Recession, If It Comes, May Re-Make Retail Landscape
Same-store sales for the holiday period rang in at 3% over last year, instead of 4% as expected, and chains across retail categories are putting on the brakes — cutting back on inventory, cancelling new store openings and preparing for leaner times. Making the missed forecast worse is the fact that much of this year’s increase in spending was attributable to inflation-boosted costs for necessities. “Apparel, jewelry and home-products chains reported same-store sales declines.” So, what would the deep retail recession that some analysts are predicting mean? Well, during the 1989 to 1991 recession, at least 50 major retailers sought bankruptcy protection, and weakened regional and national chains set the stage for the explosion of big-box and discount retailers. Even the mild recession of 2001 “…presaged the later consolidation of department-store chains.” While no one knows how deep or long the slowdown will be, it likely means some big changes for retail. The Wall Street Journal Subscription required. (Jan. 18, 2008)
Tags: recession, retail shake-out, store closings