After same store sales figures were released last week, U.S. retail industry experts got busy trying to figure out how they could predict holiday sales based on October's results. Reuters concluded that holiday sales would be "tepid." Deloitte Research says they'll be "unchanged." Retail Metrics says they will "rise modestly." A little more research would undoubtedly reveal some individual or organization that sees October same store sales as an indicator of an unexpected holiday boom, and another who's certain that the monthly figures are warning us about a startling seasonal bust.

One of the reasons why there are no consistent conclusions about what October's same store sales figures mean for the final two shopping months of 2009 is because using long-term measurements to predict short-term performance is about as scientific as the penicillin experiment growing in the back corner of my refrigerator.

If you want to compare and predict sequential months you need month-over-month sequential measurements, not year-over-year historical measurements. Or, to put it in a more holiday-friendly way, it's not the job of the ghost of Octobers past to reveal the visions of the holiday shopping season future.

So, instead of trying to make October same store sales figures mean something they don't, let's look at what they do tell us instead.

For instance, when looking at a multi-year comparison of October same store sales, it's easy to see that Dillard's (DDS), Stein Mart (SMRT), and Abercrombie & Fitch (ANF) haven't seen positive growth in four year's worth of Octobers. The fact that these three major U.S. retail chains have been consistently getting worse at figuring out what to do to make their Octobers productive is something pretty significant that year-over-year same store sales numbers can validly tell us.

Add to that a multi-year comparison of September same store sales figures, and we find that the same three major chains have declined in their Septembers as well. That is a same store sales revelation that indicates there might be three major retail chains in danger of becoming irrelevant on the U.S. retail landscape. (In fact, Dillard's was identified as being "high risk," and Abercrombie and Fitch was identified as being "medium risk" on one retail bankruptcy risk assessment in 2009.)

Comparing this October's same store sales results with past Octobers can also provide us with some other interesting revelations.

Chains with October, 2009 Sales Levels Higher Than Before the Recession:

• TJ Maxx (TJX)
• Ross (ROST)

Chains with Positive October 2009 Same Store Sales, That Are Still Performing At 2005 Sales Levels:

• Nordstrom (JWN)
• Bon-Ton (BONT)

Chains That Have Experienced Growth Every October Since the Recession Began:

• Aeropostale (ARO)
• Buckle (BKE)
• Walgreens (WAG)
• BJ's Wholesale Club

Chains That Have Experienced Declines Every October Since the Recession Began:

• Limited (LTD)
• Macy's (M)
• Gap (GPS)
• American Eagle Outfitters (AEO)
• JCPenney (JCP)
• Wet Seal (WTSLA)

Chains That Have Experienced Declines Every October Since Before the Recession Began:

• Stage Stores (SSI)
• Abercrombie & Fitch (ANF)
• Dillard's (DDS)
• Stein Mart (SMRT)
• Hot Topic (HOTT)

While October trends can't accurately predict November and December results, four-year trends can certainly give some valid insight about a chain's relevance, leadership, innovation, resiliency, and consumer appeal. Based on that, here are my predictions for the 2009 holiday shopping season (because we don't have quite enough opinions expressed about this already).

Ross, TJX Stores, Aeropostale, Buckle, Walgreens, and BJ's Wholesale Club will see year-over-year sales growth. Stage Stores, Abercrombie & Fitch, Dillard's, and Stein Mart will experience declines and will have the chutzpah to try to play the "challenging economic environment" card at least one more time. Every other chain will be somewhere in between.

Overall, while consumers might not be as panicked as they were in the 2008 holiday shopping season, this year there are 10 million more consumers who don't have jobs, unemployment benefits, or medical insurance, who are burning through their savings, chronically unemployed and borderline desperate, and who won't be buying seasonal merchandise even if it's marked down 90% because they just can't.

Black Friday pre-opening crowds will be ridiculous in size, and the first hour of every store's Black Friday sales day will be out of control. Unfortunately I think there will be at least one senseless Black Friday consumer frenzy tragedy, and we will all get the opportunity once again to re-evaluate our unconscious and self-destructive addiction to the acquisition of stuff.

My word to describe this year's holiday results - because everybody else got a word - is "unsettled." I think that is the word that will accurately describe the condition of both retailers and consumers this holiday shopping season - with one foot in a past that no longer exists, and one foot that doesn't know exactly where to plant itself in a new reality that has yet to be clearly defined.

It's not exactly the most ho-ho-hopeful word, but it's not going to be the most jolly retail holiday on record either. Making peace with that in advance, though, takes some of the pressure off and it might even allow everyone in the U.S. retail industry to just relax and enjoy the season a little bit more.

