During tough economic times every business is under pressure
to figure out ways to maintain their current sales and obviously find ways to
increase sales. Many of us have just returned from the granddaddy of all shows,
the ASD show in Las Vegas.

The vendors exhibiting seemed upbeat and between the Sands and Mandalay Bay Convention Centers,
there were thousands of these vendors to choose from. But if you spent any time
talking beyond what products were being sold, you definitely felt the
underlying current that business is very tough in our industry. 2 driving
factors have the suppliers in the industry very concerned. First is their major
accounts are slowing down how quickly they pay their bills; and second the
average order size is down.

When you are in the closeout and inexpensive goods industry,
a slow down in payments can be a death wish for companies on the bubble.
Finding the right closeouts at the right price usually requires the right cash,
and if the suppliers’ cash flow is interrupted because of a slowdown in
payments coming in, they can’t close the deals that they once could when
business was normal. This does have a snowball effect, because now stores
aren’t going to be exposed to the same number of quality deals and it slows
down the entire beat of the industry.

This in turn is one reason why the average sale was down for
this show. Another reason is the slowdown in growth during January and
February. Stores sell less during the first part of 2008 which clogs up open to
buy and they have less to spend because the shelves do not need to be
replenished at the same rate.

A third reason is we believe what we read and in today’s
news of downturn and recession, we all get the jitters in how far out we are
willing to step in when it comes to predicting the future.

So, is this spiral the industry is experiencing short term
or long term? Our combined psychic will determine that for the long run, so to
protect yourself in the short run, don’t over buy or over commit.