Retailers, consumers and prices
Reuters checked out some of the stores that Starbucks is closing in California’s Inland Empire – an area well known for being a leader in home foreclosures.
Some of the coffee shop closures made sense, some didn’t and some had us wondering just what Starbucks was thinking.
This yet-to-be closed cafe, on the left, is in an upscale mall near a eerily quiet housing development — a no-brainer.
Another that is set to be closed is located in a busy, movie theater-anchored shopping center near a university. When we drove by, the store appeared busy.
The National Bureau of Economic Research, a prestigious private institute that decides when the United States is in recession, says we’ve been in one since December last year.
The call from the NBER came as news to almost nobody in the United States, where unemployment is climbing, available credit is shrinking, consumer spending and confidence are lagging and home prices are falling off a cliff after a huge rise that enabled homeowners to use their property as a cash machine.
Check out the Whirlpool of woe.
Five thousand. That’s the number of jobs Whirlpool plans to cut by the end of next year as it faces falling sales in North America and a potential global recession.
Appliance makers have already been hammered by the U.S. housing collapse. Now the credit crunch is likely to keep demand down, the world’s largest appliance maker said.
“The global credit crisis has had a profound negative impact on what was already a weakening and very fragile global economy,” Whirlpool Chief Executive Jeff Fettig (pictured left) said in a statement.
Some of the job cuts had already been announced. Others were new. They all add to a slew of job cuts announced by corporate America in recent weeks.
That creates a spiral of people not being able to buy the goods the manufacturers make, which could cause manufacturers to cut more jobs as the economy keeps swirling down the drain.
Also in the basket:
Sam’s Club opening new store called Mas Club
Retailers slash Blu-ray player prices (WSJ)
In one of the more chilling consumer spending anecdotes thus far, a Wal-Mart executive told a lunch crowd in Los Angeles that more of its customers are waiting to have paychecks or government assistance checks in hand before they buy necessities like baby formula.
“We have started to see some very disturbing behavior,” said Eduardo Castro-Wright, president and chief executive of Wal-Mart’s U.S. operations.
Check out the latest peeks into consumer behavior.
You know how when there is a huge news event, people stay home to watch it unfold on TV and order pizza?
Well, apparently that doesn’t happen when the major news event is a meltdown in the U.S. financial system.
Domino’s reported a dip in quarterly profit on Tuesday, with U.S. sales down 6.1 percent at restaurants open at least a year.
The credit crunch has also made it harder for the company to open new restaurants, overhaul existing ones and turn over poor performing franchisees, CEO David Brandon said.
Less pizza being sold also means less need to wash it down with Pepsi. PepsiCo missed Wall Street earnings expectations, hurt by disappointing U.S. soft drink sales.
Pepsi trades in brand names, like Cheetos and Tropicana. But brand names are coming under fire from thrifty shoppers seeking private-label products.
Just ask Supervalu. The grocery chain operator also posted lower profit as consumers traded down to lower-cost store brands.
So, to paraphrase John Belushi’s Greek diner owner, “No Coke! No Pepsi! Sam’s Choice.”
Also in the basket:
Thriftiness on special in aisle 5 (N.Y. Times)
Credit crunch raises pressure on U.S. textile industry (WWD, subscription only)
Cadbury cuts more jobs as Q3 sales rise 6 pct
Barnes & Nobles expects to open 20 to 25 new stores in 2009 — down from 30 to 35 store openings this year.
It’s not that the company wants to open fewer stores, according to Barnes & Noble Chief Executive Joseph Lombardi.
While the bookseller is taking advantage of favorable deals with existing landlords, it said the U.S. housing crisis and credit crunch mean that developers are not able to finance as many new projects — leading to fewer opportunities for Barnes & Noble to open stores in new shopping centers.