On Retailing

Tuesday, January 2, 2001

Local general merchandise industry is still strong

Merchants say despite Ward's closing, consumers will have lots of choices

Despite the slew of specialty shops that Montgomery Ward's officials blame as part of the reason behind the department store's demise, some local merchants said that the general merchandise industry remains strong.
   Even with Ward's gone, consumers won't face a fallout of general merchandising retailers, said Lian Ler, store team leader at Mervyn's California in Sunrise Mall, where Ward's is an anchor.
   If anything, the retailing pioneer's closing signals the opposite of a downturn for the remaining stores.
   His own store along with merchants such as J.C. Penney at Padre Staples Mall targeted the same income-level customer, and Ward's exit just means more shoppers to split among the remaining group.
   "In two to three months, I expect everything to settle down," Ler said.
   The impact of the department store's closing is still uncertain, said Chuck Courtney, vice president of the Texas Retail Association. Most important is consumer confidence, which would help remaining shops fill Montgomery Ward's vacancy if the economy picks back up.
   The reason for that continued success isn't difficult to understand, said Donna Lee, Sunrise Mall property manager.
   "I think people still want to do that type of one-stop shopping," she said.
   The 128-year-old company announced its shutdown Thursday, and no date has been set for when the company's 250 stores and 10 distribution centers will close.
   Ward's, a leader in mail-order shopping, operated general merchandise stores in more than 30 states and employed 37,000 workers.
   The company had survived a Chapter 11 bankruptcy in August 1999 and revamped about a fifth of its stores. But some analysts said Ward's never established itself, allowing competition from chains such as Home Depot, Best Buy and the Gap to lure too many customers away.
   "There will always be niches in retail," Courtney said. "If you find your niche, you're going to be successful."
   But this holiday season's weak retail performance was the last straw for Ward's.
   Mall specialty stores increased sales by 2.2 percent over last year, according to the International Council of Shopping Centers. That compared to the 7.7 percent increase last year.
   Bad month for retailers
   TeleCheck Services Inc., the world's leading check acceptance company, predicted a 4 percent increase in sales but a pre-Christmas spending surge only boosted same-store retail sales by 3.1 percent. The last-minute splurge helped push sales from the 2.4 percent reported for the first 24 days of the holiday season.
   Merrill Lynch had predicted a holiday gain of only 2.4 percent, which would be the worst since at least 1990, according to its calculations.
   "December was just a disaster month for retailers," Ler said.
   A sign of the times
   Montgomery Ward had wanted 9 percent sales growth this year but gained only 2 percent.
   That doesn't reflect the local Ward's performance, though, Lee said.
   "This store was doing particularly well," she said. "They were really hitting their numbers."
   What it does show, however, is a changing market, Lee said.
   "It's just a sign of the times," she said. "The older merchant is not aggressive enough (to attract) the younger person."
  
  

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On Retailing is published every other Tuesday in the Caller-Times Business section. Ideas may be submitted to: On Retailing, Corpus Christi Caller-Times, P.O. Box 9136, Corpus Christi, Texas 78469; e-mail Michael Hines at hinesm@caller.com; fax items to (361) 886-3732; or call (361) 886-4316.

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