Wouldn't a reduction in year-over-year stress represent a holiday improvement? It would be great if some analyst somewhere would create a way to quantify that. Except then we'd all have to worry about finding ways to beat those expectations too.

When looking at the numbers from the U.S. retail industry in the second half of October, it appears that retail expansion will be gaining twice as much momentum as retail recession in the last two months of 2009. Included in the store opening figures, however, are 757 stores which have quickly popped up in the plentiful inventory of dark retail spaces across America, but which will disappear just as quickly when shoppers stop their holiday spending sprees. Seeing those empty retail spaces filled will add some cheer to the holiday shopping experience, but considering the fair weather retailers as part of an authentic trend is not really helpful.

Minus the holiday popups, the U.S. retail numbers go the other way, with nearly twice as many store closings as openings, along with a significant new batch of retail chains hanging in the balance after recently filing for Chapter 11 protection. A glimpse of real recovery is found in the 2010 Store Openings list, which is growing significantly each week. But until plans become reality, these future store openings are little more than holiday season ho-ho-hope for recovery as well.

The biggest contributor to the 2009 Store Closings list in the second half of October was Movie Gallery, the owner of the Hollywood Video chain. The company has closed 250 stores since September 1, and may close another 200 before the end of 2009. Reportedly the company has even set up a special toll-free number for the commercial landlords who haven't gotten paid lately. Establishing a dedicated unpaid rent hotline says a lot about the well-being of a company, I think.

It's interesting that earlier this month Movie Gallery staged a promotion which resulted in the donation of 20,000 DVDs to military families. For every two DVDs that customers purchased, Movie Gallery donated 3 DVDs to Operation Homefront.

Considering the company's recent downsizing activities, this DVD donation promotion could have been mostly an inventory reduction strategy. If so, clever points go to Movie Gallery. And no matter what the motivation, it was $300,000 worth of inventory well placed. It was also a great way for Movie Gallery to boost its brand higher than its main competitor, which is also busy closing 960 Blockbuster stores.

Meanwhile, last week we learned that the biggest nemesis of the two biggest movie rental chains has been busy creating more ways to make the brick-and-mortar DVD distribution system even more obsolete and irrelevant. Sony announced last week that Netflix is the partner of choice for delivering movie and television content via its PS3 systems. And strong rumors, still without credible confirmation, were also swirling around a similar partnership between Nintendo and Netflix last week. Can Wii movies be far behind?

It's been inspiring to watch little old Netflix take down two giant retailers with one strategic slingshot. For small companies with big ideas, this is a case study in the power of innovation and customer satisfaction. For large retail chains that are busy watching stock prices and each other, this is a case study in misdirected focus and short-sighted vision.

For home movie watching customers this is a case study in free enterprise at its finest. If there is a better, cheaper, faster way to deliver products, some enterprising retailer will likely find it, to the benefit of the average consumer. Right now Netflix is the American way.

Five Below is another diminutive chain that is hoping to borrow the Netflix slingshot and see what kind of damage it can do to the competition. This small regional chain, however, is not taking aim at just one or two competitors, though. Five Below is targeting an entire market segment that it wants to steal from a whole lot of different retail giants.

This new ultra discount specialty retail chain wants to steal the tween and teen customers from Best Buy with its electronic accessories, from Michael's with its art supplies, from Party City with its holiday stuff, from Bed, Bath and Beyond with its bedroom decor, and from Hot Topic with its vampire t-shirts. Five Below is also happy to lure young customers away from Wal-Mart, Dollar General, Target, Old Navy, and every other chain that carries all the cheap and unnecessary stuff that underage discretionary income can buy.

Apparently Five Below is successfully gaining "it" status with trendy cost-conscious teens already. The six new locations that it is contributing to the 2009 Store Openings list on November 6th, and the 98 stores it added to the 2010 store openings tally is proof of that.

The chain's popularity could have something to do with the fact that everything in its stores is priced below $5. But it probably also has something to do with its mission to sell "the trendiest, coolest, highest quality stuff that you just gotta have!" For now, at least, TISC! (If you don't know what that textonym means, you definitely aren't in Five Below's target market. So, if your kids drag you there, just head to the candy aisle.)

One company that wishes it still had its "it" status is Crabtree & Evelyn, which recently shuttered 25% of its chain and joined the Retail Chapter 11 list last week. It seems that the demand for pricey lotions and potions has decreased, causing Crabtree and Evelyn to downsize accordingly.

It also seems that using the Chapter 11 process as leverage to renegotiate rents and leases has become a U.S. retail standard practice this year. Chapter 11 as rent control is a strategy that won't be relevant or workable forever, so there's no time like the present for Crabtree & Evelyn to employ it.

