Howard Davidowitz believes that for retailers, the worst is yet to come.
Big-box retailers are in liquidation. Big chains are closing locations. Earlier this month, Fortunoff filed for Chapter 11 bankruptcy.
“The two worst categories in retail are home and jewelry,” said Davidowitz, chairman of Manhattan-based Davidowitz & Associates Inc., a national retail consulting and investment banking firm. “Fortunoff happened to be in the two worst categories in retailing, so it was a double-header,” Davidowitz said. With Pier One on life support, Levitz Furniture Corp. in liquidation and Linens ”™n Things closing down, the home furnishings industry is “a complete train wreck.”
There are survivors and those who will benefit, including Bed Bath & Beyond, which will ultimately benefit from the liquidation of Linens ”™n Things, Davidowitz said. “Retailers with strong balance sheets with staying power ultimately will benefit.”
The home furnishings and décor industry is being hit hard because “home is the consumer”™s biggest asset and it”™s getting crushed,” Davidowitz said.
As for apparel, the news is all terrible, according to Davidowitz.
“Anything discretionary is terrible because of the wreck the consumer is in,” Davidowitz said. “I think we”™re going nowhere but downhill, and there is no improvement in sight.”
In the past, a bankruptcy filing ”“ with its ability to hold creditors at bay ”“ didn”™t necessarily mean closing for good. That is no longer the case.
“More and more, these bankruptcies mean store closings rather than re-organization,” said Matthew Harding, president and chief operating officer of North Plainfield, N.J.-based retail real estate services firm Levin Management. “Banks really aren”™t lending, so it”™s difficult for a bankrupt retailer to get the financing it needs to go on. Many of these retailers who have filed bankruptcy are doing liquidations.”
The combination of the amount of space being put back on to the market and the low demand for new space has left big-box footprints around the country.
“These days so many retailers have pulled back on the reins and are not expanding, so it”™s going to be difficult to fill those spaces,” Harding said.
Harding said consumers are migrating toward value retailers. The renovation of the 280,000-square-foot Post Road Plaza shopping center in Pelham Manor will reflect this trend with the addition of discount grocer Fairway Market among existing tenants Mandee, A.J. Wright and Modell”™s.
The 75,000-square-foot market will open in a reconfigured K-Mart space.
“These are interesting times, but strong, well-located properties should still do pretty well as long as the properties are kept up-to-date,” Harding said.
The Palisades Center in West Nyack has seen several retailers recently close locations at the mall, including Dave & Barry and Legal Seafood. Legal Seafood in White Plains remains open for business.
“A lot of stores are actually closing down,” said Isik Beravy, who owns two Customize It kiosk locations at the mall. “There”™s a lot less people, a lot less traffic lately.”
Beravy has worked at the mall in various stores since it opened 10 years ago. He said anchor stores like Macy”™s have helped draw shoppers in, but the winter months are generally slow for retailers. Â
Mall management, however, remained mum about the status of retail establishments within the mall.Â
“We”™re not going to comment at this time,” said LeeMarie Dell”™Accio, director of marketing for the Palisades Center.
