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Retail Newsline: Procrastinators to the Rescue or More Consumer Funk (Not the Good Kind) Ahead?

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By Garrick Brown, Vice President, Retail Research for the Americas

Despite the various pronouncements Shopping Mallthat Black Friday is dead, we are still coming up on the most critical (extended) weekend of the year for most retailers. By the way, click here for some interesting things the spreadsheet jockeys over at PriceWaterhouseCooper came up with. It’s not all that different from what we have been saying over the past few years… which is that the importance of Black Friday has been diffused greatly thanks to the impact of e-commerce and earlier promotions. That trend continues, though I think anyone who pronounces Black Friday dead is jumping the gun a bit. After all, not being all that important isn’t the same thing as being dead… at least that is what I keep trying to tell myself…

So before I start ranting about the news of the week, I do have a couple of things I want to share with you. First off I want to remind you that you can check out our latest and greatest retail report, Main Streets of the World. Last week we released the 27th annual edition of our global retail flagship report focusing on 500 of the top retail streets around the globe. Our analysis ranks the most expensive in each country by their prime rental value and it also shares our view of what is happening when it comes to prime, urban high street retail from a global perspective. This is an outlook that you just can’t find anywhere else.

Also, if you are going to be at ICSC New York come see me Sunday, December 6th at 10 AM at the Sheraton Times Square. I will be a panelist on a group that is discussing the increasing role of data and technology in retail and retail real estate. In “The Great Retail Shakeup,” we will be covering the topic of innovation.. Here’s the brochure blurb; “Frictionless commerce is the holy grail of the retail industry. An expert panel explores the data and technologies used to bridge the gap between online and in-store shopping to create the ultimate experience. From social media to e-commerce and virtual dressing rooms to robots, learn how to stay ahead of the curve in a rapidly changing retail environment.” If this sounds dry to you then you especially better come to this event, because the topic is anything but dry. This is going to be a lively and enlightening discussing of new technologies that are radically changing both how retailers do business and how those of us in retail real estate will be doing business in the next few years. And I will probably be grinding my axe about the fine line between convenient and creepy that retailers will have to walk with some of these technologies that could potentially boost sales or that might blow up in people’s faces.

Anyway, let’s get back to the topic of Black Friday because I know that you are dying to hear my takes as you sit in that folding lawn chain in front of your local Best Buy. Yeah, you know it’s true. Hey, just 72 more hours until they let you in the store so you can buy yourself one of those “Suny” 30-inch televisions for $49 bucks so at least you will have all of these articles in this week’s Newsline to keep you busy…

And what are these articles about? Well, mostly about nervous retailers… which is pretty understandable given the soft retail sales of late summer and early autumn. Last week’s terrorist attacks certainly didn’t help in terms of getting U.S. consumers in the shopping mood. And frankly that remains a great big question mark. All of the economic indicators should point to a decent holiday sales season performance, but you can’t discount psychology. I still think that, barring any additional ugly events overseas—or God forbid—here, that procrastinators will save the day (or at least result in this year’s sales performance matching last year’s). But I must admit I am increasingly concerned that this might turn out to be a Bah Humbug year simply on the basis of negative consumer temperament.

That being said, you might notice that half of the articles in this expanded Top Ten this week aren’t about Black Friday but instead focus on various merger and acquisition activity occurring in the marketplace. I will share with you a full download on this trend in a couple of weeks (next week I just have to commit to reporting on actual Black Friday performance). But this is an increasing concern of mine.

M&A activity historically tends to be something we see spiking late in the economic cycle. Usually by the end of a cycle we see companies sitting on boatloads of cash and M&A is the fastest way to grow. Of course, M&A activity is a job destroyer with companies eliminating redundancies as they “synergize.” It is of special concern in the retail sector because mergers almost always result in store closures and large blocks of space coming back to the market.

All that being said, it is vital to note that M&A activity alone isn’t what drives economies into recession (though the job cuts don’t help). But it has historically tended to pick up once we are closer to the end of a growth cycle than to the beginning. That being said, thanks to fiscal policy, this past recovery and growth cycle has been unlike any other on record… so all bets are off. But as intense as the M&A activity has been in the retail sector over the past few weeks and months, I only see it escalating heading into 2016. And that might become a major concern for landlords as we head into the new year.

This post is commentary from the latest weekly edition of our Cushman & Wakefield Retail Newsline, which you can subscribe to for free by e-mailing garrick.brown@cushwake.com.

garrick-brownGarrick joined Cushman & Wakefield (formerly DTZ / Cassidy Turley) in October 2010. He serves as Vice President of Retail Research for the Americas. He speaks frequently at industry events and has been a keynote speaker at symposiums, conferences and market forecasting events for groups like the Appraisal Institute, Urban Land Institute, CREW, ICSC and PRSM. He is also a member of Lambda Alpha International, an invitation-only land use society for those who are involved in the ownership, management, regulation and conservation of land, but also those who are involved in its development, redevelopment and preservation.

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