NEW YORK — World uncertainties have totally beaten down the financial markets and consumer confidence all year — that is, until last weekend.
This story first appeared in the March 18, 2003 issue of WWD. Subscribe Today.
It may have just been a short spurt, but with warm weather settling in around the country there were hopeful signs at last of life at malls and stores, and consumers showed some interest in spring merchandise — perhaps because a lot of it was already offered at 20 to 25 percent off.
The upbeat mood even spilled over into the financial markets on Monday as temperatures continued to heat up throughout much of the nation. Stock prices surged Monday as investors snatched up beaten-down shares and the uncertainty about a possible war against Iraq became all but cleared up after government officials declared an end to efforts to resolve the standoff with the United Nations. With a quick war anticipated, and hopefully leaving the U.S. economy unharmed, Wall Street’s three leading market indices each climbed more than 3 percent, piling on its fourth straight day of gains. The Dow Jones Industrial Average was up 281.65 points, or 3.6 percent, to 8,141.36. The Standard & Poor’s Retail Index was up 12.85 points, or 4.9 percent, to 273.17. And the Nasdaq Composite Index was up 51.34 points, or 3.8 percent, to 1,391.67.
“We had a good weekend, particularly in Manhattan, and the apparel business was very strong,” said Michael Gould, Bloomingdale’s chairman and chief executive. Gould cited “a little pent up demand,” along with the store’s “Hot At” campaign spotlighting new trends and items that the company believes are must-haves. “Spring fashion was very strong, which goes to show that even in difficult times, people respond to newness,” Gould said.
But the shopping sprees didn’t happen only in New York. “The Florida business was very good, our Medina [home] store is nicely over plan for the month, and the metro New York was a tad above plan” last week, Gould said.
“This was the best weekend we’ve had since the beginning of the year,” said Stephanie Greenfield, co-owner of Scoop, the designer specialty chain. “We had an amazing weekend. Other than the fact that we had a full spring assortment, there’s spring break; people aren’t traveling as much but are getting ready to go on holiday, and the weather was good. It’s very hard to perceive yourself in a pink floral dress when you are wearing snow boots. It’s buy now, wear now.”
Asked what people are buying, Greenfield said, “Tons of color, great sexy knits from Loy and Ford, Diane Von Furstenberg skirts, Lyocell tops.”
Cathy O’Malley, general manager of the Twelve Oaks Mall in Novi, Mich., said children’s apparel was “the fast tracker for the weekend. We saw adults and kids in T-tops and shorts. Traffic was brisk and it helped that the thaw was occurring. The entire weekend proved to be good in terms of traffic. Ice cream was the popular dish, shoe stores had more sandal activity, though sneakers were hot.”
“Our weekend was the strongest we’ve had this year,” noted Bailee Martin, a buyer for Zebraclub, a streetwear boutique in Seattle. Martin said there was a strong demand for anything casual with denim jeans, peasant tops and tank tops among the best-selling items.
Sales were also brisk at high-end boutique Jeri Rice located inside Seattle’s Four Seasons Hotel. “It was back-in-action fabulous,” said Rice. After receiving a spring shipment on Thursday, Rice sold evening separates, denim jackets and belts, handbags and jewelry. Tastes are either very casual or very dressy, she said. Rice conceded the weekend took her by surprise.
In Southern California, a torrential downpour on Saturday kept shoppers away from outdoor malls and more at indoor complexes like South Coast Plaza in Costa Mesa, Calif. “We had a very strong weekend,” said a spokeswoman. “But it’s been a continuing trend of high-traffic weekends. I do think it’s being driven by new spring product.”
By Sunday, sunny skies returned to the Southland and the parking lot at outdoor center The Grove in Los Angeles was filled by 1 p.m., according to a spokeswoman.
Eveningwear blew out of Nordstrom for the city’s numerous Oscar parties scheduled this week. Other hot items included white trenchcoats at Banana Republic and stretch pants at Gap.
But retailers aren’t being fooled by the sunnier climes; they’re still expecting a tough month. As J.C. Penney Co. said Monday, March same-store sales are expected to be flat to down slightly, reflecting the shift of Easter to April this year, and it has seen an even steeper drop at its catalog, around 15 percent.
An even more glum report came from Federated Department Stores, which anticipates March same-store sales dropping 3 to 4 percent. The outlook for the March selling period, which runs from March 2 to April 5, is based on sales through Saturday, the parent of Macy’s and Bloomingdale’s said in a weekly sales update Monday.
“Business is horrible. The weather has helped the spring merchandise, but the overall sense has been quasi-paralysis,” said Isaac Lagnado, president of Tactical.org, a market research firm. “The consumer, particularly the older and middle-aged consumer, who is much more exposed to financial markets and the job market, has gone into acute caution. Anything that resembles discretionary purchasing has suffered tremendously.”
However, Lagnado did say that effect of action with regards to Iraq, as opposed to the uncertainty that has been prevailing over the last six months, “will just be positive for consumer and business confidence. The financial markets are already giving a vote of confidence, in anticipating a rapid and decisive victory. The end of indecision and uncertainty is highly welcomed. This war uncertainty has trumped economic positives like interest rates and credit availability, and manufacturing capacity.
“If there is armed conflict, people are going to be very hesitant about shopping in stores,” said one retail executive.
Meanwhile, developers remain in their heightened state of security, a posture they assumed after Sept. 11, 2001. Taubman Centers’ director of communications, Karen MacDonald, said, “We have plans and procedures in place based on the particular level of alert, and our procedures mirror the recommendations from the Department of Homeland Security. Based on different levels of alert, whether it’s orange or yellow, we adapt and adjust as threat levels change. The higher it gets the more security measures we put in place. We have highly trained officers who have undergone additional training related to terrorism. They work closely with local law enforcement and emergency officials. We continue to restrict axis to sensitive areas, such as rooftops, delivery zones and loading docks.”
Along with national law enforcement agencies during the time the country was under a code orange alert, South Coast Plaza enhanced its security measures and has implemented a plan “for all contingencies.” Specific security measures are being kept confidential.
At General Growth, the nation’s second-largest mall operator and developer, “we are definitely keeping an eye on national and international events, especially with what the President is saying,” said David Keating, a spokesman. “Our security is at the most heightened state, and we’ve been operating at that heightened state since Sept. 11. There are several measures we have taken that we can’t talk about, but we are encouraging shoppers and employees to keep an eye out for anything out of the ordinary. We are watching as events unfold, and we are taking our cue from national leaders and leaders here at General Growth.”