Mrs. Big Picture's Anecdotal Tales of Holiday Retail
When it comes to most things, I pay very close attention to what Mrs. Big Picture says. She is, after all, much smarter than me, with gobs more common sense and people smarts than I could ever hope to have. (I'm what people derisively call "book smart," which is a polite way to say that I am a social idiot). The missus also has a very good antenna about all sorts of things.
She never asks me to go shopping, cause she knows I hate malls and crowds. Instead, she says "Let's go do some economic research." Clever girl.
Anyway, when she relates anecdotes with economic overtones, I pay close attention. This is such a story.
A broken nail led to a visit to the manicurist. The shop was relatively empty, and the gals got to talkin'. At the salon, Mrs. BP asks the salon owner how business is. Michelle responds "Very quiet." The shop has been slow enough that Michelle gets to go Christmas shopping during her lunch. Store traffic and crowds, she points out, are surprisingly sparse, given its less than 2 weeks to the 25th. And everything is on sale, with prices slashed.
One of the other ladies pipes in: She runs the catering arm of a local food store (Bernards) -- and business is way off. Bernards is a terrific but very expensive specialty food shop -- picture a small but higher end version of Whole Foods.
A little context: we live on the North Shore of Long Island, in a nice, affluent little town, surrounded by even nicer, more affluent towns. We're adjacent to Old Brookville (2 acre zoning, Median house value in 2000 was $972,100!), Locust Valley (where Sabrina was filmed) Mill Neck (where the $40 million home of disgraced Global Crossing exec is found). This background is to show that this isn't a tale of middle class woes.
The story gets me thinking -- this is so consistent with what we have heard from from the major retailers, but not what the Commerce Dept. claims -- so I start asking around:
My train commute in is mostly Wall Streeters, Lawyers, Advertising, Bankers. I relate this story to one of the women is regularly sit with. Her answer? Shoes.
"See these pumps with the baby jane straps [like I have a clue]? They are Tahari. Fairly expensive. Got 'em on sale this weekend at Lord & Taylor. 40% off, plus they mailed me a 20% off coupon. Usually about $120-40 for them. I paid $46 bucks."
I speak with my friend, who owns a very high end Audio Video store on Park Avenue. The equipment is gorgeous, and if you ever want a pair of $60,000 speakers, this is the place.
I ask: How's biz?
"Way way off from last year. We typically see abotu $10-15k in walk in business, plus all the installs we do. Some of those are $100k plus jobs [I'm thinking -- 100k? Nice stereo!]. This year, we are seeing $3k a day walk in business. There ar eoccassional spikes, but its nothing remotely like last year."
I ask: What about all the flat panel displays on sale?
"Not our clientele. We only carry super premium -- Pioneer Elite [which is the only tv that has ever made me weep, its so gorgeous] and Fujitsu; Our customers are not buying the $999 Panasonic to go with their $30k in Krell Audio and $20k in Kef speakers [hmmm, drool].
He blames -- wait for it -- the housing slow down. He was doing so many installs into new or renovated condos, Hampton homes and Long Island / Westchester /CT / NJ residences, he could barely keep up. He was booked months in advance. Today? "We can do an install in 2 weeks."
~~~
All the usual caeats about anecdotal tales apply: Perhaps its regional, or this is a non-random sample, biased, skewing one way or another. But these experiences, combined with what we have heard from Wal-Mart, Best Buy, Circuit City, and the truckers, etc., all add up to a Holiday shopping season that may be less than robust.
And, there are only 5 shopping days left until Xmas . . .
Wednesday, December 20, 2006 | 08:30 AM | Permalink
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>>>But these experiences, combined with what we have heard from Wal-Mart, Best Buy, Circuit City, and the truckers, etc., all add up to a Holiday shopping season that may be less than robust.
Fed Ex just had a weak report as well
Posted by: anon | Dec 20, 2006 8:46:24 AM
Good reporting, BR. Hopefully your readers can post some more insight...
PS I thought you had ganered some knowledge of women's shoes from your previous posting...
Posted by: Chief Tomahawk | Dec 20, 2006 9:01:25 AM
Historically the difference between big and small recessions was Xmas. From WW II to 1980 all the big recession included a poor xmas and small recessions did not include xmas.
Recessions occur when the business community makes a mistake -- like planning on a Xmas season that is bigger then what is actually realized leaving them with unwanted inventories.
Unwanted inventories only occur when someone makes a mistake.
Posted by: spencer | Dec 20, 2006 9:01:49 AM
Jim Rogers is also calling for a recession this year. I know a lot of people dislike Roubini but its pretty hard to discredit Rogers. He points out that cutting prices is a sign of economic weakness. It appears that the Fed is trying to cure the 70's style problems (war, rising commodities, inflation) with the same 70's style fix (more and more liquidity). Meanwhile they try to hide the problem by doctoring the data and propping up the markets. Will they avoid the 70's outcome (stagflation)? Let's just say I have my doubts as to whether it will work.
