Did The Stores Really Do That Badly?
On CNN Money today, there was a news story saying that over 1,400 stores could close in 2009 after dismal sales figures in November and December, now being considered the worst retail season on record. For its part, the story does not say that chains will necessarily close as much as some stores from some chains that didn’t perform well in their locations may either close or move, downsizing so that the store at least has an opportunity to be profitable.
One of the worries the story reports on is that consumers won’t have enough choices of stores to shop at, thereby reducing choice. On this one I think the “experts” are far off the mark. If anything, there are too many choices of stores that pretty much offer the same thing that, probably, a part of the retail syndrome just did what naturally had to happen and render some stores that couldn’t figure out how to differentiate themselves from other stores selling the same types of things null and void. There are a lot of specialty stores that may not have made the cut because the price of their wares didn’t sit well with customers who were watching their dollars this season. This may not seem fair, but I have little sympathy for stores that sell $1,000 purses or $450 sweaters if they happen to be on the hit list.
So, who’s considered to be in trouble? Circuit City is the easy one, since they’ve already declared bankruptcy. I like Circuit City personally, but right now they’re sitting at 13 cents a share, while back in 2003 they rejected an offer to be purchased by Highfields Capital, a hedge fund headquartered in Boston, for $17 a share when they were starting to see cracks in the foundation. Sounds a little bit like Yahoo, doesn’t it? Women’s clothing chain Chico’s and teen-oriented chain Abercrombie & Fitch are also rumored to be on the hot seat. I don’t know much about Chico’s, but I know a little bit about A&F, having read about their problems with minority hiring and promotions and having to pay out a settlement back in 2004; no, I’m not a fan. However, even though their stock price has gone up from its low of around $18 back in early November up to $23.07 now, they had been on an expansion jag at the beginning of the year with around 99,000 employees worldwide, but have seen sales tumble as much as 8%, which doesn’t seem like a lot when you first think about it but for an organization as large as they are, that’s a healthy chunk of change. And the projection was that theirs was the type of store that would suffer greatly this holiday season as a trendy, expensive type of store that buyers with small checkbooks would avoid.
As much as many people love to hate them, Walmart is being projected as the probable big winner this holiday season, because they offer what most people were looking for; cheap, inexpensive stuff that looks pricey and is packaged well. Walmarts were packed, and they moved a ton of merchandise; that could be big news for a model that, while many people complain about it, seems to be just what the doctor ordered in this economy. And yet I didn’t buy a single thing there; what does that say about me?
It also seems that the “experts” believe, oddly enough, that some states and regions of the country are going to fare worse than others. They’re predicting that California, Florida and Nevada will be hurt the most, while states with what are considered as having the most stable housing markets will do better. Unfortunately, those states don’t have high enough populations to make much of a dent in the overall retail market.
For what it’s worth, in my area stores really seemed to be very busy this season, even though I only got to see it the last few days before Christmas. However, shoppers don’t always translate into buyers, so, like everyone else, I’ll be interested in seeing how all the numbers play out come next week, when the first financial reports from the season will come out. Let the axe fall where it may.