trends: April 2009 Archives

Timely Demise read two interesting articles in yesterday's New York Times. First, the news: retail sales fell in March, as did producer prices, as a temporary bump in spending pulled back. While a few chains posted sales gains, the overall retail industry fell 1.1%, suggesting continued weakness but not market contraction.

More curious was the Times' coverage of bankrupt stores resuscitated as brands. Several companies are being leveraged for their well-known identities despite the failure of their store-level businesses. Among them: Sharper Image, which sold its name for a hefty sum to use on a new line of gadgets; as well as Linens 'n Things and Bombay.

When the going gets tough, the tough pilfer.

High unemployment is giving people with less pocket money more free time to roam around stores. ... The recession also is creating a perfect environment for organized shoplifting gangs to flourish. That's because it's easier than ever to fence stolen goods such as designer jeans, flat-screen TVs or fashionable handbags.

Shoplifting increased by as much as 15 percent nationwide in 2008 and is thought to be rising in 2009. The Atlanta Journal-Constitution says theft is up in many counties across Georgia, as are gray-market sales and pawn shop traffic.

This weekend's New York Times consumer-economy article is about overcapacity in the nation's restaurants. Stores-to-customers ratios have actually been in decline since 2005, leading to significant overcapacity that is making a difficult economy even worse. Forecasters are expecting as many as 20,000 net restaurant closings in the next few years as consumers' spending adjustments solidify.

Saks, the retailer that helped create the deep-discounting trend last fall, is seeing more shifts in its business. The luxury retailer has begun altering its mix downmarket in order to carry products with more budget-minded appeal. It is also expanding its Off Fifth outlet stores and producing more merchandise to sell directly via outlets.

Saks Chief Executive Officer Stephen Sadove, noting "an evolution of what the consumer wants," is moving to more value-oriented merchandise, including budget lines from high-end brands. While the specialty retailer holds out hope that exclusive, high-end items will still sell, Saks is acknowledging the changes present.

Update: Scrolling through department store archive news, this development is happening in similar ways at Saks' competition. Nordstrom is lowering prices in order to accommodate new shopping patterns, although it's compensating by raising its credit-card interest rates. And Neiman Marcus is encouraging its designers and buyers to look for value as they prepare collections this year. Neiman, similar to Nordstrom, is hoping to keep shoppers at full price, just on lower-ticket items for now. Said a Neiman VP, "We have to get the customer to buy [at] full-price ... [so] you won't get this discounting nonsense."