Retailers Face Bleak 2009

CBS Evening News: More Than 200,000 Stores Expected To Close; But Strong Companies Will Benefit

(CBS)  Preliminary reports show the number of shoppers who visited stores during Christmas week was down nearly five percent, and foot traffic down 16 percent. It's expected to be the first drop in holiday shopping in 40 years.

Christmas week shoppers did spend a bundle -- $8.4 billion the day after Christmas alone. But it wasn't enough to boost a season in debt, reports CBS News correspondent Michelle Miller. And the fallout for 2009 will be huge.

"It's almost like the auto industry and the airlines industry in the last cycle, where there are just too many companies chasing too few consumers," says retail analyst Burt Flickinger.

In what retail analysts call an overbuilt industry, more than 200,000 retail stores are expected to close next year. That's on top of the 160,000 that went out of business in 2008.

Most vulnerable: stores selling non-essentials like home furnishings, apparel and electronics.

"Just like shoppers have been on steroids in a 25-year shopping spree, the retailers were doing the same thing," Flickinger says.

Analysts say that market correction will breathe life into those left standing.

"The weakness of weaker players will benefit the strong players," says retail analyst Dana Telsey. "Even Bed, Bath and Beyond is benefiting from Linens and Things going away."

"Who will survive?" Miller asks.

"The strong companies will be those that have a strong brand that consumers recognize and those with a strong balance sheet," Telsey says. "The ability to have cash is key."

While November sales dropped for most retailers, discounters from Wal-Mart to Kohls posted sales gains. Other survivors: youth oriented stores like Hot Topic and American Apparel, which saw a six percent sales increase last month by knowing its customer.

"We're lucky in that our customer tends to have less economic liability," says Marsha Brady of American Apparel. "They don't own real estate. They're not likely to have a stock portfolio."

For the rest of us with more bills to pay, there's a bright side to the continuing retail shakeout. There will be fewer stores with fewer choices, but lower prices may be here to stay.

[mnguyen4]

I disagree with retail analyst Burt Flickinger remark that %u201Cthere are too many companies chasing too few consumers.%u201D The retail giants that were filing for bankruptcy or going out of business last year or maybe this year were founded because there were many affluent customers (middle-class workers) before. Mervyns or Circuit City stores existed to serve a large clientele that had money to spend.

However, nearly 2 decades ago, when politicians lifted US tariffs to allow massive imports flow into this country, American jobs along with the American Middle Class disappeared. What we have in 2008 and in 2009 is not the case of too many industries chasing few customers. The truth is we have too many retail companies chasing too few dollars in the hands of the consumers; even after Congress has pumped trillion dollars into the economy.
So where is the money going? It is going to the millionaire Wall Street CEO%u2019s and a few wealthy families.

[mytoosense]

There must be thousands of business owners out there who are second guessing their past support of the Republican party.

How did they ever believe that diminishing the earning power, thus the spending power, of the middle class in America would be good for business?

The orgy is over and the bill has arrived.

[jsutaguy]

You''ve really got to read this article by the Washington Post. http://tinyurl.com/6emukq

This top-rated piece of investigative reporting shows that Wall Street took BILLIONS out of our pockets by cornering the Oil markets in 2008, controlling 81 percent of all oil contracts in the world

http://tinyurl.com/6emukq

This story was buried by the other major media outlets. Cut and paste it and send to your friends. We have been sold out.

As the article points out, these same Wall Street firms plan to do the same thing in 2009 to the price of everything we eat or drink, using the cheap (zero percent interest) money they are getting from our treasury.

Why are we paying to keep these firms in business?

Why are our taxes being used to keep them operating?

They aren''t lending money to real businesses, they aren''t helping our economy, they simply aren''''t necessary for America...they are only used by the very richest parasites who are destroying our country and dictating its policies by buying out our government.

They''re throwing parties with our money: http://tinyurl.com/562moo

They''re paying for their fourth and fifth luxury home: http://tinyurl.com/5qf7cu

How much longer are we going to tolerate this?

[jsutaguy]

You''ve really got to read this article by the Washington Post. http://tinyurl.com/6emukq

This top-rated piece of investigative reporting shows that Wall Street took BILLIONS out of our pockets by cornering the Oil markets in 2008, controlling 81 percent of all oil contracts in the world

http://tinyurl.com/6emukq

This story was buried by the other major media outlets. Cut and paste it and send to your friends. We have been sold out.

As the article points out, these same Wall Street firms plan to do the same thing in 2009 to the price of everything we eat or drink, using the cheap (zero percent interest) money they are getting from our treasury.

Why are we paying to keep these firms in business?

Why are our taxes being used to keep them operating?

They aren''t lending money to real businesses, they aren''t helping our economy, they simply aren''''t necessary for America...they are only used by the very richest parasites who are destroying our country and dictating its policies by buying out our government.

They''re throwing parties with our money: http://tinyurl.com/562moo

They''re paying for their fourth and fifth luxury home: http://tinyurl.com/5qf7cu

How much longer are we going to tolerate this?

[whitemale08]

How can you have 16% less foot traffic but only 4% less visitors?

Did some of those visitors have 4 foots?