RETAILER SHAKEOUT SEEN EXTENDING INTO 2001
Jane Hamill is coming down from a retail high.
Business at her women’s apparel boutique replica louis vuitton bags in Lincoln Park has boomed in the past couple of years, with sales approaching $1 million annually. But for the past several months, shoppers for her strappy dresses have been acting quirky they’ve been debating longer and buying less.
“It’s been so easy for so long,” she sighs. “I was a little crazy this year, buying anything I fell in love with. Next year, high quality designer replica handbags I’ll just be more business minded.”
So will the rest of the nation’s retailers if they’re smart.
The retail industry took a cold shower high quality designer replica handbags wholesale in the second half of 2000, finally waking up to the fact that the good times weren’t going to roll forever. High energy prices and interest rates, combined with confusion after the presidential election and volatility in the financial markets, threw a damper on holiday spending.
The slowdown was badly timed because merchants had ordered lots of holiday inventory months earlier, expecting another bang up holiday season. To persuade wary shoppers to take the plunge, stores were forced to slash 1:1 replica handbags prices well before Christmas, hurting profit margins as well as executive egos.
The holiday slump was even high quality designer replica handbags more costly for some. Montgomery Ward Co. said Thursday that it will liquidate its 250 store chain during the next several months. The news followed a similar announcement last Tuesday by Bradlees Inc., a discount chain in the Northeast.
For the retailers that remain, caution will be the watchword in the new year.
“It’s going to be a very difficult year for retailers,” predicts Carl Steidtmann, chief retail economist with PricewaterhouseCoopers, a national accounting firm. “You’ve got all of the makings of a recession coming on, and consumer spending is one of the elements of the economy that gets hit hard in a recessionary environment.”
For 2001, Steidtmann is looking for a 4 percent increase in total retail sales, half of fake designer bags the estimated 8 percent growth in 2000.
Even if the Federal Reserve were to begin pushing interest rates lower in hopes of staving cheap replica handbags off a recession aaa replica designer handbags aaa replica designer handbags , the positive effect on the economy wouldn’t be felt for at least a year, economists agree.
In the meantime, consumers will struggle with record levels of revolving debt, and a lot high quality replica handbags china of them won’t win the battle. “We will probably see a record number of consumer bankruptcies [in 2001], exceeding the 1998 peak,” Steidtmann said. Some 1.4 million Americans filed for personal bankruptcy in 1998.
The coming downturn will differ from others because it will hit high end retailers particularly hard, some retail experts believe. In the past, upscale households appeared relatively immune to short term economic dips because the gains in their stock portfolios subsidized their consumption.
In the late 1990s, a new group of wealthy appeared the so called dot com millionaires. This highly compensated group of techies and MBAs spent their money lavishly on designer goods and luxury cars, said George Rosenbaum, president of Leo J. Shapiro Associates, a Chicago consumer research firm.
But when the Internet bubble burst last spring, their wealth vanished. “Louis Vuitton is going to feel pressure,” Rosenbaum quipped, referring to the French retailer of luxury leather goods.
One retail maxim will continue to hold true, experts say: Discount chains will benefit if the economy continues to head Designer Louis Vuitton Replica Handbags south and more people become worried about job security.
Just having low prices won’t be enough, however. Successful discounters will be those that sell more than basic merchandise, putting their own spin on fashion trends, Rosenbaum said.
Target Corp., which has become known for having trendy apparel at the right price, should continue to win market share, retail analysts say. That will put additional pressure on once hot chains such as Old Navy that succeeded for several years by offering simple items such Discount Replica Louis Vuitton Bags as fleece vests and cargo pants in 20 different colors.
“That gets boring,” Rosenbaum said. “Specialty stores that have interesting merchandise not necessarily higher priced merchandise will do well.”
Perhaps the sector under the most pressure this year will be the nation’s department stores. Those venerable chains have found their niche squeezed by up and comers such as Kohl’s Corp., the Menomonee Falls, Wis. based apparel chain that charges low prices for many of the mainstay brands also found at department stores.
As department stores have struggled to distinguish themselves with fashionable apparel, many have veered off course by offering edgy, sexy outfits that many women can’t, or won’t, wear. Meanwhile, they’ve cut costs everywhere, from the sales floor to the accounting department, by modernizing computer systems and outsourcing departments such as fine jewelry to third parties.
Now some chains will have no recourse but to close underperforming stores, said Sid Doolittle, partner with McMillan/Doolittle, a Chicago retail consulting firm.
There won’t be any segment of retail that won’t feel some pinch Discount Replica Louis Vuitton Bags , Doolittle added. Teen retailers, in particular, may be ripe for a shakeout because of the rapid growth in that sector, consultants say.
Many retailers will be tightening their belt early in the year with layoffs at their headquarters. The cuts won’t be drastic, likely in the 5 percent range, Doolittle predicts just enough to give retail CEOs some flexibility if the economy takes a serious turn south.
Another way retailers will be pulling back: reducing capital spending by opening fewer stores and fixing up existing ones instead. “If I were a retailer, I would be getting my arms around expenses across the board. I would start being very conservative about payroll and non productive assets,” Doolittle said.
Not everyone is predicting retail gloom for the next 12 months. Diane Swonk, chief economist with Bank One Corp., said she believes there will be a pickup in the replica louis vuitton second half after consumers work through their higher than normal heating bills.
“Spending has slowed from a frenzied pace to one that would have been enviable in the 1990s,” she said.
Swonk expects consumer spending on an inflation adjusted basis to increase between 3 percent and 3.5 percent in 2001. That’s a slowdown compared with this year’s 5 percent increase.