trends: February 2009 Archives

In response to slower foot traffic, two major mall chains are shortening the hours their properties are open. Westfield Group shopping centers are opening half an hour later and closing half an hour earlier on weekdays, and lopping off half an hour on Saturdays; the policy applies to most of their locations nationwide. Last month Simon Group began closing 17 New England malls half an hour early, a policy it is extending to Pittsburgh and elsewhere.

Mall operators note that retailers are encouraging the shorter hours, although anchor tenants (like department stores) and restaurants, which independently set their hours, may not follow suit.

Interesting article in the New York Times this morning discusses how rental car companies are dealing with the downturn. In short: their cars are getting worse. Usage time for a typical car has crept closer to two years and total mileage can pass 30,000.

The reason for this is a bit counterintuitive: rental companies have to sell their old cars to make way for new ones. With the auto market in shambles, they can't move the old inventory profitably, so they can't afford (or make room for) new ones, leaving an aging auto fleet with few options.

USA Today has a nice summary of retail closings that gives a bird's-eye view of the crisis. The article includes a sidebar with a full list of store closings (most of which Timely Demise has covered) and a nifty interactive map of empty storefronts.

The Wall Street Journal ran an excellent article Monday on the lasting impact of Saks Fifth Avenue's drastic price cuts during the 2008 holiday season. Saks' move was almost unprecedented: a luxury retailer, used to receiving premium payment for premium goods, slashed prices up to 70 percent during the busiest time of the year.

"Saks's risky price-cut strategy was to be one of the first to discount deeply, rather than one of the last," the article noted. By acting quickly, Saks was able to grab mindshare and clear its racks of merchandise rapidly declining in value. This didn't help matters as much as hoped, though: Saks reported a 24% dip in January sales, on par with Neiman Marcus and Nordstrom.

The Saks effect has two potential prongs. One is on the vendor side: luxury companies not wanting to see devaluation of product are going to be wary about selling items into Saks moving forward. Designers may keep certain items for their own stores to create demand and maintain a price floor.

The other, which is already widespread, is the entrenchment of Americans' distaste for paying retail price. Customers have long known of product cycles and eventual sales; Saks' rapid discounting--and the rest of retail,the past few months--has taught people to wait for reductions before buying. Even The Economist reported on the recent rise of haggling among everyday items in consumer shopping. These trends may alter the retail landscape for years to come.

New York Magazine has an expansive article this week titled Freakoutonomics. It's filled with interesting sidebars, including what it takes for a business to survive, how bodega owners see things, and a gallery of quotes from retailers. It's a must-read for anyone tracking this sector.

The article also uses the term "retail anthropology," which is quite nice, and which this author hasn't heard since reading Paco Underhill's Why We Buy.

Another locally trended story is how different shopping hubs are faring in the downturn. The consensus: not well. Recent articles have covered Greenwich, Conn.; Newbury Street in Boston; and New York's Madison Avenue. Myriad additional stories report on closures and traffic patterns at malls around the country.

"Steep declines" marked another tough month in retail in the United States, as most retailers saw declines. While deep discounter Wal-Mart showed a slight gain, sales were slower almost everywhere else, including notable drops of 22.7% at Saks, 19% at Gap, and 15.5% at JC Penney. All price points are being affected.

Not everyone suffered, though. Aeropostale grew 11% and Hot Topic 6% as their surges from the fall season continued.