Cautious Optimism Abounds
June 1, 2009,
Judging from the recent series of quarterly retail calls with analysts, life is no longer hideous. And that almost feels too good to be true.
A search of HTT's recent archives using the word "opportunity" turned up 18 instances of retailers or suppliers invoking the term to describe the current operating environment.
This view remains fairly cautious. "Better" does not equal "good." Commodities reign. Consumers, retailers concur, continue to shy from discretionary purchases — although I noticed a number of retailers pointing to dresses as a bright spot, a hint that there is a thirst for something bright and fashionable looking to be slaked.
There's something else I've heard from retailers with whom I've spoken in the past three months — and suppliers, this will not come as welcome news. To a man, they said there are too many of you for today's consolidated retail industry. So if you're thinking about making a deal, now would be the time. Is there anyone willing to bet we're going to get through the year without losing more doors?
In terms of independent specialty retailers, some suppliers have seen a handful of accounts go out of business. One with whom we spoke recently had not lost any, but said he had a couple on the brink.
Hospitality — to which many have turned in search of new accounts — is making its own slow crawl back to growth. According to a report in last month's issue of Hotels Magazine (owned by HTT parent company Reed Business Information), North America suffers from an oversupply of properties, prompting developers to turn to "projects with lower capital commitments in markets with low barriers to entry," such as the Midwest. Silver lining for those with international ambitions: hotel development in South America is clicking along nicely.
While the consensus holds that we're out of the "hideous" stage, it's also possible we could hit one more round of "hideous" before the slow recovery begins in earnest. I get the sense, however, that while executives are braced for that possibility, they're beginning to grow less fearful of it.
So even though we can't pop the champagne just yet, maybe we can start putting a few bottles on ice.