It would have been easier if everyone in the U.S. would have made a blanket agreement at the beginning of 2009 to rollback everything - prices, salaries, net worth, etc. - by 25% across the board. That's where we're all going to land eventually anyway. Instead, the recessionary rollback has been happening in the slowest and most painful way possible because we've all been trying to hang on to an economic reality that was never all that real.

For the rest of 2009, retail momentum will probably still be rolling back overall. I think it will be key for retailers to not get panicked by the continuing decline, and not get too exhausted trying to create better results than the economy can support.

I recently watched a video about how to survive if you ever step into quicksand. (Other than Gilligan, I've never known anyone that got stuck in quicksand, but more is better when it comes to life survival strategies I think.) While I was watching this quicksand survival video, I was thinking that it was a perfect metaphor for U.S. retail industry recovery:

1) Stay calm.
2) Don't let the struggle suck you down.
3) Change your angle.
4) Wiggle free.
5) Crawl to solid ground.

If the strategy works for escaping one type of unstable soupy muck, it should work for any type of unstable external conditions that threaten to suck you down and make forward motion impossible.

The numbers in the second half of October indicate that U.S. retailers are still likely to find themselves in the middle of some more recessionary muck in the short-term. The key for retailers will be to not let it drag them down too far, find a different angle, and leave themselves some wiggle room.

Most important, retailers will have to abandon their pride if a slow and clunky crawl through the next few quarters is necessary before we all find ourselves on stable ground once again. No matter what the stock analysts think, it doesn't matter how pretty you look during the recovery process. What matters is that you manage to survive.

Apparently Amazon.com gave customers 5.45 billion good reasons to open their wallets and let their credit cards breathe some fresh air this summer. While U.S. retail industry watchers were relentlessly scrutinizing every intention, sentiment, and minor mall movement of American consumers leading into the back-to-school season, Amazon kept itself busy processing payments and packaging purchases for a healthy fraction of its 98 million worldwide customers.

Last week was as big and wild for Amazon as the company's namesake South American waterway. In just two days Amazon gave retail industry "experts" 69% more self-doubt in their calculations with its greatly "unexpected" third quarter earnings report, it gave investors a 24% boost in their portfolios in a single day stock surge, and it gave members of the global retail industry more hope about economic recovery than could be quantified by a percentage sign.

Retail industry onlookers who oversimplify Amazon's counter-recessionary success as being nothing more than having the right products at the right price haven't been paying attention since 1994. Amazon is thriving not only because of the transactions that it is conducting today, but also because of the billions of transactions that it has conducted in its past, which positioned it as a trustworthy retailer that sincerely values its customer relationships. It may have taken the rest of us 15 years and a global recession to see the proof that these things really do matter, but Amazon knew it all along.

There are plenty of small and large retailers around the world who are already devoted followers of Amazon in general and CEO Jeff Bezos in particular. Undoubtedly the company's recent stellar success has created even more converts who, consciously or unconsciously, ask themselves, "What would Bezos do?" as they make decisions and lead their business every day.

Although I'm fairly certain that Bezos does not view himself as an omniscient retail messiah, it would be an interesting exercise to look at some of the U.S. retailers who have not been faring as well as Amazon recently and ask, "What Would Bezos Do?"

Blockbuster's Shrinking Market Share - What Would Bezos Do?

If Jeff Bezos was leading the world's largest movie rental chain... read more...

While there is still a lot of uncertainty in retailing worldwide, one thing that the latest numbers tell us for certain is that the U.S. retail industry is definitely not stagnant. With 829 new store closings, 1486 new store openings, and Chapter 11 entries and exits, U.S. retailers are retracting, expanding, succumbing and defying all at the same time. What U.S. retailers are not doing at this stage of the recession cycle is sitting still.

Cafeterias Close

Included in the most recent 829 tally, Luby's added 25 of its cafeterias to the 2009 store closing list last week. These 25 restaurants had collectively lost $5.5 million in fiscal year 2009. Systemwide, Luby's lost $23.3 million in its latest quarter, which was seven times greater than its losses for the same time period last year. Considering those numbers, it seems pretty ambitious for Luby's to continue to operate at all.

It's sad to watch the Luby's chain slowly shrink in size and popularity. Not only is it a nostalgic part of Texas Americana, the chain was also built with a set of old-fashioned business practices that I want to believe could carry any restaurant through any difficulty.

Luby's survived beyond the Great Depression in the 30's by feeding homeless people with leftovers at the end of the day. Luby's survived beyond Hurricane Carla in 1961 by feeding emergency workers despite the damage to its own kitchen facilities. In both instances, Luby's customers repaid the restaurant chain for its human kindness with fiercely loyal patronage.

