Over-Stored No More
December 8, 2008-- Home Textiles Today,
Last Thursday, retailers reported their monthly sales results for November. It was a good day to be Wal-Mart and a bad day to be just about anybody else.
What's become clear as the recession has deepened, is the extent to which the housing and interconnected easy credit bubbles shaped the shopping habits of aspirational, over-leveraged, domestic divas.
As HTT contributing editor Brent Felgner noted in his Black Friday blog: "Even Tiffany & Co., which in quarters past reassured us that the luxury market lives — that at least some of us could still afford to shop (so it couldn't be that bad) — reported U.S. Q3 comp-store declines of 14% … The declines were 'reflective of lower sales to lower market customers,' the company said."
Williams-Sonoma last week posted a net loss for the third quarter of $11 million vs. a profit of $27 million last year. Sales cratered 16%. Revenues fell across the company's nameplates, with Pottery Barn brands particularly hard hit.
Say what you like about the going-out-of-business sales environment. I don't think you can blame everything on Linens 'n Things. Williams-Sonoma execs, for the record, didn't.
Earlier in the week, Bed Bath & Beyond did. The company whacked third-quarter earnings expectations, citing LNT liquidation sales as well as the macroeconomic environment.
Where do we go from here? Clearly, there will be fewer stores around the country — not only from liquidations but also because many retailers have curtailed store opening plans for at least the next couple of years.
Let's hope they stick with that strategy when the economy starts showing signs of improvement. Let's hope when that happy day comes around Wall Street doesn't get caught up again in the notion that rapid store expansion equals healthy growth.
Let's hope some entrepreneurial independent retailers and small suppliers take advantage of the scorched earth to create new, differentiated concepts. The internet gives them a marketing reach no one could have imagined a dozen years ago as the country came out of the 1992 recession.
Truthfully, just about any day in any economic environment is a good day to be Wal-Mart. When everybody was flying high a few years ago, sure, a segment of Wal-Mart's grocery customers traded up elsewhere for general merchandise. They'll probably do so again once they can.
But a day when Wal-Mart is just about the only winner on the retail scene is not a good day for the industry.
Related Content By Author
Industry Related Content
Pimacott: Proof Positive