Statistically speaking, 2001 retail sales numbers were down...way down. That came as no surprise.
As many companies approached third quarter 2001, they were already re-evaluating sales projections, adjusting budgets, and scaling back. Then, the tragic events of September 11...and the ensuing war. What happened next? Economic instability and downturn led to consumer uncertainty, and economic and consumer recession. The industries most affected include travel and leisure, entertainment, and fashion (particularly apparel and luxury goods).
I don't think there's a need to explain the reason behind the decline in travel and leisure. But why entertainment and fashion? It's commonly referred to as consumer "nesting" or "cocooning" periods. Basically, consumers turn their attention home, where they feel most safe and comfortable. This consumer trend shows no signs of abating. Mortgage rates are at the nation's all-time lowest. Late 2001, early 2002, many consumers opted to refinance their homes,
Unfortunately, for fashion retailers, particularly luxury goods and apparel, consumers always scale back on conspicuous consumption purchases. What tends to uptrend in fashion during this period is the purchase of accessories. It's the old "update last year's wardrobe with this year's accessories." But let's not forget that with so many channels of distribution to choose from-from mass to class-consumers have tons of price-point options. It goes without saying that many consumers opt for the lower.
As if all that happened in 2001 wasn't enough to scare public spending (and scare the public, period), scandals such as that of Enron threw the stock market upside down and further escalated consumer fear. One day, an Enron employee's 401(k) Retirement Fund was worth millions; the next day, zero. Following the Enron scandal, other companies fell victim to the same type of actions.
Further relating to our industry came news of Kmart's Chapter 11 filing in 2002, and the closing of retail doors for good, such as those of Jacobson's. Now, the Martha Stewart scandal, a name well known and trusted by the public, does not boost consumer confidence.
While our Industry Annual Report provides estimated worldwide retail sales for 2001, I can almost guarantee that 2002 will fall victim to the events of 2001. I know many of you utilize reports of this type to formulate business and strategic plans. This benchmark, which begins on p. 19, will aid you in judging 2003. Questions? Don't hesitate to phone me at (212) 951-6707 or e-mail me.
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