By Mark Huffman
ConsumerAffairs.com
November 11, 2009
This holiday season, bargain-conscious consumers need not trek to the outlet mall to find name brand merchandise at discount prices. In fact, if they do make the trip, one retail analysts predicts they'll be disappointed.
"Throughout the summer and fall, stores at outlet malls like Woodbury Common, in Central Valley, N.Y., typically are full of great stuff," said Alan Cohen, Chairman of Abacus Advisors, a Closter, N.J.-based turnaround and restructuring firm. "However, this year inventories appeared to be light at the likes of Neiman Marcus' Last Call or Saks' Off 5th."
The reason is simple, says Cohen. Since these and other upscale retailers were discounting heavily in their mainline stores, they didn't have as much excess inventory to send to their outlet locations. Consumers could get the same stuff the outlet stores used to sell by going to the main store location.
Deep concern about both the credit crisis and cutbacks in consumer spending has translated into retail strategies marked by caution. Cohen says that caution does not necessarily translate into a benefit for consumers looking for the lowest prices.
"Manufacturers produced less, and retailers ordered less. In the run-up to the 2009 holiday season, everybody was in a conservative mood," he said.
Both retailers and consumers lose
In the past, for example, retailers like Nordstrom would bring in holiday merchandise early and reorder the best-selling items. This strategic tool likely will not be available to them this year. For consumers, it means that if you miss a product before it sells out, you might not get another opportunity.
"Reorders will be down significantly this year, simply because the merchandise will be unavailable amid these inventory cutbacks," Cohen said. "That puts retailers at a strategic disadvantage, and it means shoppers will have a harder time finding certain popular items."
With inventories low at upscale stores, Cohen expects discounters like Wal-Mart will do well, as they will probably have plenty of lower-priced merchandise. With consumers in a cost-cutting mood anyway, some might by-pass the large department stores altogether and head for the discounters. When all is said and done after the holidays, filing for Chapter 11 bankruptcy protection may be the only option for many chains, Cohen added.
"I certainly see more bankruptcies down the road," he said. "And we will also see vacancies going up at shopping centers and malls across the country. With a limited number of conventional retail, restaurant or entertainment tenants actively looking for space, landlords will be exploring alternative uses like dental or emergency clinics or, in the case of large big-box spaces, flea markets."
