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Survey: More than half of retailers optimistic about rest of year

BY Katherine Boccaccio

North Plainfield, N.J. — Results of a survey released Tuesday by shopping center owner Levin Management Corp. showed that, while store sales remain relatively flat, the majority of its retail tenants are optimistic about the balance of 2011.

According to a mid-year survey conducted by Levin and polling the thinking of its roster of 1,000 tenants about the January through June 2011 period, about half of the retailers reported a sales decline for the six months and half reported sales were "the same" or "better" compared with the first six months of 2010. More than 62% at mid-year indicated the first-half was either better than expected, or what they anticipated.

"The results indicate that the economy and recession are still affecting retail sales, which are a prime benchmark for the economy’s overall performance," said Matthew K. Harding, Levin Management’s president and COO.

Customer traffic, spending results, and hiring trends remain mixed in the Mid-Year Survey, mirroring the results of a previous Levin survey. For customer traffic, the split was again nearly 50-50 between those reporting lower traffic and those citing either the same or higher traffic.

While surveyed retailers reported a strong Easter season — 52.6% had Easter sales that were the same or higher than in 2010 – overall, customers have been spending less per transaction during the first half of 2011 compared with 2010: Just 18.1% of retailers reported shoppers spending more per transaction compared with a year ago.

A total of 27.7% of responders cited increased markdowns across the board, and 39.3% indicated selective markdowns of products for promotional purposes; 32.8% said their markdown policy had remained the same as last year.

The economy drew mixed reviews from surveyed retailers: Forty-six percent said the economy has not been a factor in their sales while 41.4% indicated the impact of the recession for the first half of 2011 was "largely negative." Just 12.5% called the economy a positive factor.

The extreme and snowy weather this winter played a big role in the year-to-date performance for retailers, according to the survey results. Nearly 51% of respondents said weather had negatively impacted their stores’ year-to-date results, and only 29% believed that weather conditions did not affect sales.

There was a decline among those voicing optimism about future prospects: while 62% were optimistic at the beginning of 2011, those reacting positively for the balance of the year declined to 53.3%. Just 6% expressed pessimism, however, with the balance "not sure" or viewing the next six months as largely a continuation of the year-to-date performance.

The optimism that is being voiced in the retail ranks is turning into more store openings, according to survey findings. Nearly one-quarter of those surveyed indicated that their companies have already opened new stores in the first six months of 2011, and nearly 20% said that additional stores will be opened between now and the end of the year.

"Clearly, there continues to be a great deal of uncertainty in the retail marketplace," said Harding. "We see some hopeful signs in the latest numbers, especially in the number of stores that have opened or will open new units this year, while noting that the effects of the recession haven’t completely worn off. At the very least, there is continued stabilization within the retail ranks, some hiring is expected, and only a small percentage of those surveyed are pessimistic about the rest of the year."

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Walmart reorganizes for back-to-school

BY CSA STAFF

BENTONVILLE, Ark. — Walmart announced that it ismaking back-to-school shopping even easier with new store improvements. Back-to-school items are now organized, both in stores and online, in one place and categorized by school age group, so families can quickly and easily shop supplies appropriate for their child’s grade, the company reported. Many of the most common school supply list items are located down the center of the back-to-school aisle allowing families to quickly check these items off their list.

“We know our customers need to stretch their dollars as far as they can,” said Duncan Mac Naughton, Walmart’s chief merchandising officer. “We’re making it even easier and more affordable for them this back-to-school season with low prices on more items along with our ad match policy and a better shopping experience.”

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Dancing on Border’s grave

BY CSA STAFF

I’m not shedding any tears over the demise of Borders and neither is anyone else in the retail industry. It’s just business.

There are always a few sentimental customers who turn up with a choice quote or two in the formulaic media eulogies that appear whenever a retailer goes under, but those customers will just have to find somewhere else to sip coffee and read books for free.

The death of Borders may be an occasion to mourn for a small group of customers, but it is a cause for celebration among other retailers. They no longer have to compete with a financially struggling company prone to unpredictable and irrational behavior as it struggles for life, and now Borders real estate can find its way into the hands of retailers eager to take their turn at putting it to a more financially rewarding use.

That process has already begun with the marketing of the Border’s locations underway by DJM Realty, a Gordon Brother Group company retained to manage the disposition of real estate, even before the liquidation plan was approved by the bankruptcy court. Retailers can’t wait to get their hands on the remains of Borders, with DJM noting strong interest in the company’s locations.

“With a lack of new real estate development and restrictive barriers of entry in several key markets, surplus real estate like Borders becomes a very good opportunity for a number of growing retailers looking to open for business during the next four to 12 months,” said Andy Graiser, co-president of DJM Realty. “It is not every day a portfolio becomes available which includes premier real estate sites in Northern and Southern California, the cities and surrounding suburbs of New York, Illinois, Texas, the Northeast corridor and Mid-Atlantic states.”

For those compelled to understand what went wrong at Borders the answer is quite simple; because it is the same thing that always goes wrong with failed retailers. The company was no longer relevant to a sufficiently large enough base of shoppers to achieve an acceptable rate of return. Retail is about survival of the fittest and Borders wasn’t as fit as some of its competitors.

Linens ‘n Things is gone because it didn’t do as good a job as Bed Bath & Beyond. Circuit City is gone because it wasn’t as good as Best Buy. The same is true of the thousands of independent hardware stores and pharmacy retailers that were prevalent two decades ago. Consumers preferred the breadth of assortment and low prices offered at places like Home Depot, Lowes, Walgreens and CVS. Walmart and Target decimated the ranks of regional discount store chains before driving Kmart into bankruptcy.

Such is the cycle of life in the retail industry where past performance is no guarantee of future success. That’s why retailers who prosper over a long period of time are those with a healthy paranoia who recognize that even the most seemingly insignificant competitor must be taken seriously. They proactively implement change and experiment with new initiatives rather than becoming complacent with current success and waiting until change is forced upon them by new competitors and deteriorating business conditions. At that point, as Borders and others learned the hard way, a downward spiral has already begun and more often than not it tends to be irreversible.

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