Value and new retail landscape

If you were hoping to hear good news on December retail sales results, prepare to be disappointed.

Overall U.S. retails sales dropped 1.7% in December versus a year ago despite heavy pre-Christmas discounting across retail categories, a 2.2% drop including November, according to the trade group International Council of Shopping Centers as reported Friday in the Wall Street Journal.

This brings to a close a nightmarish 2008 retail period that included the demise of numerous famous-name retailers including KB Toys, Linens ‘N Things, Mervyns, Sharper Image and Steve & Barry’s; a recent article in analyzes the pitfalls each company faced leading up to closure. Other famous retailers that left us in 2008 include Bennigan’s, Whitehall Jewelry and Wickes Furniture.

A glance at December sales total from the Wall Street Journal report begins to tell a story.

  • Family Dollar +6.0%
  • BJ’s +5.9%
  • Walgreen +4.9%
  • Costco +4.0%
  • Walmart +1.9%
  • K-mart -1.1%
  • Macy’s -4.0%
  • Target -4.1%
  • Gap -14%
  • Sak’s -19.8%
  • Neiman Marcus -27.5%

This partial list from the report show a clear trend in favor of “everyday value” retailers which continually feature low prices and regular price promotions, while upscale department stores not known for value suffered worst. To put it another way, assuming American consumers are to make holiday purchase, they are more likely to shop at stores that offer “Save Money. Live Better.” as opposed to those than bring to mind the phrase “Needless Markup.”

Every retailer, even the most exclusive, needs to discover ways to frame a value argument to consumers — or face making the 2009 list of dearly departed retailers.