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Sears Fades While Retail, Restaurants Retreat


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Last year’s talk of a restaurant recession has morphed into broader, more sustained hard times for many of the best known retail and restaurant brands, led today by the apparent demise of Sears that’s been a very long time coming. The “Trump bump” appears over, oil prices are back in the toilet, mortgage applications are falling, interest rates are rising, institutional investors fear U.S. stocks are overvalued and we have officially entered a new wave of economic uncertainty.

Even with a unified federal government controlled by the Republican party, gridlock has remained the norm in Washington, D.C. While many key economic indicators remain positive—and stock prices have yet to take a significant hit—there’s plenty of evidence suggesting that the current economic uncertainty is more than a speed bump. Let’s take a quick look at some telling numbers …

Two big-ticket markets, housing and autos, are definitely in a new era after a few outstanding years. According to the Mortgage Bankers Association, mortgage applications decreased 2.7 percent for the week ending March 17. Its Refinance Index also decreased from the previous week, and has now reached a point that harkens back to January 2009. You remember that awesome period of recent American history, right?

Looking ahead to when the National Association of Realtors will reach February home sales figures, the consensus points to a significant decline from January. If the drop is confirmed later today, that will certainly have a ripple effect that begins to impact everything from consumer confidence to inflation.

On the auto side, February U.S. sales missed expectations with car sales down 13 percent, even as light truck sales grew 7 percent as SUVs continue to overtake sedans in the American market. The all-important seasonally adjusted annual sales rate remains above 17.5 million, which is still very good, but auto sales have clearly topped out for this cycle.

The health of the U.S. economy is still a mixed bag, with many indicators still in positive territory. Hotel occupancy is still growing, the unusually early spring will boost many areas of the economy and the Chicago Fed’s latest numbers show an increase in employment-related indicators.

All that said, let’s close with a quick listing of retailers that have either declared bankruptcy or announced large-scale store closings: Gander Mountain, Gordman’s, Radio Shack, The Limited, American Apparel, Sports Authority, J.C. Penney, Abercrombie and Fitch, Outback Steakhouse, Toppers Pizza, Ruby Tuesday, Pie Five, Chipotle, Noodles & Company and, of course, Sears, which just announced it has serious reservations about the brand’s ability to continue as a growing concern. Even if it’s just a shell of its formerly massive self, the decline of Sears will echo through the economy as a sign of the times, and they are most definitely changing.

Let’s hope whatever’s coming next at least provides some evidence that American retailers, investors, franchisors and restaurants of all stripes show some lessons learned from the Great Recession.

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The latest news, opinions and commentary on what's happening in the franchise arena that could affect your business.

Tom KaiserTom Kaiser is associate editor of Franchise Times. He can be reached at 612.767.3209, or send story ideas to tkaiser@franchisetimes.com.
 
Beth EwenBeth Ewen is editor-in-chief of Franchise Times. She can be reached at 612.767.3212, or send story ideas to bewen@franchisetimes.com.
 
Nicholas UptonNicholas Upton is staff writer at Franchise Times. He can be reached at 612.767.3226, or send story ideas to nupton@franchisetimes.com.
 
Mary Jo LarsonMary Jo Larson is the publisher of Franchise Times Magazine and the Restaurant Finance Monitor.  You can find her on Twitter at
 twitter.com/mlarson1011.
 
Nancy WeingartnerNancy Weingartner is editor-at-large of Franchise Times magazine and the editor of the Food On Demand media project. You can reach her at 612-767-3200 or at nancyw@franchisetimes.com.
Follow her on Twitter at http://twitter.com/nanweingartner.
 

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