Fallout begins for retailers after dismal holiday season
— -- Retailers will close tens of thousands of stores in 2009, and several more will file for Chapter 11 bankruptcy protection as the effects of the worst holiday retail season in 40 years sink in.
"Every retailer is looking to reduce their footprint," says Michael Dart, principal at Kurt Salmon Associates, a retail industry analyst firm.
"Retailers will assess every location, and if it doesn't make a profit, it's gone," says Marshal Cohen, chief industry analyst at NPD Group.
The International Council of Shopping Centers projected in October that 148,000 stores would close in 2008, the largest number since 2001. It said an additional 73,000 stores would close in the first half of 2009.
That number could grow. December sales will be reported on Jan. 14, but early surveys indicate spending is almost completely frozen. MasterCard's annual SpendingPulse report released late last week showed retail sales fell 2% to 4% for the holiday season. Sales of electronics and appliances fell 27%. Women's clothing fell 23%.
Sales at chain stores fell 1.8% in the week ending Dec. 27 compared with the previous year, while sales fell 1.5% compared with the prior week, according to the ICSC-Goldman Sachs Weekly Chain Store Sales index.
The International Council of Shopping Centers expects holiday sales, which measures sales in November and December, to fall 1.5% to 2%. That would represent the weakest performance since the ICSC began tracking such data in 1969.
"We see a sustained, protracted and prolonged shift in consumer behavior through 2009 and 2010," Dart says. "This is not just one bad holiday season."
For the first time, holiday online shopping declined this year. Spending was down 2% from Nov. 1 to Dec. 21, says market researcher ComScore."This is bad, considering that online holiday sales, year-over-year, have been up about 20% every year," says Don Davis, editor of Internet Retailer, a trade magazine.
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