"Share the work, share the risk, share the profits." This was a guiding principle of the restaurant chain's founder, Harry Luby which was also embraced by his son, Bob. Because both men genuinely valued their management team, Luby's has been well-known throughout it's 98-year history for having some of the lowest employee turnover rates in the U.S. restaurant industry.

It would be great to see Luby's stick to its roots and prove to the world that profit and principles are not mutually exclusive. After observing banking meltdowns, excessive CEO compensation, outrageous executive bonuses, and widespread corporate chaos over the past few years, it is clear that the world could use some more principle-guided leadership. The past decade in Luby's history, however, has revealed that the company may be abandoning its own dedication to outstanding employee and customer relationships.

Current online customer reviews consistently complain that Luby's food quality is decreasing while its prices are increasing. Customer compliments in the past expressed the exact opposite opinion.

Employees don't seem to be as happy with Luby's any more either. In two high-profile cases in the past three years, Luby's paid substantial settlements to former employees in response to EEOC suits for disability bias and sexual harassment.

Investor satisfaction seems to be faltering for Luby's as well. Since well-known restauranteurs Chris and Harris Pappas took over leadership of the Luby's chain in 2001, they have been criticized for management conflicts of interest with their Pappas restaurants, and their leadership team has been in proxy fights with shareholders.

CEO Chris Pappas said in a teleconference last week that Luby's current profitability plunge is a result of "the challenging economic environment, including the unemployment rate rising to its highest level in over 20 years." But considering the pre-recession challenges that Luby's was having, perhaps the economy is not causing Luby's problems, but rather just revealing them.

Restaurants Reorganize

Another distressed restaurant chain seems to be having management problems as well. The famous Fatburger chain is still under bankruptcy court protection, six months after its filing. Included in the most recent retail Chapter 11 updates, Fatburger has recently announced the closing of eight company-owned restaurants that were collectively losing $1 million. The company also recently stated its intention to file its reorganization plans with the bankruptcy court before mid-November, which it hopes will include renegotiated leases and restructured debt.

In an overcrowded American burger market, Fatburger has one invaluable competitive advantage that other burger joints would fry for - unpaid celebrity endorsements. Sports, music, film, and television celebrities eat at Fatburger, rap about Fatburger, and own Fatburger franchises. Montel Williams, Kanye West, Queen Latifah, Ice Cube, and the Beastie Boys have all voluntarily associated themselves with the chain in one way or another. How could a restaurant chain not be able to capitalize on all that star power?

Since buying out the chain in 2003, CEO Andrew Wiederhorn has been on trial, in and out of jail, and fighting foreclosure on his personal residence. That may not be the cause of Fatburger's struggles, but it's at least got to be a little bit distracting.

It's difficult to keep track of how the company has been doing financially in the recession because apparently parent company Fog Cutter has been too busy planning its Fatburger expansion into China to file SEC paperwork for the past year or so. But that annoying little paperwork task is one thing that Widerhorn promises is high on his 2009 to-do list, right next to bankruptcy reorganization, of course.

Eateries Expand

While Fatburger has only Chapter 11 news to report, one of its biggest competitors was counted among the 1,486 store openings most recently tallied. In addition to approximately 60 openings that rival Smashburger added to the 2009 store opening list, the company has also confirmed that seven new airport locations will be among the 18 new locations it has contributed to the 2010 store openings tally.

Smashburger hasn't garnered high profile celebrity endorsements, but what it has successfully amassed is local appeal. If you attended the grand opening of the new Smashburger in Dayton, Ohio this weekend, you could have ordered the Buckeye Smashburger with fried pepper rings, and your smashing purchase would have contributed to the Thank You Foundation of Dayton. If you had stopped into the two-week old Tempe, Arizona Smashburger on Saturday, you could have ordered the Arizona Burger with habanero cheese, and your spicy appetite would have benefited the Sun Devil Family Charities.

Last month, avid Smashburger fans in Minneapolis saw the Spicy Baja Smashburger on Texas menus and decided that the southwest concoction would also be a smash hit in the great white north. So the Twin City smashies started campaigning via blog posts and Twitter tweets until the company agreed to add its jalapeno-chipotle-pepper-jack concoction to Minnesota menus.

Smashburger issued plenty of press releases about the whole affair, saying that it was glad to make the menu change for Twin City fans, which it did with plenty of fan-fare. Who needs celebrity endorsements when you've got food that creates its own burger buzz?

Luby's vs. Fatburger vs. Smashburger

Three different restaurant chains in the same economy find themselves in three different stages of their own business cycle. The critical difference? Luby's and Fatburger were already having internal conflict and management challenges before the recession hit. Smashburger, by comparison, seemed to be in hamburger heaven. External economic crisis caused further destabilization within the Luby's and Fatburger chains, while a self-built stabilization in Smashburger's operations has allowed it to buck the recession and move way ahead of the recovery curve.

