WALL STREET’S VIEW: TOUGH YEAR FOR RETAIL
Byline: Jennifer L. Brady
NEW YORK — Although the near future for retailing remains grim, Sears, Roebuck & Co., Target and Wal-Mart Stores should remain at the head of the pack.
Shopping patterns won’t change course, with disposable dollars directed more toward home, office, entertainment and fitness needs in 1996, adding pressure to the troubled women’s apparel business. Retailers able to supply diverse needs under one roof should register robust sales.
This was the consensus of three Wall Street analysts who spoke this week at a National Retail Federation workshop, “A Wall Street Review of Retailing.”
Analysts highlighted a few retail trends: industry consolidation through acquisition, continued pressure on margins, price deflation and supercenters’ market-share gains. Margaret A. Gilliam of CS First Boston Corp. said she expects a shakeout among retailers, with “a lot of store closings in the next few years.” She said the trend to one-stop shopping helps larger discounters and supercenters dominate regional chains.
Gilliam added that she sees a surge of hybrid malls, with upscale specialty stores next to discount outlets. However, she added, “Proficient merchandisers offering something different always will have the edge.” Dana L. Telsy, at Bear, Stearns & Co., said retailers’ success is to be found in “a well-defined niche that attracts repeat customers.” She added that companies will fare well if they can expand abroad, strengthen sourcing capabilities and create good systems to manage inventories. Among Telsy’s list of winning categories are men’s and children’s apparel, home furnishings and computers, while women’s apparel is a clear loser.
According to Jeffrey M. Feiner, at Salomon Bros., although the short-term retail business may remain difficult, the longer-term outlook for mass merchants and large discounters is brighter. He noted retailers need to accept lower margins, control expenses and be willing to change merchandising methods to offer what the customer wants.
— Fairchild News Service