RETAIL UPDATE
By Danielle Douglas
FACED WITH RECORD HIGH FUEL PRICES, RISING
food costs and a softening job market, consumers are pulling
back on discretionary spending, resulting in weakened retail
sales across the board.
Based on its tally of 37 retail chains, the International Council
of Shopping Centers recorded a 0.5% drop in sales on a year-over-year comparable-store basis for March, the most recent
data available. Apparel-specialty chain sales fell 11.2% over the
year, department store sales were off by 8.2% with the luxury
segment down 5.3% and discount-store receipts declined by
0.3%, says the New York City-based association. However, grocers and other necessity retailers are breaking even, if not seeing
a profit. Wholesale clubs and drugstores experienced year-over-year sales growth of 5.1% and 4%, respectively. Some fared even
better; Costco, for instance, posted an 11% gain.
Although ICSC research anticipates that April sales volume
will increase between 2% and 2.5%, consumer concerns over
the faltering economy will result in continued softness in the
retail sector. Poor sales coupled with tightening credit markets
are forcing a growing list of retailers to scale back on expansion
plans, close stores and, in some cases, file for bankruptcy protection. Retail giants such as Home Depot and JCPenney have
announced reductions or delays in new openings this year, and
Office Depot has scaled back its plans to launch 150 new locations to 75. ICSC projects that the number of store closings for
the year could reach 5,770, the highest figure since 2004. Both
Ann Taylor and Zales have announced they would be shutting
down more than 100 locations each. Meanwhile, those companies in dire straits are seeking insolvency. Earlier this month
home-goods retailer Linens ‘n Things filed for Chapter 11
