The year's longest sustained sales season encompassing Thanksgiving and Christmas is just on the horizon, but early indicators suggest little holiday cheer for retailers as American consumers seem set to remain on the sidelines and retailers are forced to shut stores.
Adrienne Tennant, an analyst with Janney Capital Markets in Washington, D.C., says retailers observed this past weekend in the firm's retail survey were "offering 'additional percentages off' already reduced items in order to move through end-of-season inventories." The Janney analyst says apparel retailers are already deeply discounting inventory: "At the Gap, the company was running an extra 50% off women's markdowns, at Ann Taylor already reduced styles were an extra 50% off, and at Talbots sale items were an extra 30% off."
The Zero Hedge blog, citing Bloomberg Brief, reports that "mall vacancies are at the highest level in measured history" rising to 9.4% at regional and super-regional malls. Vacancies hovered at around 5% in the early 2000s and began to soar as the recession took its toll in 2008, but never recovered as the recession ended. The report blames Internet shopping for the bankruptcies of Border's, Circuit City and Linens and Things and warns the trend portends a further blow to employment.
As if on cue, home improvement chain Lowe's announced Monday it would close 20 of its big-box stores and lay off nearly 2,000 workers. The retailer said consumers were limiting home renovation to projects costing less than $500. Meanwhile, the Gap has fallen into a financial tight spot and is shutting down 190 of its retail outlets, a 21% reduction in its stores. None of this augers well for retail space at malls, or for retail sales.