Posted by: Gary | Dec 20, 2006 9:08:34 AM
I was in Water Tower Place in Chicago yesterday and was struck by the same experience. Some stores were completely empty. In no store we entered was there a line to checkout.
The only store that had a substantial line?
Tiffany, on the second floor (the cheap stuff) had a line for a salesperson that was 20 people long.
Posted by: Mike | Dec 20, 2006 9:25:34 AM
I see large crowds in Western PA. I don't even drive the main rode home anymore b/c the traffic is so bad due to the shoppers.
However, the sales this year are absolutely amazing....even moreso than usual.
Got an 30GB ipod from BBY, which is never on sale, but they have a promotion this week where you get a $20 gift card.
Went to VS and everything was slashed.
Went to Bath and Body Works and saved 30%.
Went to Fashion Bug and everything in the store was marked down twice (the sales ladies were commenting on the fact that EVERYTHING in the store had been marked down at least once....apparently corporate was visiting their store today and they were under strict orders to have everything marked down).
I mentioned to my wife that I saved, on average, 30% off of everything I bought this year (except the ipod), and that when I went to check out, the prices were actually marked down again at the register. She said that she noticed the same thing..."hidden" markdowns.
Crazy.
P.S.: I am by no means an old fart, but what's up with all the kiddies at VS?
Posted by: LAWMAN | Dec 20, 2006 9:32:15 AM
Fiday night:Mall of America-overflow parking lots mostly empty, no police directing traffic, very unlike last year. Monday night:Another regional mall-empty parking in main lots even though new addition to mall occupied existing lots, very unlike last year. Smaller mall-parking within 200 feet of door, very unlike last year. Walmart-lot 1/3 full, piles of toys in the aisles, no lines at checkout, very unlike last year.
Posted by: Neal | Dec 20, 2006 9:35:41 AM
Just remember that Rogers timing is often off and he is often early, but never wrong. Just ask him. LOL.
Posted by: bushsux | Dec 20, 2006 9:38:26 AM
@LAWMAN
After speaking with my own retail expert(the girlfriend), I think the kiddies are being pulled in due to the relationship of VS and the Limited stores. Plus she saids that VS has expanded there product lines to include a broader mix to target a broader age group of shoppers.
Posted by: KP | Dec 20, 2006 9:43:58 AM
Victoria's Secret also just had their big TV show -- which is essentially a one hour commercial featuring lingerie models . . .
Posted by: Barry Ritholtz | Dec 20, 2006 10:00:58 AM
A lot of the retail and home refurnishing activity over the past 3-4 years has borrowed a ton of demand from the future, IMO.
We toured about 40 open homes this fall in our area. We are renting and will likely continue to do so, but thought we'd see what you get for your money (answer: not much.)
What was striking: nearly every single home had recently been outfitting with upgraded appliances, bathrooms, kitchen counters, etc. Some of these were older homes that hadn't seen a remodel in decades.
Given the turnover in properties in the past five years, wouldn't surprise me if at least 10 years (or more) of demand for these home improvements have been borrowed from the future. I know many folks who have sold their homes since 2003 and who put in fancy new kitchens and bathrooms--expenditures they would never have considered if they weren't selling their homes.
I don't expect demand will fall to zero. There will always be some new business. But to many retailers who focus on this trade, it may FEEL like business has firm support at zero over the next few years.
In particular, I wouldn't want to be a granite countertop salesman right now. Is there a home left in America without them? Certainly not in my neck of the woods. They last a pretty long time, I hear.
Posted by: angryinch | Dec 20, 2006 10:20:28 AM
Lots of sales here in middle America. I always shop for the wife around mid-December and normally I have a coupon or two, but this year everything was marked down in addition to the coupon 30-40%. JJill was dead with everything on sale, AT was moderately busy, ATLoft was by far the busiest and was offering buy one item, get second 50% off. Funny, there were no signs posted indicating the 50% off sale, the sales clerk was walking around telling everyone about it as if it was unplanned.
Posted by: JB | Dec 20, 2006 10:23:53 AM
In an earlier post, someone commented that online retailers are rocking and tried to insinuate that online is the reason for the decline of brick-n-mortar. If true, shouldn't the transports be doing better?
Posted by: Aaron | Dec 20, 2006 10:25:27 AM
President says we should do more shopping, hmmm.
Posted by: rob | Dec 20, 2006 10:30:19 AM
Yesterday's NYT had an A section coupon for Borders: 40% dvd box sets;
Today's WSJ: Hefty Discounting Of Flat-Panel TVs Pinches Retailers
There is definitely action, but its very discount driven -- and its certainly not the 19% gains we heard earlier in the year from the National Retail Federation
Posted by: Barry Ritholtz | Dec 20, 2006 10:32:14 AM
I've heard the Boca Mall is NUTZ. No parking, and slamming.
