Retailers, consumers and prices
American luxury retail has been, well, in shambles.
Since department store revenues began to plummet in September, luxury’s glossy image transformed to one that brings to mind strewn-about merchandise on a Saks Fifth Avenue floor.
Pricing structures have come under pressure as shoppers seek deep discounts, or worse, question price guidelines after aggressive reductions at the end of last year. In the spring, markdowns crept dangerously close to the start of the season. Clearly, discounts really are not what designers want their labels to be known for.
“For younger, newer designers, image is everything,” said fashion consulting firm Launch Collective’s Rob Spira, who recently co-curated the New York City Save Fashion pop-up shop to celebrate independent designers.
“Before, designers were coming to us for ideas to build funding,” Spira told Reuters at the Save Fashion store, which popular style Web site Refinery29 also co-curated. “Now they’re looking for creative ways to sustain in this kind of environment.”
Macy’s CEO Terry Lundgren professed his admiration for Target‘s advertising tactics at a consumer conference in New York.
Macy’s ran two back-to-back ad campaigns late last year, which included the “Believe” ads based on the famous New York Sun’s “Yes, Virginia, there is a Santa Claus” editorial.
Check out the not-so-chipper news in the retail world.
Restaurant chain Burger King reported lower profits and cut its full-year forecast due to the currency fluctuations, while cosmetics and perfume companies Estee Lauder and Elizabeth Arden rang up lower, albeit better-than-expected, profits and said they would cut jobs.
Indeed, retailers overall posted the second weakest monthly same-store sales performance since Thomson Reuters began tracking the data in 2000 as heavy job losses, weakness in the U.S. housing sector and the still-tight credit markets have many consumers closing their wallets.
The terrible U.S. retail sales racked up in December -- called a "horror show" by ING -- were all the more gruesome because of the sales on offer to customers in the run up to Christmas. Shops weren't exactly giving things away, but their generosity knew few bounds.
Consider the experience of one visitor to a heaving handbag department in a Maryland Macy's.
Customer: "I would like to buy this handbag please. Oh dear, it appears to be the only one that is not on sale."
Salesman: "So it is. Tell you what, sir, I'll give you 15 percent off anyway."
Check Out the drop in sales.
It was no surprise that sales were weak in December, though some retailers stood out Thursday for their worse-than-expected performance.
Wal-Mart, the world’s largest retailer, said sales at U.S. stores open at least a year rose just 1.7 percent, while analysts were expecting a 2.8 percent increase. Wal-Mart and other chains such as Macy’s cut guidance for the fourth quarter ending later this month.
Shares of Wal-Mart fell more than 9 percent on Thursday morning, dragging the Dow Jones industrial average into negative territory as well.
On Chicago’s State Street, I found these dinosaurs creeping up on a Christmas tree at the FAO Schwarz section inside Macy’s:
Moving on to an empty TV section in Sears:
At Sears, Christmas decorations were already 60 percent off:
And at Charlotte Russe, more discounts:
Macy’s is still finding ways to celebrate in what could be a dark winter for retail this year. Customers entering Macy’s flagship store in New York City’s Herald Square it opened today were met by the pounding beats of the Soul Tigers Marching Band, lots of red balloons and a barrel full of exploding ribbons.
CEO Terry Lundgren was there cutting a ribbon promising another 150 years for the department store, to tack onto its current 150th birthday. A gaggle of employees sang “Happy Birthday Macy’s!”, threw confetti and danced.
The Republican National Committee has spent more than $150,000 since late August to outfit Palin and her family in the fanciest of duds from department stores like Saks and Neiman Marcus, says politico.com.
Macy’s, which also runs the Bloomingdale’s chain, is the latest retailer to see consumers shy away from purchases of new fall clothes as they try to stay afloat in the economic downturn. Several clothing chains and department stores posted dismal September same-store sales earlier this week.