So perhaps one of the big lessons of the Great Recession is that there is no such thing as a recession-proof business. Rather, there are businesses that are rendered crisis-proof by stable management teams with strong values and solid customer and employee relationships. Cash reserves help too. But even a big pile of money can't hide mismanagement forever.

Comparing this year's sales in stores open for at least a year with last year's sales in stores open for at least a year is supposed to reveal the strength of a retail chain. This is the premise of same store sales figures and this is what motivates members of the U.S. retail industry to go to the trouble of calculating, reporting, and analyzing same store sales monthly, quarterly, and annually.

Based on this premise of "strength," same store sales of the Old Navy chain not only had strength in September 2009, the chain seemingly developed super powers. With an impressive 13% increase in same store sales as compared to September 2008, Old Navy rocketed into positive sales territory faster than a speeding retail recovery.

To be fair to all other publicly traded U.S. retail chains, Old Navy was at a distinct advantage because it was comparing this year's September sales with last year's September, which saw an embarrassing 24% same store sales drop. And that 2008 drop was in comparison to its September 2007 sales drop of 8%, which was compared to its 3% drop in 2006, its 7% drop in 2005 and its 6% drop in 2004. In fact, Old Navy hasn't seen a same store sales increase in six years worth of Septembers.

So is this year's 13% increase really a show of Old Navy's "strength?" As much as sitting up in the intensive care unit after being hit by a bus can be viewed as strength, Old Navy did show some signs of recovery progress in September, 2009.

The problem with same store sales numbers is... more...

The big story in the retail industry recently has been the 38,500 jobs that were trimmed off retail payrolls in September. This, apparently, came as a surprise to just about everybody who labeled the job drop as "unexpected."

After the big Bernanke "recession over" speech, isn't all news about the economy supposed to be positive and aren't all economic indicators supposed to signal expansion? For those who believe that, there will undoubtedly be more "unexpected" numbers to come out of the U.S. retail industry in the last quarter of 2009.

I don't really see what's so unexpected. The 15 million people who don't have jobs are not spending all their free time shopping. If retail sales aren't happening, retail jobs aren't needed. So, retailers are doing temporary hiring for temporary spikes, and instead of hanging onto those employees in the lulls between spending sprees, retail positions are simply being eliminated. The growing stack of resumes sitting on every store manager's desk gives them the confidence that staffing up for the next busy buying spurt will not be much of a problem.

The retail job numbers have been reported and analyzed ad nauseum already, and there's not anything particularly interesting about any of them. If you google "retail jobs" you'll see them all.

Here's what is interesting. If you google "retail hiring" you get an entirely different set of articles which will give you an entirely different picture of what's going on in the job market in general and the retail sector in particular.

The Society of Human Resources Management (SHRM) surveyed HR professionals at more than 500 service-sector companies and found out that 32.5% of them wil be hiring in October.

Robert Half Finance Accounting interviewed senior executives from some of the largest companies in the U.S. and 31% of them said that hiring new employees was their top priority when business conditions improve.

Toys 'R Us has already started hiring the 35,000 workers it will need to staff its 350 mall holiday pop-up stores.

Kohl's will start putting an extra 20 employees in each of its 1,022 stores this month for the holiday season.

CEO Brian Dunn told Business Week that Best Buy will be hiring more seasonal holiday employees this year than it did last year. Apparently the chain thinks that flat-screen televisions, smartphones, and netbooks are going to be this year's big stocking stuffers.

Smaller electronics rival hhgregg apparently is as optimistic as Best Buy because it plans to hire 10% more seasonal employees this year, for a total of 800.

So if you look in one direction at the job market, what you'll see are a huge collection numbers that are both recessing and depressing. If you look in another direction at who's hiring, what you'll see are job openings and hope. And even though the hope is as temporary as the positions, these seasonal jobs will carry thousands of people into a new year, when new 2010 store openings are already being planned.

The Wall Street Journal estimates that there will be about 600,000 people hired for seasonal retail positions this year. That's good news. If all 15 million unemployed people apply for those jobs, though, that will be bad news.

The U.S. retail industry has largely been viewed as the place to go for jobs of last resort. If you can't find the kind of job you really want, you can always work in retail. Obviously that will not be the case this holiday season.

People without retail training or experience will be competing with displaced employees who are genuinely pursuing retail careers. Mediocre retail employees will be competing with chronically unemployed people who are highly-motivated and extremely eager to please. The competition for retail temporary holiday jobs is going to be stiff and job hunters are going to need to bring their "A" game in order to earn a space on anybody's retail team.

More than half a million retail jobs will be filled in the next three months. Landing one of those jobs, though, may take even more salesmanship and skill than the job itself.

