Robert Graham opens first New York City store
New York— Robert Graham has announced a new lease agreement to open its first New York City store on Bleecker Street this fall. The West Village Bleecker Street fashion corridor houses Burberry, Brunello Cucinelli, Marc Jacobs, rag & bone, and Ralph Lauren.
Robert Graham currently operates six freestanding stores across the country. They are located in Los Angeles, Houston, Las Vegas, Boca Raton, Fla., Long Island, N.Y., and Short Hills, N.J.
Shelter Cove signs two new tenants
Hilton Head Island, S.C. — Shelter Cove Towne Centre has signed letters of intent with two new tenants: Heritage Fine Jewelry and Jake’s Wayback Burgers.
A joint venture between Blanchard & Calhoun Commercial and Kroger Real Estate, Shelter Cove is being developed into a destination for Hilton Head residents and the area’s 2.5 million visitors. The project includes plans to redevelop the existing mall into a walking village that will consist of 290,000 sq. ft. of retail space anchored by Kroger and Belk.
One Step Forward, Two Steps Back
An article that recently caught my eye adds more evidence to my growing suspicion (and I know I am far from alone in this) that the near-term to mid-term retail outlook might not be quite as positive as we may have thought just a few months ago. The piece, “Gap Stands out Among Retailers in Tough Quarter,” in Women’s Wear Daily highlighted the sobering second-quarter numbers from a long list of big retail brands. As the title implies, Gap, Inc. enjoyed a strong second quarter — second-quarter net earnings rose 25% to $303 million and sales jumped up 8% compared to the same period in 2012 — but the bigger story isn’t so much about GAP stepping up, as it is about everyone else taking a step back.
The list of second-quarter casualties is extensive. Macy’s, Target, Abercrombie & Fitch, Aéropostale, Wal-Mart and Sears have all recently either reported weak earnings or have revised their projected Fall numbers down. At a time when the economy has been in a modest but consistent recovery, this is alarming and certainly unwelcome news. We’ve seen signs for concern, but I think it’s safe to say that the extent of the poor retail numbers took most analysts and observers by surprise.
The question, of course, is what does it all mean? Is it a blip on the radar or the beginning of something more profound? One possibility is that the economic recovery has been overhyped, and the robust numbers earlier in the year were more a reflection of pent-up demand than a sign of a larger economic trend. In the immediate future, retailers and retail real estate professionals must consider the impact of the former on back-to-school shopping and the just-around-the-corner holiday season.
What makes the weak second-quarter retail numbers and anemic third-quarter projections particularly counterintuitive is that many/most of the big-picture economic indicators have shown improvement throughout the year. If that’s the case, however, why don’t consumers really seem to be spending? I think this gets at a larger problem, which is that when we talk about economic trends, the metrics we use to measure the ups and downs apply disproportionately to large companies and the wealthiest consumers. The result is that recoveries tend to be focused at the high end of the income scale, and that’s really a fairly small group of people. If the middle class isn’t spending money, that’s going to have a huge impact on retail sales. I think it’s worth asking the question of whether or not this “recovery” might be the new normal.
If we are we using metrics and assumptions from 10-20 years ago to analyze today’s recovery, maybe it’s time to consider the possibility that many of the things that we think are important — a stock market that recently reached record all-time highs, a rapidly recovering housing sector — might be less relevant when it comes to the retail economy. I suspect employment is a much bigger deal in that regard: not just the top-line number, either, but thinking about how many people have dropped out of the workforce, settled for part-time or lower-paying work, or otherwise seen their professional circumstances adversely impacted.
The one fly in the ointment of this “evolving retail economy” theory is that, if this was simply the case, you’d expect to see discounters and value-oriented retailers doing better. But, despite these circumstances, even big value names like Target and Wal-Mart are delivering fairly uninspiring numbers. One interesting data point that might be related to that discrepancy is that off-price apparel chains like Stein Mart, TJ Maxx and Marshall’s have been quite strong lately (all were second-quarter standouts). It’s possible that more consumers are looking for quality but digging deeper to hold out for great values and bigger discounts.
Whatever happens going forward, it seems to me that an across-the-board 2013 rebound is very much in doubt for retailers. Previous predictions had been as high as double-digit growth for back-to-school shopping, but in light of the latest information, I’ll be quite surprised if those figures even manage to top 3%. What is even more concerning is what this might mean for holiday shopping. If the trend continues, we might be looking at flat or very modest growth, which would definitely be a disappointment in the midst of what was supposed to look and feel much more like a true recovery.
What do you think? Is this kind of inconsistent and underwhelming recovery the “new normal”? If so, what are the ramifications, and how are retailers going to have to do to adapt and evolve? Leave a comment below or send your thoughts to [email protected] and join the conversation.
Click here for past columns by Jeff Green.