Retail's Challenge: The Overstuffed Consumer

It sure looks like business as usual. Tinsel, lights, and ribbon as far as the eye can see. Mannequins dressed to the nines. And throngs of would-be buyers. As the crucial days before Christmas dwindle, many stores in New York -- shopping capital of the galaxy (apologies to Beverly Hills) -- feel as mobbed as ever.

Yet the tidings from U.S. retailers are not universally merry. True, sales overall are running about 3% ahead of last year's, according to a report from UBS Warburg. But look who's getting the big traffic: discounters like Wal-Mart and Target, and warehouse clubs such as Costco. Sears' same-store sales, by contrast, were down 1.3% in November. Circuit City, down 4%. Gap? Don't even ask. (Okay -- its sales dropped a stunning 25%.)

Clearly, the tragedy of September 11 has left its mark on shoppers. So have fears of a protracted economic downturn. But Wendy Liebmann argues that there's something more profound going on. Since 1989, her consulting firm, WSL Strategic Retail, has authored "How America Shops," a survey of consumers' attitudes on shops and shopping that's published every other year. Liebmann says that, even if September 11 had never happened, many retailers would be on the brink.

The problem: After six years of shopping, Americans simply have enough stuff -- and most stores are offering little reason to return. Here, Liebmann talks with Fast Company about the trend, and about what some retailers are doing to buck it.

You spend a lot of time in malls -- maybe as much as some teenagers we could name. What are you seeing there now?

There's been a very telling progression since September 11. In the first few days, of course, consumers simply shopped to stock up for a war. Soon after, though, they returned for a different reason. It was very much about feeling a need to be around other people. You could walk through the malls and see plenty of people -- but no one was actually shopping. And you'd get to the food court, and there would be people lining up to eat. The mall was the town square where people came together.

Which raises an important truth: Shopping in the United States isn't purely about need. It's about our emotional connection to who we are and how we live. Shopping is so much a part of our lives in this country that it's both a necessity and therapy: The way we show we care is to shop. So in the weeks that followed, we began to see mothers and children in the malls shopping for school clothes. Friends, arm in arm, shopping together. It was all about holding on to something or someone you could recognize as safe.

Now, with the holiday season, retailing has returned marginally from the brink. The extraordinary shock of the situation has eased, and shopping has become one of the easiest ways for us to get on with our lives. It's less threatening than getting on a plane or maybe even opening the mail. It's like coming home -- the simple act reminds us of when -- before September 11 -- it was always a good time to shop. And President Bush says it's the right thing to do.

Not only that, but everything's on sale.

Exactly. Overlaying the emotional resonance is the most compelling reason of all to shop -- and that is, the sales are huge! Even though the economists say it's a recession and people are losing their jobs, we're going to save a lot of money by shopping now.

So, people are finding their way back into stores, where everything is being sold at huge discounts. Luxury-goods retailers are plastering their windows with signs for 35% discounts. Department stores are cutting even deeper. Retailers are saying, If we don't get them in the door now, we don't have a chance. They're panicking out of necessity. There are very few retailers who are in very strong positions and a ton of retailers who are very precarious.

If huge sales are the most compelling reason for people to shop now, can the prospects for retailers be very bright come December 26?

What's going on in stores now reflects a larger problem rooted in what shoppers were thinking and doing before September 11. A big part of it is what we've called the "overstuffed consumer." For the past six years, consumers have bought just about everything in sight -- clothes, computers, cell phones, cars, jewelry. Well before September 11, long before economists started screaming about a recession, consumers' closets were full, their garages were full -- and they were full. They were absolutely sated.

It wasn't that consumers weren't willing to shop. You could tempt them. But it got to the point where, unless new products were extraordinarily innovative or there was a huge sale, they didn't need anything. How many more pairs of denim do I need? How many computers or phones? Previously, they always had to have the newest and latest -- then they got it and realized that the latest wasn't much different from what they had before. So, enough already.