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The sum total of the numbers found in the U.S. retail industry store closings, store openings, job cuts, and Chapter 11 assessments in the second half of September don't add up to recovery yet. But despite the threat of recessionary aftershocks which some predict will hit the retail industry in the next year, many retailers are finding opportunities for expansion in the rubble of the recession's initial quake.

The most recent major additions to the retail store closings list were more sobering than surprising. In any other year, Blockbuster's announcement of 960 store closings and 10,000 retail jobs cuts would have been big news. But after a year's worth of upstaging, Blockbuster's huge jump up the store closing list was almost uneventful.

The liquidation sales of the $116 million of inventory that began at 104 Finlay jewelry stores over the weekend were also somewhat uneventful, except to those who were hunting for semi-precious bargains and those who will soon be hunting for new retail jobs. After watching the dissolution of Fortunoff, Whitehall, Robbins Bros., and Ultra, one more exit of one more jewelry store chain is barely newsworthy.

But the total of 1,131 additional store closings that were added to the 2009 tally in the past couple of weeks is nothing to yawn about. And these sobering retail figures are definitely a stark contrast to the state-of-the-economy picture that was painted by Ben Bernanke's "recession is over" speech this month.

There are still some U.S. retail chains that have not adjusted to the new normal of American consumerism. It seems as if they have been biding their time, hoping that the newfound American frugality is a quickly passing fad rather than a permanent shift in values. The resistance of these chains may prove to have been futile, however.

There are two different groups of experts who agree with that position and are predicting that... read more...

This week Federal Reserve Chairman Ben Bernanke declared to the world that the U.S. recession was “very likely over.”

This reminds me of a certain day in May, 2003, when a certain U.S. president stood on the deck of a certain aircraft carrier and declared that a certain “military action” was over. That was 76 months, $800 billion, and 4,340 U.S. casualties ago. Which just goes to show you, that just because a person in a position of authority makes a declaration, doesn’t mean it’s true.

Now that the economy-in-chief has declared that the recession is over, he better make sure that the memo about that declaration gets better distribution than Bush’s victory proclamation did. Apparently Bush’s “war-over” memo didn’t reach those with the guns and the suicide bombs, so the fighting didn’t stop. So, Bernanke better make sure that his memo gets out, otherwise people might continue to live as if the economy is bad.

For instance, as soon as the 15 million people without jobs find out that the recession is “very likely” over, they may “very likely” stop worrying so much about the fact that they have no income.

As soon as the Bernanke memo about the recession being over gets distributed to the people who do have jobs, the 9 million people who are underemployed “very likely” will feel renewed optimism that they will be able to secure a new job that will better utilize their high-priced education and help them make their burdensomely large student loan payments. Hopefully the 7 million job positions that no longer exist won’t dampen the newfound enthusiasm of those underemployed job-hunters. “Very likely” there are not 7 million open hiring requisitions waiting to refill those previously eliminated positions, no matter how positive things look on the Federal Reserve spreadsheet.

Bernanke also needs to make sure to send his “recession over” memo to the home addresses of... read more...

The U.S. retail industry numbers in the first two weeks of September haven’t given us many major surprises, as store closings slow down, store openings increase, and Chapter 11 filings continue. The good news is that from now on we’ll be comparing this year’s same store sales numbers with last years economic crash numbers. The improvements will only be relative, but there is still psychic value in positive numbers, even if they are mostly an illusion.

U.S. Stores Are Still Closings in 2009

The 2009 store closings list grew by 360 stores in the first two weeks of September. This didn’t happen as a result of any major announcements, but because cumulative store closing numbers are being revealed when major retail chains make their quarterly reports public.

Payless Shoes contributed 102 U.S. stores to the 2009 store closings total. It’s curious that the discount shoe chain hasn’t found a stronger foothold in the recession, but you know how women are about their shoes. Some would choose pretentious footwear over food, if their budget didn’t allow for both. So, purchasing disposable vinyl creations from the Payless shelves may be viewed as more of a death plunge than a trade-down for diehard shoe shoppers.

Perhaps that’s what Payless had in mind when it struck a deal with Project Runway’s Christian Siriano to design a collection of “fierce” footwear. The Siriano for Payless Fall collection got a lot of buzz last week when it was debuted at New York’s Fashion Week. It’s a newsworthy moment when top models strut down the runway of a world famous fashion event wearing a $45 pair of skyscraper heels. Payless was smart to make a place for itself on the Siriano runway, and grab the press attention that came with their unlikely appearance there.

Hopefully the company will cash in big on Siriano’s celebrity and the “fierceness” of his designs, no matter how ergonomically incorrect they seem to be. (Comfort has never been all that important to those with a footwear fetish anyway.) Making a well-known designer affordable and accessible to the masses may be just the strategy that will give shoe snobs permission to walk through the Payless doors.

