NEW YORK — Little appears to slow down the American shopper.
This story first appeared in the February 13, 2003 issue of WWD. Subscribe Today.
The nation is on heightened “orange” alert; the government has warned to stock up on water, food, plastic sheeting and duct tape; Osama bin Laden seemingly has returned with threats against the U.S., and a war against Iraq grows increasingly likely. But malls across the nation report traffic remains relatively normal — and in some cases, very busy, thanks to upcoming Valentine’s Day and the annual President’s Day sales.
Taubman Centers’ director of communications Karen MacDonald said, “There appears to be no impact on traffic with the higher alert. We went into a higher level of alert around Sept. 11 and instituted a lot of different polices and procedures and have been operating at the same level ever since Sept. 11.”
She said that at Taubman’s Beverly Center in Los Angeles last weekend, car counts were above last year, and that about 15 of Taubman’s 30 centers experienced good traffic last weekend, partly because of gift buying for Valentine’s Day. The mall manager at Taubman’s Fair Oaks center in Fairfax, Va. indicated that last Saturday, he hadn’t seen the parking lots so full since Christmas.
West Coast malls reported a heightened security awareness in the days following the upgraded alert but said traffic has not been adversely affected by the terror warning. If anything, Valentine’s Day and shipments of spring merchandise to stores only encouraged more shopping over the weekend, they said.
South Coast Plaza in Costa Mesa, Calif., saw a record pre-Valentine’s Day weekend buoyed by sales of jewelry. Beverly Center in Los Angeles also reported a greater Valentine’s Day push this year versus last.
Several mall representatives preferred to keep security measures under wraps, but Galleria at Tyler in Riverside, Calif., has stepped up patrol on parking violators, especially cars illegally parked on curbs near mall entrances. Management at the Beverly Center in Los Angeles has security people closely watching deliveries at docks and is currently evaluating evacuation plans.
“Security has taken on a whole new meaning since 9/11 and that is not going to disappear,” said Laurel Crary, Beverly Center’s general manager. “It’s a way of life now.”
David Keating, manager of media and consumer relations for General Growth, the nation’s second-largest mall developer and operator, agreed, saying, “we are taking this orange alert very seriously and we have been operating under the same heightened sense of security since after 9/11.”
While acknowledging that people may be anxious, Keating added, “I think they feel comfortable continuing to come to our malls. We are taking this threat level very seriously. A lot of our corporate executives are in contact with the FBI and the Office of Homeland Security. They’re getting updates. We have taken a lot of security measures that we can’t talk about.”
Wal-Mart Stores, which generally operate in or near strip malls, also is seeing little negative impact from the latest security alert.
“We’re seeing normal buying patterns across food, hardlines and softlines,” said Wal-Mart spokesman Tom Williams, when asked about traffic patterns for the past week. He did say that some Wal-Mart stores reported increased sales of duct tape, but the reports were too scattered to conclude there’s been any big run on the item. The government has listed duct tape as a survival item, to shore up your windows, in case of a gas attack.
Of course, the concern remains: What happens if there is another terrorist attack or if America and its allies invade Iraq? Even Alan Greenspan, chairman of the Federal Reserve Board, on Tuesday blamed the sluggishness of the U.S. economy on continuing uncertainty over what will happen in the Middle East. In testimony he gave to Congress on Tuesday, Greenspan said geopolitical tensions create “formidable barriers to new investment and thus to a resumption of vigorous expansion of overall economic activity.”
If fighting breaks out, the nation will be glued to the television, watching the news unfold and will not be shopping. “There is a real challenge here because consumer confidence has been battered on a number of fronts,” observed John Staton, partner in Accenture’s North American retail industry group.
He cited the declining wealth effect from the sagging stock market, and recent January data suggesting consumers are starting to pay down more debt and save more. “That’s money that used to be in retailers’ coffers,” Staton said.
“It’s all really influencing the consumer psyche towards not spending,” Staton said, but he did mention that in terms of the terrorist alerts alone, “There might be some dampening of retail expenditures, but there are broader issues of the economy.”
Wendy Liebmann, president of WSL Strategic Retail retail and marketing consultants, said during Desert Storm people avoided browsing stores or mall visits and stuck to shopping for essentials, including pharmaceuticals and food, as well as comfort food, such as French fries and ice cream, to make their at-home experience watching CNN more palatable. However, the war ended up being “a momentary blip in shopping behavior,” Liebmann said, with shopping patterns returning to normal when the war ended.
During the two-month period right after 9/11, Leibmann’s group measured shopping behavior, and noticed that by the Christmas season, shopping had returned to normal patterns.
Currently, she said, with the nation going through an extended period of unease over the possibility of more terrorist attacks in the U.S., “people are holding their breath on [buying things]. They are waiting to exhale,” though she also believes the economy is a strong factor in purchasing reluctance.
But retail overall remains promotionally driven, with sale events continuing despite the influx of new spring merchandise.
Even then, business remains tough. Federated said little about last week’s retail performance in its weekly report Monday, except to reiterate that sales for the first quarter — February through April — are expected to be down 2 to 3 percent on a comp-store basis. Comps are seen falling 4 to 5 percent in February and 3 to 4 percent in March, although April should finish flat to up 1 percent, the company said. Its January comps retreated 1.2 percent on top of a 2.6 percent drop in December.
Also on Monday, Wal-Mart Stores said sales were soft at both the beginning and end of the week, “just below plan” of a 3 to 5 percent increase at the flagship division and a 2 to 4 percent uptick overall. Included on a long list of categories with improved sales were intimate apparel and HBA. The average ticket price was up for the week and accounted for two-thirds of comp increases, with the other third supplied by increased traffic.
J.C. Penney Co.’s department stores planned for a flat month versus a 12.5 percent comp increase last February. Last week, the company said, the department stores sales trended slightly above the flat plan despite inclement weather in much of the country. Fine jewelry and children’s apparel were among the top performers.