though sales growth there will also slow. Mullin said online shopping would grow 7 percent to 12 percent in the coming year, down from 20 percent to 30 percent sales increases in recent years.
"This is a sector that is proving to be resilient but not immune from the declining economy," Mullin said.