A recovery in U.S. consumer spending on discretionary goods could take “many, many years,” the chief executive of U.S. No. 2 bookseller Borders said on Thursday (May 7).
“Our view increasingly is that in certain discretionary categories the total market has shifted down — depending on the category, by between 15% and 25%,” Ron Marshall told the World Retail Congress. “It may be many, many years before we regain the spending levels we enjoyed just last year.”
Marshall said confidence in the U.S. housing and equity markets had been shaken, and consumers could take many years to reduce their debts.
As well as the consumer downturn, Borders has been hit hard by intense competition from online rivals like Amazon.com and Marshall has slashed costs, including axing jobs and closing stores, in a bid to revive the group’s fortunes.
“We’ve worked very, very hard to reduce our permanent cost structure and improve our financial structure so that we could be profitable at that lower level [of consumer activity]. If you’re too pessimistic, you’re well placed for operating leverage on the upside,” he said.