Black (and Blue) Friday

Yes, all retailers are feeling a bit bruised right now. Amongst the stock market meltdown, the Big 3 automakers in need of a bailout and the trickle down effect of the negative psychological condition of the consumer (job losses, deflation concerns, housing value issues), the mall seemed surreal on what is purportedly the busiest shopping day of the year in the United States.

It’s not that it wasn’t busy – it was. It’s not that people weren’t walking around with shopping bags – they were. It’s not that Santa didn’t show up – he did. And it’s not that the markdowns didn’t work – they seemed to. It was that it seemed strangely like nothing had happened outside the perimeter of the mall parking lots to disturb the activity inside the mall corridors and shops. It did seem less festive a mood, but not by much.

The real problem is it’s a bit of a snowball effect on the negative atmosphere. Once one retailer announces that they are paring back inventory and slashing prices, the dominoes start to fall. That is the nature of this business unfortunately. So, while the Thanksgiving Friday’s sales may be pretty healthy considering the doom and gloom that has been purported, the margins may have suffered big time. That is the primary concern – how much bruising did everyone’s bottom lines take? How much more can they take in case this pall lasts a little longer?

Sales were aggressive this year, but the smart retailers make them pretty aggressive every year to capture the hype and the predisposition to buying that this weekend evokes. The Thanksgiving weekend phenomenon has been receiving an increasing amount of hype over the past few years. Stores have started opening earlier and earlier (with some opening on Thanksgiving Day itself) and more and more people have been seduced into lining up throughout the night to ensure they get the best deals available.

I am all for promotions and excitement, but the caution would be how much is too much? I understand that this year may be an exception, but this issue has been a trend for years. At some point it spoils the consumer – I gather that point has been reached by now.

For now, the holiday windows are bright and cheerful (and occasionally obstructed by sale signs) and the Gap has more colour in the assortment this season, so all is right with the world.

At least they won’t be calling it “Red” Friday this year.

TheRetailTherapist

Friday Night Lights

Some of us spend Friday nights at high school football games; some at the family dinner table; some at bars and clubs; some at friends’ houses; some babysitting at home. I spent Friday night at the mall. This mall is what you would call a “super-regional” at highway crossroads and very close to the big city. What I found was surprising.

Based on what the media tells us and the phrase “Global Financial Crisis” that flashes on the screen of CNN every 5 minutes or so, you would think the parking lots would be empty, stores would be in disarray and people grumpy and irritable. The exact opposite was true.

Now, was it promotional?  Yes. But I seem to remember the holiday season being promotional for several years now. Was it quiet and tense? Not at all. It seemed festive and energetic and there were lots of children running around squealing, lots of people laughing on their cellphones and lots of shopping bags in hands.

Maybe this was an anomaly. Maybe this was a night where people let off some steam of pent up demand that has been building for weeks, but somehow I doubt it. I am sure the numbers are not as good as last year, but I don’t think it is the disaster that the media has made it out to be. The problem with the “Global Media” that is able to change its message or report a snippet of “news” in a nanosecond, it tends to exaggerate any situation. Crises sell. They sell programming on TV and radio and they certainly sell newspapers (and everyone knows they need all the sales they can get these days).

This is not to say that there are not structural problems with the economy. The U.S. housing crisis of confidence is the biggest of them all since this directly affects people’s lives and their notion of personal worth. The other scary issue is layoffs which is a slippery slope. As the economy slows, there is a domino effect on demand and therefore pressure on companies’ overhead and that’s when you get layoffs to cut costs and preserve some form of profitability to stay in business. Everyone gets that.

What I don’t get is the constant harping on retail sales once they happen especially when everyone knew what to expect. Everyone knew October was soft before they announced the actual sales tallies. However, once it was announced (an “astounding and record breaking” drop of 2.8%), the market acted as it it were shocked. That seems ridiculous to me.

What is also ridiculous is the manipulation that is going on near the end of trading days. I know I am straying from my mission on this particular entry but I have had it. The very best retail companies are being painted with the same broad brush as those copy cats and lesser lights I spoke about last time. Trust me when I tell you, people are buying and the good retailers are operating better than ever. Their results may be below last year, but who really cares for one year out of 10-12?

By the way, the busiest store in the mall by far was Bath and Body Works. It is pretty new to this market and their store is nice and compact and the merchandise is also very unique and affordable. I predict they have an outstanding holiday season.

Life is too short…You should too.

TheRetailTherapist

Lavish and Squalor

I passed an interesting store the other day. I had to chuckle to myself as I walked by as the name seems to sum up what the economy is struggling with at the moment. These are interesting times for sure, and the fact that we have been so “Lavish” and that has led to a bit of “Squalor” has humbled a lot of people and re-set quite a few expectations.

The way I see it, we have spent a ton of money on some very overpriced merchandise. We have constantly traded up and traded across as there have been so many copycat merchants that have risen with the high tide of the stock market, huge bonuses, easily available credit and rising housing values that the expression about “a rising tide floats all boats” is appropriate to explain what has happened at retail.

Now, the fallout will begin and the copycats will have the toughest time. If you do not have a unique proposition or occupy an important piece of real etate in the consumer’s mind at the moment, you will struggle when the spending stops and the constant sales flow turns into chinese water torture.

Independents that have romanced their customer and have built personal relationships with them should be able to survive this downturn. Those powerful brands that have built an authentic reputation and have been consistent about delivering on that reputation should also do alright. Gap could have been one of these but they have been inconsistent. I would say Urban Outfitters and their other brand Anthropologie have mastered their domain and should be able to perform well over the course of the next 12-15 months of a predicted tough retail climate.

Of course we all know the obvious that the bargain brands will gain market share at this time in the economic cycle as Wal-Mart, Target and TJX should all thrive. But the corollary to that is what will happen to the Neiman Marcus’ of the world? My hope is that they have not become too overwrought with overhead or inventory and they can weather some significant negative comp sales. The sales will come back to a certain extent – maybe not to the level it once was, but business will be solid as long as they stay true to their unique proposition and the high end retailers do not become tempted to change their stripes.

So what about “Lavish and Squalor” the store? It is a neat blend of a full range of casual unisex apparel, accessories, candy, Vitamin Water, and gifts. It is aimed at the 17-27 year old who is a bit funky, urban and casual. It looked like there is a grunge influence but it is tasteful and more mature than the average store of that type. The music, the environment are spot on for their target market (er…not me) and the staff seemed cheerful and interested. The visuals were exciting and unique.

And I love the name!!!

TheRetailTherapist