In the news
Paris — Offering low prices and fancy features may have worked in the past to draw consumers dollars into stores. But an approach that connects with consumers on a basic human level will be more successful in the current period of economic and political uncertainty, says Fred Crawford, executive vice president and global managing director of the consumer products, retail and distribution practice at consulting firm Cap Gemini Ernst & Young.
In times of an economic downturn, such as the United States is experiencing now, “there's an opportunity for companies that become more consumer relevant to improve their competitive position and capture increased market share,” notes Crawford.
Consumer confidence was already slipping because of the weakened economy. Now, with the war on terrorism raging full force, confidence has plunged even further. “We don't know how long the present situation will last, so there's something of a wait-and-see attitude right now.”
According to Crawford, high-end and fashion-oriented stores are likely to be hit the hardest as consumers move away from luxury goods. “Department stores and specialty retailers may experience modest declines, while discount, drug and grocery stores will do all right,” he says.
Toronto — TrizecHahn Corp. wants to convert from a Canadian REIT to an American one. If shareholders and courts approve, the transformation could be completed by March 2002. The $2.5 billion firm, which is emphasizing its 48.9 million sq. ft. of office properties in several prime U.S. CBDs, hopes to boost its stock price, reduce tax exposure and put the company on a level playing field with other REITs.
U.S. shareholders in TrizecHahn, currently traded on the NYSE, will receive one share in the new REIT. Canadian shareholders will receive one share in Canco, a new Canadian company that will own 40% of the U.S. REIT and dispose of TrizecHahn's Canadian and European assets.
Plano, Texas — J.C. Penney announced plans to spend $100 million to add 14 new stores to its chain. The first of the new prototypes, which include wider aisles, better lighting and improved signage, debuted last month at Taubman Centers' Mall at Wellington Green in Palm Beach County, Fla.
Harrison, N.J. — Household goods chain Lechter's Inc. is asking a bankruptcy court to allow it to sell its assets or liquidate. The retailer, which currently operates 523 units including the Famous Brands Housewares trade name, experienced a freefall in recent years and the company has been under bankruptcy protection since May 2001.
SIDEBAR: Grim present, bright future
Though consumer dollars flowing from the World Trade Center to surrounding businesses were displaced by the September 11th terrorist attacks, Manhattan retailers will persevere, says Steve Yalof, president of Robert K. Futterman & Associates (RKF), a New York-based retail leasing brokerage firm.
While many of RKF's clients were affected in one way or another by the attacks — either by having stores in the World Trade Center, or by relying heavily on that critical mass — Yalof has yet to hear a client say, “We don't want to be in New York, let's find alternatives in New Jersey.”
The attacks, acting as a catalyst rather than a cause, have exacerbated low consumer confidence and the economic slowdown. “There is a very small percentage of clients who might have put their plans on hold, but I do not think it is directly related to the attacks. It might have been the icing on the cake,” says Yalof.
Immediately after the attacks, neighborhood restaurants and bars became places where people got together to talk about what had happened. “I don't want to say those businesses are thriving, but I would say that they probably saw the least amount of decrease to their business. Whereas areas that service the office population, such as Times Square and Grand Central Station, really bear the brunt.”
As a company, RKF is extremely optimistic about New York's future. It is advising its tenants and landlords the area will come back. Space is still at a premium, and it has held its value.
“Good retailers will take advantage of the opportunity to expand their businesses if that is what they are looking to do,” says Yalof.
According to Yalof, there is a renewed sense of vibrancy in the city. “People have been back on the streets, and I think we are going to bounce back from this in relatively short order. The future, especially in Manhattan, is going to be bright.”