More stores expected to close in ‘09

Circuit City, KB Toys, Mervyn’s, Steve and Barry’s, Whitehall Jewelers, Linens ‘n Things, Showcase Home Entertainment. How many more will join the growing list of bankrupt and shuttered chain stores before the end of the economic crisis?

The International Council of Shopping Centers predicted in December that, by the end of 2008, 148,000 stores would close nationally. The New York-based retail trade group expects an additional 73,000 store closings in the first half of 2009.

Retailers face three main challenges in the tough economy: Increasing shopper frugality, tighter lending standards from banks and tougher bankruptcy laws. Experts say that some stores that might have emerged from bankruptcy a few years ago will close permanently under regulations that make it harder for stores in financial trouble to get loans.

Also, some retailers – including Sears Holdings Corp., Talbots Inc. and Ann Taylor Stores Corp. – have said they may close a number of underperforming stores in the new year. Other chains have said they will postpone expansion until the economy improves.

But retail is “not all doom and gloom,” said leasing expert Kim Choukalas, vice president for leasing at Westcor, the Valley’s biggest shopping center company.

Experts – including Choukalas; marketing Professor Stephen Hoch at the University of Pennsylvania’s Wharton School; and retail analyst Mary Brett Whitfield, senior vice president at TNS Retail Forward in Columbus, Ohio – have identified keys to retailing success in 2009.

“It’s an ever-evolving world out there,” Choukalas said.

Here are some trends to watch:

• Marketing to teens and young adults. Stores such as Buckle, Forever 21 and Aeropostale are coveted by many shopping-center developers. Forever 21 is expected to fill a number of vacant Mervyn’s stores. And even J.C. Penney has jumped on the trend and says it is no longer your grandmother’s store – but your teen daughter’s.

• Luxury within limits. Coach’s success shows that shoppers still want quality in the down economy but are unwilling to go into deep debt for it. Handbags at Coach range in price from less than $100 for a canvas wristlet to $300-plus for a large leather bag.

• Family-friendly. PetSmart, BestBuy and GameStop don’t have much in common at first glance. But experts expect all of them to do well in the new year for one reason: They sell products that families can use while cocooning at home with kids – or pets.

• Deeper discounting. It’s no surprise at least one report shows Wal-Mart Stores Inc. made more money during the holidays than its competitors combined. Even the wealthy want deals on groceries, basic apparel and electronics these days. Look for competitors such as Target to try to beat some prices at Walmart Supercenters.

• Uniqueness and interactivity. Stores that can come up with new and different products and formats will be winners. Think Apple, a store that is more focused on educating and entertaining customers with its product than making instant sales. Or Sephora, which allows customers to experiment with cosmetics in the store, or take home free samples to try.

In bankruptcy or gone

Amid a deepening recession, a number of big-name brands filed for bankruptcy protection or went out of business in 2008. Here’s a list of some of the biggest:

Retailers

• Circuit City Stores Inc., the nation’s second-biggest electronics retailer, is closing more than 150 stores and laying off thousands of employees as it keeps operating and attempts to restructure under Chapter 11 bankruptcy protection.

• Mervyn’s LLC filed for Chapter 11 bankruptcy protection in July and began liquidation sales at its remaining stores to wind down its business.

• Linens ‘n Things filed for bankruptcy protection in May. It announced liquidation sales at its stores in October after failing to find a buyer that wanted to operate the firm.

• Steve and Barry’s filed for Chapter 11 bankruptcy protection in July, then later abandoned plans to keep stores open and said it would liquidate.

• KB Toys filed for bankruptcy protection two weeks before Christmas and has begun to liquidate its stores and plans to shutter operations. It is the second time KB Toys filed for bankruptcy protection; the first was in January 2004.

• The Bombay Co. declared bankruptcy in September 2007 and shuttered the last of its stores in January 2008.

• Sharper Image Corp. filed for bankruptcy protection in February and closed all its stores in the past year.

• Woolworths Group PLC in the United Kingdom failed to find a buyer in December and put its nearly century-old business into administration. It is closing its 800-store business in stages, set to end this month.

Sources :- The Arizona Republic

India feels the retail pinch

With shoppers deserting US retail stores, India is feeling the pinch. Leading American retailers, which outsource goods ranging from shirts to carpets from India, are in the process of reducing their orders.

“There is a 20 per cent decline in apparel orders for the spring-summer season as compared to the last year,” said Premal Udani, MD, Mumbai-based Kaytee Corporation. “Consumption is coming down in the US in a big way.”

Udani’s Kaytee Corporation, which exports to leading US retailers, is among the companies that had ramped up capacities in a big way in 2000 when the quotas on apparels were phased out. “Elimination of quotas was meant to boost our orders. But we do not see any large rise in orders,” said Udani.

Target, one of the leading retail chains in the US, reported a drop of 2.1 per cent in sales in August.

The closure and consequent filing of bankruptcy by some mid-size retail chains have worsened the problem. For instance, Steve & Barry’s, an apparel retail chain firm, has filed for bankruptcy under chapter 11 in July. The New York-based chain was started in 1985 and had 276 retail outlets.

The crisis is going to balloon with leading US retailers like Wal-Mart, Target and JC Penney forced to cut down their orders from India, according to experts.

“It is clear that there will be some slowdown and even Wal-Mart will not be immune to it,” said Rajan Hinduja, MD, Gokaldas Exports. “Though it is too early to give out a strong reaction, the possibility of Indian suppliers getting affected is not ruled out.”

Wal-Mart and JC Penney had set up huge outsourcing offices in India for large-scale outsourcing. Wal-Mart, according to estimates, imports close to $600 million worth of goods from India.

Source: Hindustan Times