Posted by: Fred | Dec 20, 2006 10:37:11 AM
"She never asks me to go shopping, cause she knows I hate malls and crowds. Instead, she says "Let's go do some economic research." Clever girl."
"See these pumps with the baby jane straps [like I have a clue]? They are Tahari. Fairly expensive. Got 'em on sale this weekend at Lord & Taylor. 40% off, plus they mailed me a 20% off coupon. Usually about $120-40 for them. I paid $46 bucks."
"[like I have a clue]?"
Really... Barry? As we recall you seemed to be quite the experrt on these matters... Perhaps you only specialize in ladies boots and then I must agree with you Bloomies on Lex is kinda special....
As it relates to retail sales, we're seeing the same thing down here in Palm Beach.... I was on Worth Ave. yesterday afternoon and you could have heard a pin drop in the street.
Econolicious
Posted by: ECONOMISTA NON GRATA | Dec 20, 2006 10:50:51 AM
Aaron,
Didnt really insinuate anything, just wanted to double check if there is something missing in the big picture of retail. I dont understand the numbers myself.
Obviously FedEx is missing some business this year. But they only ship half the parcels as UPS(9.8Mill to 21Mill) and there is still USPS.
Maybe somebody can shed a light on how much business online orders are taking away from brick n mortar retailers?
WW
Posted by: WW | Dec 20, 2006 10:56:40 AM
Looks like an intreiguing mix:
WSJ: Holiday Lights: Retail’s Bright Stars, Dim Bulbs
With six shopping days until Christmas, Thomson Financial says that, with the exception of maybe Wal-Mart (and we would add, the Gap) a lot of retailers are on track to “smash last year’s December performance.”
Drug stores and discounters (ex-Wal-Mart) look set to shine bright, while the specialty sector may be the string’s dim bulb. Thomson expects drugstore same-store sales to climb 7.9% this month, with Walgreen on top at 10%. Thomson also called out J.C. Penney, for its success in introducing the Sephora brand into stores and reaching the teen market.
Other retailers Thomson cited for their star potential are: Costco, Target, American Eagle, Bebe, Limited, Federated and Nordstrom. At the bottom of Santa’s same-store sack, according to Thomson’s projections, are: Sharper Image, Pacific Sunwear, Hot Topic, Pier One, Gap and Wal-Mart.
Most major retailers are expected to report December sales on Jan. 4.
Posted by: Barry Ritholtz | Dec 20, 2006 11:02:20 AM
I’ve been doing the same survey in Palm Beach County, with mixed results: The jeweler in the flea market says: “business is good. The empty stores in the surrounding mall is normal.” The salesman in the Home Depot Designer Store says: “still getting plenty of $100k kitchen upgrade orders. No recession here.” The Crafts and ‘slock’ store in a neighborhood mall is closing. I haven’t asked them how is business, but where I thought there was weakness and bothered to ask, the people involved have told me not so.
Posted by: Robert ben Kline | Dec 20, 2006 11:09:00 AM
Now this is the kind of comments I love about this Blog. Meaningful data and reasonable discussion.
Sorry I can't add anything. My holidays started last friday and so my shopping was all done a couple of weeks ago.
I can hear the January debates now. Gift cards! The weather! Retailers blew it with early discounts! January will save us!
Posted by: advsys | Dec 20, 2006 11:32:50 AM
I've been watching the CNBC ticker the last couple of weeks and it looks to me like everyone's buying stocks, not stuff. It's an information economy. )
Posted by: VennData | Dec 20, 2006 11:36:29 AM
The only place I went to that did not have big sales and discounts was American Eagle. Still, I only was behind one person to check out. Kohles had big discounts and sales, and a line. But I went on senior citizen day which is always busy. (I don't know how they can have a profit with 50% off plus another 15% for seniors.) Other places were not particularly busy and there were no lines.
Posted by: JWC | Dec 20, 2006 11:45:42 AM
I was at Tysons Corner Mall in VA last night and Pentagon City Mall this past weekend. I would say 60-70% of the stores had sales going on. Of course, 40% off can always be marked against a higher base price.
What I found most interesting was the buy $50 in merchandise, get a $10 gift certificate type deals. My guess are retailers are trying to front load their sales expecting most of the gift cards to be redeemed after the new year, maybe to mop up excess inventory. Also the LLBean in Tysons Corner was open 24hr a day through the 23rd. That doesn't sound like they are working from a position of strength. What threw me was that at least four stores were looking for sales help. I haven't quite figured out what that might mean.
Posted by: ksh | Dec 20, 2006 11:56:39 AM
i spend about the same every christmas. i went shopping 3 days this week and was not overly impressed with the store traffic. granted, i went during the first 1-2hrs the stores were open on saturday and sunday but it still seemed light for a wknd. some stores relatively busy (but not "mobbed") while others were DEAD.
everything i bought was on sale.
Posted by: emd | Dec 20, 2006 12:07:06 PM
