Rising inflation and supply-chain bottlenecks are two phrases you’ve heard repeated over and over and over again throughout the past year-plus. But mentions of one more not-so-great word are cropping up: recession.

Federal Reserve Chair Jerome Powell said he believes a recession is possible, but not a foregone conclusion, while some economists from Morgan Stanley predict a mild recession is on the horizon for the end of 2022, according to Bloomberg.

• The consumer price index hit a 40-year high in May with an 8.6% YoY increase.
• And Q1 economic growth slowed to 3.5%, down from 5.5% during Q4 2021.

So for retailers, how does the current economic climate compare to the Great Recession? Retail Brew spoke to a few analysts to understand what trends defined the 2008 recession, and how they compare to today.

Good, better, best

In 2008, retailers had to give consumers a price-value proposition, and the “good, better, best” model was a way of doing just that, Suzy Davidkhanian, principal analyst of retail and e-commerce at Insider Intelligence, told Retail Brew. It refers to the idea of multi-brand companies like Nordstrom and Macy’s expanding their price ranges across three buckets, with “good” being the lowest tier.

• For example, products in Nordstrom’s “good” range would be similar to products found in Macy’s “better” range, whose “good” range could be shopped in an off-price retailer like TJ Maxx.
• While the strategy wasn’t necessarily new, Davidkhanian said it became much more obvious.

“If you already have a customer that was buying the slightly elevated price points, but now they’re being a little bit more careful, you just drop them down a tiny little bit, but you still kept them in your brand ecosystem,” she said.

However, Davidkhanian doesn’t believe good, better, best will be a strategy in the current economic environment, because so many retailers have maintained it dating back to the Great Recession.

“There may be people, investors who think that they should be dropping to lower-price brands, but I think that would be a mistake, because that would be a very short-term game, versus ensuring that you keep your brand’s promise and ethos intact through tough times,” she said.

Click here to keep reading.—KM

Happy Prime Day Eve. Amazon’s first major sales event of 2022 kicks off tomorrow, which usually means other retailers gear up to compete. But Walmart isn’t taking that approach.

Sitting it out: The company won’t be holding a countersale this year since it’s already marking down so many items as a means to shed excess inventory—a problem affecting several big-box retailers.

• “You go in stores now, it’s almost like Prime Day in some of these categories,” Rupesh Parikh, senior analyst for Oppenheimer & Co., told CNBC.
• CEO Doug McMillon said during a May earnings call that the company will work through its extra inventory “over the next couple of quarters.”
• “We’ll control what we can control, reduce our inventory level and keep prices as low as we can,” he said.

Target has also gone the discount route, after warning investors profits could fall in the coming months because of too many items in stock. However, Target is still hosting its three-day Deals Days event from today through Wednesday, per CNBC.

The big picture: Unfortunately for Walmart—and many retailers—consumers anticipate discounts won’t be significant. Nearly two-thirds of shoppers believe discounts will shrink this summer, according to an Adobe Commerce survey.—KM

As the planet gets hotter, workers’ rights advocates are urging for policies that help beat the heat. But HR Brew’s Susanna Vogel recently looked into how heat-related workplace protections in the US lag behind.

A report recently released by Public Citizen, a nonprofit consumer advocacy organization, found that environmental heat is “likely responsible for 170,000 work-related injuries every year, and possibly many more.” The New York Times reported that heat-related workplace injuries are often vastly undercounted. Heat exposure, the report said, is one of the top three occupational causes of death, killing between 600 and 2,000 workers annually. Though the most vulnerable are those who work in hot outdoor environments, Juley Fulcher, author of the Public Citizen report, told HR Brew that manufacturing, warehouse, and commercial-laundry employees can also be at high risk.

Advocates have called for increased federal and state workplace heat standards, and have achieved some success. Last fall, President Biden made heat a priority for OSHA and directed the agency to create a federal heat standard. However, further progress will likely slow to a trickle. David Michaels, former assistant secretary of labor at OSHA, told Marketplace last month that “OSHA won’t get a standard out for several years at best.”

So why has there been seemingly little progress on federal heat protections for workers since the California farmworkers marched for Jimenez in 2008? Can’t OSHA just impose and enforce stricter guidelines?

Fulcher said it’s “an easy question,” but there’s “never an easy answer.”

Click here to read the full story on HR Brew.—GT

Today’s top retail reads.

Bookworm: Independent bookstores not only survived the pandemic, they’re flourishing around the country—and are more diverse than ever. “People are really looking for a community where they get real recommendations from real people,” said Michigan-based bookseller Nyshell Lawrence. (the New York Times)

Make change: Former Freshii executives are hoping to expand their “virtual cashier” program beyond Canada, amid both labor shortages and criticisms of their model. (Toronto Star)

It’s electric: In a bid to appeal to millenials and Gen Z, retailers like Starbucks and Kroger are installing EV charging stations in their parking lots. (Quartz)

Mind your business: Morning Brew’s Business Casual podcast, that is. Join journalist Nora Ali as she chats with creators, thinkers, and innovators about today’s biggest and most significant business stories, what they mean, and why you should care. Listen here.

Plan to grow. Are you primed to thrive in this new age of retail? Learn strategies and practical tips from retail execs at The Checkout: Retail Growth Forum on July 19, sponsored by Bolt. Register here.*

^{*This is sponsored advertising content.}

At the mall, it’s where band tees are the only tees. In Retail Brew, it’s where we invite readers to weigh in on a trending retail topic.

Buy now, pay later has become popular among Gen Zers and shoppers who want to make large purchases but need to break up the payments. Retailers have also jumped on the bandwagon, partnering with a handful of companies offering the service.

• BNPL transactions are estimated to add up to roughly $100 billion annually, and that figure could climb to between $1 trillion and $4 trillion in a few years, per CNN.

But economists and experts are worried that consumers are using the service to pay for everyday items like gas and groceries. Regulators have also expressed concern that BNPL might deepen financial hardships for consumers amid inflationary pressures.

“With everything going on in the economy, this is not getting the attention this deserves,” Marshall Lux, a Harvard Kennedy School research fellow, told CNN. “Meanwhile, young people and the underbanked are being hurt badly, potentially ruining their credit for years to come.”

You tell us: Are you concerned with consumers using BNPL to pay for common goods as opposed to big-ticket items? Cast your vote here.

Catch up on the Retail Brew stories you may have missed.

• See ya, sweatpants: sales of dressy clothing are surging
• Pinterest rolls out new shopping features for merchants
• What does it mean for a company to use a ‘Made in USA’ label?