Consumers will continue to be more focused on discounts and essentials, putting discount and warehouse stores in a better position than luxury and upscale apparel chains this year. That's the message conveyed to more than 700 people attending an International Council of Shopping Centers (ICSC) Idea Exchange, held recently in Florida.
"Clearly, people today are buying what they need, not what they want," said James Maurin, chairman of Stirling Properties, based in Covington, LA, and a former ICSC chairman. He cited numerous figures computed by ICSC researchers showing that discounters and pharmacies are faring better than most other retailer categories. ICSC issued an earlier forecast predicting that retail sales may pick up in the latter half of 2009. Total sales are expected to decline 5.3 percent in the first half, then rise 2.7 percent in the second half, balancing out to a full year decline of 1.3 percent.
Even though shoppers are likely to focus on necessities this year, Maurin noted that they will move only on markdowns of 30 to 50 percent, similar to bargain hunters on vacation. He compared the current retail climate to recessions in the waning years of the 20th century, with one notable exception. This time around, the market is not suffering from the overbuilding of retail space that was seen in the early 1990s. The retail sector's annual growth rate is now between two and three percent, an amount that can be easily absorbed in years to come, he said.
Retail and housing have been the focal points of the recession in Florida, according to Hank Fishkind, a noted Orlando economist and the event's keynote speaker. He pointed out that the entire state is, "over-stored," and needs to regain equilibrium, adding that Florida is still growing in population, but is now being outpaced by Georgia and North Carolina. Fishkind also said he foresees an upturn in the latter months of 2010.
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