September 21, 2014

Retail

Barbara Miracle | 1/1/1996
While economists tout the state's job growth and low unemployment, the average Florida retail customer is struggling with low wages, skimpy pay raises, continued corporate downsizing and enormous consumer debt. That's forced many Floridians to put away their checkbooks -- or more likely credit cards -- and become window shoppers. For retailers, it's led to intense competition. "There are too many stores, and there's less discretionary spending power among consumers," says Miami retail consultant Herbert A. Leeds, adding, "I see 1996 as a struggle."

For the first three quarters of 1995, Florida's gross sales rose 9.4% compared to the same period a year earlier. Sales tax collections for the same period were up 6.9%. To generate those sales, however, retailers are discounting heavily. Says Leeds of 1996, "It will take far more customer transactions to stay even."

Apparel & Home Furnishings
In Florida, as in the nation, certain trends have emerged: apparel and home furnishings sales are slow, groceries and drug store sales are holding their own and computers are selling well, particularly high-end models.

"In the fashion industry, there really hasn't been a lot to get excited about," says Jack Williams, president of Jacksonville's Stein Mart off-price retail chain.Increasingly, casual dress in the workplace and uninspiring fashions in stores have helped the trend.

"Americans don't place the same value as they used to in wearing the latest apparel," says Andrew Weinberg, vice president and retail analyst at Raymond James & Associates, the St. Petersburg stock brokerage. He adds, "There's nothing right now that would point to a resurgence in apparel."

If there is one segment of the industry with more positive prospects for sales growth this year, it's children's clothes. Leeds, the Miami retail consultant, predicts that the children's departments of major stores and specialty stores will benefit.

What other retailers are doing well? Weinberg points to exclusive department stores, such as Saks Fifth Avenue and Neiman Marcus. "It's the disparity between the haves and have nots," he says.

Saks Fifth Avenue will open three new Florida stores, in Sarasota, Fort Myers and Orlando, in 1996. And the Falls, a mall that caters to upscale shoppers in south Dade County, is undergoing a $300 million expansion and renovation that will add a Macy's and 50 new specialty stores.

For budget-conscious Floridians, however, shopping in 1996 won't mean a trip to the mall, but more likely to "big-box" retailers such as Wal-Mart, Target or Kmart. While Kmart's weak finances are forcing it to close stores here and nationwide, Target expects to add five or six new locations in 1996 to its current base of 52 Florida stores. Still, Target has a long way to go to catch Wal-Mart, which has 116 regular Wal-Marts and 34 Sam's Club warehouse-style stores.

Now, Wal-Mart is preparing to challenge Publix, Winn-Dixie and other supermarkets in the battle for shoppers' grocery dollars. Since August 1993, Wal-Mart has opened 16 Florida Supercenters -- 100,000-square-foot to 210,000-square-foot stores that sell fresh produce, bakery and dairy items, frozen food and meat in addition to general merchandise. Three new Supercenters, in Palm Coast, St. Cloud and Bradenton, will open this year.

As Wal-Mart expands into groceries, Florida's supermarket chains are countering by diversifying away from groceries, adding photo processing centers, pharmacies, coffee shops, floral shops and banking services. Publix, for example, will open full-service Barnett Bank branches in 10 to 15 stores in Jacksonville next spring. "The trend is to larger stores and catering to different needs," says Bruce Congleton, president of the Tallahassee-based Florida Food Industries Association, adding, "The corner grocery really has become a thing of the past.

Drug Store Chains
Eckerd Corp. and Walgreen Co., the state's two main drug store chains, posted healthy sales growth last year primarily as a result of managed-care prescription sales. Success in 1996 will depend on whether they can prevent supermarkets and mass merchandise discount stores from capturing a larger share of the state's lucrative prescription business.

When consumers do have extra money, or at least more charging power left on their credit card, they're buying computers. Remember the hype accompanying the introduction of Microsoft's Windows 95? Brisk sales of that software illustrate how hot the personal computer market is right now. Sales are booming at CompUSA and Office Depot as well as consumer electronics superstores such as Best Buy and Circuit City. "Lower prices have contributed to increased sales," says Leeds, who believes the trend will continue in 1996, 1997 and beyond.

Circuit City spokesperson Paul Rakov says that in 1996 computers will continue to drive sales, with more features such as multiple CD-Rom drives and faster modems. He also predicts that digital camcorders and digital video discs will boost consumer electronics.

New car sales in 1996, as in 1995, will be driven by consumer interest in sport utility vehicles, such as the Ford Explorer and Jeep Cherokee, according to J.D. Power & Associates, a California-based market research firm that follows the auto industry. In the next two or three years, even luxury car makers BMW, Acura and Mercedes-Benz plan to get into the game with their own sport utility models. Sales of mid-priced cars likely will be led by Ford Taurus (with a new 1996 design) and Chevrolet's Cavalier and Lumina. In the luxury market, European models, and to a lesser extent Japanese, are selling better than U.S. autos such as Cadillac and Lincoln.

Buying previously leased cars has become popular. "The almost-new cars are the ones that are coming on strong," says Donald L. Keithly of J.D. Power.

One Florida company benefiting from the abundance of older cars on the road is Discount Auto Parts. "The average age of a car in Florida is 9.2 years old," says Kristi Mullis, director of investor relations for Discount, the Lakeland-based auto parts retail chain for do-it-yourself mechanics. The company has 227 stores in Florida and will add 60 to 65 new stores in 1996, most of them in the state. "We have not saturated this market yet," says Mullis.

For Florida's largest retail sector, restaurants, the recent increase in visitors to the state will give a boost to sales. "We're hearing that 1996 is going to be a good year," says Florida Restaurant Association CEO Carol Dover.

But to attract residents, not just tourists, restaurants are teaming up with other retailers. Most Barnes & Noble bookstores, for example, include Starbucks coffee houses. Home Depot, Tandy's Incredible Universe and Wal-Marts often have McDonald's, Taco Bells or Pizza Huts. And Burger King is going on the road, with hundreds of fast-food outlets at gas stations and on campus.

Clearly, retailers and restaurateurs are desperately searching for a winning formula to boost sales. It won't be easy. The economic realities show that it will be tough to get consumers to part with their few spare dollars in 1996.

Tags: Florida Small Business, Politics & Law, Business Florida

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