There is plenty of hope that U.S. retail industry numbers will make sense each time they’re released, but experts and analysts keep drawing as many different conclusions about the status of retailing as there are economic indicators. So far in August the sum total of store closings, store openings, Chapter 11 activities, auctions, rebounds, failures, sentiment dips, and stock price rises equals a result that is neither mathematical nor conclusive.
The future of the U.S. retail industry is still anybody’s guess. Sometimes numbers are just numbers.
The most active numbers news for the second half of 2009 will probably be found on the store openings list. With the massive defensive store closings mostly completed, major retail chains seem to have found a comfortable equilibrium for riding out the rest of this recessionary year. Now is the time for the chains with liquidity and credit lines to swoop in and scoop up some prime retail spaces at prices that are well below prime.
The number of multi-store retail chains that have committed to opening stores in calendar year 2009 is more than 300. The list has been growing at an accelerated rate in the past two months, although it doesn’t seem that consumer confidence is keeping pace with the optimism of the retail companies in expansion mode. On Friday it was reported that consumer sentiment dipped to 63.2 this month, after dropping almost five points last month. These are not the numbers that indicate a consuming public is crying out for more retail outlets.
One of the most surprising numbers on the store openings list is 140. That’s the number of dealerships that Chrysler announced it plans to open in the next two years. This announcement comes just two months after 789 dealership closings were identifed for closure as part of the automaker’s Chapter 11 reorganization. Understandably there are a few ex-dealers who are not at all eager to fill out the application forms for one of the new dealerships.
Another notable automobile number is 225. That’s the number of GM dealers who will be selling cars and trucks in a new section of eBay which is completely dedicated to GM. 20,000 is the number of vehicles that are expected to be listed on the site at any given time, which GM hopes will be viewed by a healthy percentage of the 12 million car shoppers who purchase a vehicle about every 60 seconds from eBay Motors.
This special virtual GM dealership is not a traditional bid-up eBay auction site. Rather, this is more like a traditional automobile price haggling, but without the tiny dealership office and high pressure sales characters popping in and out of the drama.
As in so many other ways, GM is a little bit behind the innovation curve here. But after closing 1100 retail dealerships, I guess GM figures it’s going to need alternative channels outlets to move some cars.
Of course, if you “win” one of these GM eBay vehicles, you have to arrange delivery and financing with your local dealership. If you don’t have a local dealership, then what’s the advantage? And if you do have a local dealership, then what’s the advantage? I guess sidestepping the car sales experience, which is typically distasteful to most people, is advantageous enough for now.
The only retail numbers that seem to have suffered more than automobile dealerships numbers this year are those of retail jewelers. Another 259 jewelry stores and licensed jewelry departments are in jeopardy of closure in 2009, depending on how the Finlay Enterprises Chapter 11 reorganization plays out.
Reportedly Gordon Brothers will be a stalking horse bidder when Finlay goes on the auction block at the end of August. If Gordon Brothers successfully beats out the liquidators that are likely to participate in the bidding, then probably at least some of Finlay’s Bailey Banks & Biddle operations will continue to operate, possibly under a new name.
Two is the number of major retail jewelry chains that have already fallen in recession. Besides Gordon Brothers, Zales is one chain that has survived, but not without shedding 191 of its stores. It hasn’t been a year of sparkling numbers for U.S. retail jewelers.
Another important retail bankruptcy number is four. That’s how many retail companies emerged from Chapter 11 bankruptcy recently. Sportsman’s Warehouse, Ultra, Stock Building Supply and Castle Megastore have all survived their own reorganization and have been released by the court to resume their normal retail operations.
In case you’re not familiar with Castle Megastore, it is neither a chain of home improvement stores for mansions, nor a one-stop shopping fairy land for children. Castle Megastore is the seller of adult entertainment products, with 16 stores in five different states. So, now it is really confirmed that there are no industries immune from the consumer spending cutbacks in the retail recession.
The PR statement released by Castle was attention-getting for more than one reason. In it CEO Mark Franks said, “This is an exciting opportunity to re-position the company for long-term success.” This was an interesting choice of words from Mr. Franks, given the nature of his business.
The company’s leader also took the opportunity to say, “We are dedicated to adhering to our core values of exceptional service, revolutionary promotions and great product selections.” Many people probably assume that those who operate adult entertainment stores have no core values. Others might assume that in the adult entertainment industry, products sell themselves, target markets define themselves, and the biggest retailing challenge is to find a location that won’t be picketed, burned down, or zoned out of business. According to Franks, those assumptions would be wrong.
Apparently Castle Megastore is a retailer that needs savvy practices to survive in a challenging economic environment like every other retailer. Granted, Castle’s vendor workshops, in-store demos, and employee discount purchases are very unique. But other than that, they’re just one more retail operation that’s glad to make it out of bankruptcy court alive.
Most of the large numbers being added to the retail store closing list are connected to Chapter 11 activities these days, but one store closing number that is significant this month is six. That's the number of Publix grocery stores that the chain has shuttered recently.
Six doesn’t seem like a very newsworthy number, except in this case, those six stores were situated in neighborhoods where Publix had purchased the nearby competitor and then closed it down. Now with the closing of the Publix stores too, these six areas are without any grocery store at all.
One of those neighborhoods just happens to be mine. Without any advance notice or a going out of business sale, one day there was a grocery store, the next day the doors were locked and a hand made cardboard sign that said “Thanks for 22 years of loyalty” was crookedly taped to them.
This does not exactly endear me to the Publix brand, nor does it motivate me to drive ten miles out of my way to continue doing my grocery shopping at their next closest store. Two is the number of words that I have for Publix management - exit strategy. Those were not the same two words that came out of my mouth when I arrived at the locked down supermarket, but those are the two words that are fit to print.
The last number that deserves a mention is 16,000. That’s the number of pairs of Crocs that were sold on the Crocs website in a single day after the Washington Post ran a story predicting the company’s demise. The percentage that the Crocs stock has risen since the story ran is 103, as of the closing bell last Friday.
As it pertains to oddly-colored anti-microbial slip-on footwear, the no-such-thing-as-bad-publicity rule seems to still be applicable. As it pertains to U.S. retail industry numbers, the old rule of weather forecasting in New England seems to be most appropriate. If you don’t like the numbers you see, wait a minute. They’re sure to change.
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Hi Barabara
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Yesterday the government issued a report about a decline in credit card debt signaling that a retail comeback is not imminent. We’ll likely see more store closings and retailers adjusting their efforts to survive. But in a sense, this is good. This is what economists would describe as self-correction in the market: make a crappy product, have rotten service, sell things without a good value and you lose. In better times, that can be masked. But today, productive brands win. Those that are not lose. Just the way it should be.