While Payless was busy partnering with a TV reality star, Claire’s was busy creating a Hollywood partnership that they hope will bring them fame. Borrowing from the Hot Topic business model, Claire’s is the official retail outlet for accessories inspired by the movie “Fame,” which will be released at the end of this month. The film is a remake of an 80’s classic, and Claire’s is hoping that audiences will become inspired to dress themselves in leg warmers, sweat bands and Fame logo rhinestone necklaces. Probably Claire’s won’t have much competition for these types of accessories.

I think there will need to be a couple of vampires in Fame’s New York City High School for the Performing Arts to motivate teens to journey back to 80s fashions. But, then again, I suffered through the shoulder pads and big hair era once already, so I might be negatively prejudiced by history.

Retail Chapter 11 Filings Reflect Changes In American Lifestyles

Retail Chapter 11 dramas continue for the retail industry in response to major shifts in how Americans are living. One of the latest examples of that is the Chapter 11 filing by Samsonite Stores in September.

Worldwide, airlines lost more than $6 billion in the first half of the year. The ripple effect of the decrease in airline travel is a corresponding decrease in the demand for Samsonite Black Label luggage designed by Alexander McQueen, among other travel-related stuff.

The good news for travel suppliers of all kinds is that summer tourism numbers were higher than expected and all major American airlines will probably make it through the end of the year without having to file their own bankruptcy papers. If the airlines can just lose and damage enough luggage, Samsonite can get back on track again too and emerge from Chapter 11 before the end of the year, as is their plan.

U.S. Store Openings Through 2010 Show Up In Retail Employment Numbers

Barring any unexpected global economic crises, the pace of U.S. retail store openings will be accelerated for the rest of the calendar year, and 2010 retail expansion should outpace retraction for most major U.S. chains. This retail expansion trend can be seen in retail employment numbers.

According to software maker Kronos Inc., three employees were hired for every 100 applications that were received by retail employers in July. That hire rate is about 9% higher than it was in January. This may not seem like a huge improvement, but considering that unemployment rose to a 26-year high in August, any positive number is extremely positive.

The retail hiring increase measured by Kronos was specifically frontline retail labor. This seems to indicate an expected increase in customer activity because if there is no store traffic, there is no need for frontline retail employees to handle it.

One retail chain that’s hiring employees to take care of its customer traffic is rue21, the low cost specialty clothes store for tweens and teens. In the first half of its fiscal year, rue21 saw a 4.1% increase in same store sales, and a 33.3% increase in sales. The chain has already added 100 stores to the 2010 store opening list, and plans to open more than 500 stores over the next five years.

Rue21 also filed its prospectus with the SEC last week, and hopes to raise $125 million in an IPO in the not too distant future. If the chain moves through the process quickly, it can beat out Vitamin Shoppe and Dollar General, which are also busy filing IPO paperwork. Wall Street has not seen a retail IPO since October, 2007, so undoubtedly the retail chain that captures the first launch will get the most attention from the press.

August Same Store Sales Probably Mark the End of Declines

The last time the U.S. retail industry saw an overall increase in same store sales was August, 2008. The streak wasn’t broken this August when, overall, year-over-year retail sales fell 2.9%. A look at the complete list of August, 2009 same store sales numbers shows that there were still twice as many declines as there were increases.

The good news for those who place way too much significance on same store sales figures is that from now on we’ll be comparing present results to last year’s scary results. This time last year Lehman Brothers tanked, people freaked, wallets were hermetically sealed, and the retail freefall began in earnest. September, 2009 same store sales numbers will be compared to that auspicious month in U.S. economic history. It’s logical to assume that the comparisons will have to look better from this point forward.

Over the next six months as the minuses and pluses on the monthly same store sales chart start to shift, many will mistakenly view that as proof that the retail industry is improving. The truth of the matter will be that the industry has found a new normal at last year’s crash-and-burn levels. That’s not exactly good, but for those retailers who finally pull themselves out of negative numbers, at least things will seem less worse.

The funny thing is that much of recession is a state of mind, particularly in an economy that is dependent on consumerism. So anything that can make consumers believe that the worst is over is likely to motivate behaviors that will create the reality that the worst is over. It’s the positive side of the negative conundrum that U.S. citizens have been living in.

With that in mind, perhaps the recession would end sooner if we would all stop talking about it so much. We’re probably all ready for a change of subject anyway, aren’t we?

Mike Jeffries is either one of the most brilliant retail leaders of our time or one of the most deluded. It depends on who you talk to – Jeffries, or anybody else. In August, for the 17th month in a row, Abercrombie & Fitch posted a monthly same store sales loss. For the 14th month in a row that loss was in the double digits. For the (estimated) 6,739th time Jeffries has defended the value of the Abercrombie brand by reminding us all that it is “aspirational.”

