With $105.7 billion in stimulus checks to be mailed to American consumers, many in the retail sector are banking on a quick fix to the recent slowdown in consumer spending. In March, total same-store sales declined 0.5 percent according to ICSC, a far cry from a gain of 5.9 percent during the same period in 2007. Now, with the majority of U.S. taxpayers awaiting at least $600 in government funds, retailers like Sears Holding Corp. are pulling out all the stops to take advantage of the windfall.
On April 15, Sears promised a 10 percent bonus to anyone who spends his or her rebate check at a Sears, Kmart or Land's End store or on one of their Web sites. The catch is the shopper has to spend the entire check at Sears. Customers need to bring their check to a Sears' cash register between May 14 to July 19, and it will be converted into a gift card. The measure makes plenty of sense, according to Craig Johnson, president of Customer Growth Partners LLC, a New Canaan, Conn.-based retail consulting firm. The problem is the sum the government is doling out is not large enough to make a lasting impact on either Sears' bottom line or on the fortunes of the U.S. retail sector.
The National Retail Federation estimates that approximately 40.6 percent of every rebate check will go towards discretionary purchases, resulting in an overall spending increase of $42.9 billion. That's about one-ninth of Wal-Mart's annual revenues.
“The [rebate checks] will ramp up spending, but there won't be a huge impact,” says Johnson. “Everybody knows that the economy is still soft, so people will not be going crazy, they will still want to spend their money wisely.”
Findings of a recent survey by America's Research Group, a Charleston, S.C.-based consumer research and strategic marketing firm, Americans might spend even less on retail purchases than the NRF estimates — respondents said they planned to use just 20 percent of their stimulus payment in stores. The bulk of their money — approximately 70 percent — will go toward paying down debt, while 10 percent will be earmarked for entertainment.
What's more, people who do shop with it will likely spend it at warehouse clubs and discount operators, says C. Britt Beemer, CEO of America's Research Group. While same-store sales at department stores and specialty apparel stores took a dive in March, by 10.6 percent and 7.4 percent respectively, according to TNS Retail Forward, a Columbus, Ohio-based retail consulting firm, the discount and warehouse clubs drew in shoppers with their emphasis on value.
Wal-Mart, for example, registered a same-store sales increase of 1.1 percent, while BJ's and Costco posted increases of 6 percent and 7 percent.
“This will be a smaller purchase for many people, so it's not going to help the furniture or appliance stores,” Beemer says. “Maybe they'll buy a TV set at Best Buy, but I think a lot of the dollars are going to be spent at the discount stores. I would also suggest the auto parts stores are going to do well because of the cost of car maintenance.”
And if gas prices continue to rise, the impact from the rebate checks might be negated altogether, he adds. As of Apr. 14, gas prices in the U.S. averaged $3.79 per gallon, a 22.6 percent increase compared to the $3.09 per gallon during the same period last year, according to the Bureau of Labor Statistics. With consumers concerned about the price of extra shopping trips, traffic at malls has subsided, says Bill Martin, president of ShopperTrak, a Chicago-based provider of shopper traffic counting information.
“The retailers will try to get their fair share, but it's not going to be a huge amount of money,” says Jay McIntosh, director of consumer products with Ernst & Young. Especially, he says, when the cumulative amount of rebates is put in the context with the U.S. retail market, which exceeds $3 trillion.
Simon Cleans Up
In May, hundreds of janitors working at 17 Simon Property Group malls across the U.S. received pay raises — some for more than 50 percent. For many earning minimum wage, the first increase will be as much as 54 percent. The raise came about because of a new agreement between Local 32BJ and Simon sub-contractor Control Building Services. As a result of the deal, which took effect May 1, the pay of nearly 400 cleaners was raised to match prevailing rates of area office building cleaners in New York, New Jersey, Pennsylvania, Maryland and Virginia. Wage increases for cleaners at four Long Island malls will take effect on July 1. Effective October 1, full-time workers will receive employer-paid family health care. Part-time employees will be eligible for health benefits that include: life insurance, prescription drug benefits, dental and vision insurance.
“Step Out Step Up” is a partnership between the Step Up Women's Network and Macerich. The REIT is tapping employees and shoppers at its centers in the U.S., bringing women together to make meaningful contributions in their communities. The program, launched at Macerich's Westside Pavilion in Los Angeles, included hands-on events such as makeovers, “updo how-to's” and creating “Wellness Bags” for cancer patients at Southern California's City of Hope. Similar “Step Out Step Up” events are planned at Macerich centers across the country, each catering to the flavor, flair and interest of local women. Macerich too, has contributed $250,000 to the Step Up Women's Network. And, the mall owner will allow its employees to volunteer time to women's organizations.
Crossman & Co. invited 25 University of Florida students on a tour of The Villages for a first-hand, in-depth, look at a mixed-use development. The Villages encompasses 26,000 acres across three counties in Central Florida and its tenants range from Wal-Mart to Publix and Chico's to Starbucks. Crossman handles the retail leasing for The Villages. The students study at the university's Gainesville campus David F. Miller Retailing Education and Research Department. The Center for Retailing Education and Research aims to link the retail industry to college students and to university-based researchers. Its objectives include working with the university's community by stimulating student interest in retailing careers, preparing students for entry-level management, researching retailing issues and opportunities and facilitating communications between retailers and academics.
Crosland's LEED Head
Crosland LLC has named Jenny Vallimont manager of sustainability, overseeing the Charlotte, N.C.-based developers' green initiatives. A LEED accredited professional, Vallimont, one of two LEED-AP associates at Crosland, will direct its 16-person sustainability team. Twelve are pursuing LEED certification. Crosland, a member of the U.S. Green Building Council and a sponsor of the Charlotte chapter, is developing three LEED-related projects and more are planned. A recently launched program solicits architects and engineers to propose innovative ways to incorporate sustainability into a signature Crosland development. Several of its projects have received recognition some even in the pre-development stage, including Terrazzo, a 14-story mixed-use tower in downtown Nashville.