Rumors about retailers can be very bad news for their health


Whether publicity that includes quoting consultants Howard Davidowitz, Britt Beemer and other retail doomsayers creates or exacerbates problems for stores is not easily agreed upon. And there's also a question of who is to blame.

Unlike reports of possible bankruptcy filings by automakers, some say concerns about the viability of a clothing chain are unlikely to scare off, say, working women searching for suits.

"If you said Tiffany, people would get riled up because if you're buying a wedding gift, you want to know if you can take it back," says Ken Nisch, chairman of the retail branding and design firm JGA. "But a coat? How concerned are you going to get?"

But National Retail Federation spokeswoman Ellen Davis says retailers are more affected by negative press than most other industries. "Everyone shops. I would argue that no other industry is as impacted by consumers as much as retailers," Davis says. "As a result, when they read something that's particularly alarming to them, they react — quickly."

But is the media at fault for relying on certain sources, or do retailers share much of the blame for being so press-shy?

Some retailers seldom, if ever, speak to the media, or place so many conditions on interviews that reporters often turn instead to the legions of "retail consultants" who are regularly pitched by public relations firms as sources. Most of these consultants are working for retailers — or hoping to — so they are either leery about disclosing companies' strategies or saying anything remotely negative on the record.

Retail stock analysts tend to be more objective, but like many other Wall Street analysts, they became especially cautious about speaking to the media after former New York governor Eliot Spitzer reached a global settlement with 10 investment banks in 2003 regarding conflicts of interest between the research and investment banking sides of their companies. After the settlement, many firms required their analysts to get approval from their compliance departments and e-mail disclosures to reporters before talking to them, which discouraged many from talking to the press.

That means journalists seeking to balance often-glowing comments from companies or the consultants who work for them often turn to some of the more dependable retail contrarians, who can now point to data like the soaring unemployment rate or store liquidations they predicted as evidence of expertise.

"I'll give you an honest opinion. That's the way it works," says Davidowitz. "There's only one person out there who's telling it like it is."

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