When announcing recently that the company will finally budge off its no-discounts stance, it seemed clear that Jeffries was not making the move willingly or wholeheartedly. After finally admitting that cost cuts were necessary to drive traffic back into the stores, Jeffries had to add, “The driving force behind our [higher] pricing has been fashion, quality and the aspirational nature of customers.”

We get it. You think you’ve been protecting the enormous value of your superior aspirational brand.

Instead of tellng us that over and over again, I wish Jeffries would answer one question. Where exactly is the value of the Abercrombie & Fitch brand hiding?

Should we look for the value of the Abercrombie brand in its sales figures? The company’s August, 2009 net sales were $313.9 million. That figure lands somewhere between its August, 2005 net sales of $287.4 million and its August, 2006 sales of $351.3 million. But it took the company nearly 250 more stores this year just to generate those greatly digressed sales numbers. If the value of the brand is reflected in its sales, then Abercrombie is giving new meaning to the "rollback" brand identity.

Should we look for the value of the Abercrombie brand in its stock? The company’s stock prices this year have been some of the lowest of the decade, most closely mirroring the value that stockholders thought the company had back in 2000. If the value of the Abercrombie brand is in its shares, then it may need to go back to the 20th century to reclaim it.

Should we look for the value of the Abercrombie brand in its reputation? The company has been boycotted by Focus on the Family, Concerned Women for America, Women and Girls Foundation, National Coalition for the Protection of Children & Families, Asian-Americans, high school students, college students, parents, and more internet groups than could be listed in one blog.

Abercrombie & Fitch has also been sued for racial discrimination, harassment, and reportedly running sweat shops. It has angered and offended African-Americans, Latinos, Asians, Muslims, Christians, gymnasts, people with disabilities, West Virginians, an Ohio children’s hospital, and even its own shareholders.

The brand is closely associated with sexual exploitation, racial discrimination, offensive t-shirts, shirtless store greeters, soft-porn catalogues, high prices, and low value. It is sometimes referred to as Abercostly & Fitch, and Abercrombie & Glitch.

The Abercrombie & Fitch brand most definitely has a reputation. It’s generally not considered to be a positive reputation, but surprisingly, there may be brand value in its aggressively antagonistic image. Its callous condescending cool may actually match the values of its core customers. Bullies from the upper social strata who enjoy domination by intimidation come to mind. Even “mean girls” (and guys) have to wear clothes. And they’re certainly not going to buy them from Target.

Most experts agree that the value of a brand is intangible, measured primarily in how it makes customers feel when they associate themselves with it. If this is true, then we can be fairly certain where the value of the Abercrombie & Fitch brand can definitely be found – in the mind of Mike Jeffries.

The 65 year-old bronzed, buff, and bleached CEO has never made it a secret that he wants to cater exclusively to the cool clique in every high school. Jeffries, then, because of his rank in the organization, gets to be the King of Cool.

So, when Jeffries stubbornly stuck to his we’re-too-cool-for-discounts policy, was he staunchly protecting the status of the Abercrombie brand, or his own? Is it really that Jeffries is so afraid that people won’t be excited about the brand any more, or that people won’t be excited about him?

Jeffries might have been too busy counting his $72 million CEO compensation package last year to notice that nobody’s particularly excited about either him or his brand these days. Americans aren’t doing all that much aspiring, sex doesn’t always sell, and conspicuous consumption isn’t cool right now. In case you hadn’t noticed.

So after spending a critical year stubbornly trying to prove that his brand was so superior to the rest of the U.S. retail industry that it wouldn’t be subject to anything as mundane as global recession, Jeffries has become one of the plebian discounters. Welcome to the lame table in the cafeteria.

Abercrombie can return to protecting the fabricated value of its aspirational brand at any time it chooses, as long as it is willing to accept 2000 stock prices, 2005 sales figures, and 30% fewer subjects in their kingdom of exclusivity. Apparently that’s the going price for cool these days.

Much like the teen customers who were abandoned in the past year, though, Jeffries may find that even though he’s willing to pay the price that will keep him feeling superior, he can’t actually afford it any more.

Jeffries said in an interview in 2006, “Are we exclusionary? Absolutely. Those companies that are in trouble are trying to target everybody: Young, old, fat, skinny. But then you become totally vanilla. You don’t alienate anybody, but you don’t excite anybody either.”

It’s easy to be cocky when you’re coming off a good year. But now that Abercrombie is one of “those companies that are in trouble,” there’s one more question that I wish Mike Jeffries would answer.

How do you like the taste of vanilla?