Retail favorites bid goodbye

So far Panama seems to have esscaped the blight and consumer confidence here has been rising.

I was surprised to hear that in Washington DC many stores are continuously on sale, in what seems to be an extended version of the end-of-summer sales and back-to-school sales so characteristic of August. Expats going back home for a visit will be surprised to see these sales have run in to October, with fall rain in the offing and more than 8 weeks into the school year.

This comes as no surprise when reading about the weakening consumer spending in the U.S. A country characterized with overspending its budget is now forced to learn to slow down. Consumer spending in August turned the weakest performance in six months, underscoring the threat the economy faces as the government’s stimulus program fades into the past. Economic uncertainty and high food and oil prices seems to have made even those earning money to keep a tight rein on spending it.

Consumers' appetite for discretionary purchases has dwindled sharply, leading to shrinking sales month after month SOme retailers, are trying to lure in the few shoppers still out in the malls with discounts in an attempt to prevent joining the expanding string of store closings.

Which brings me to the second retail surprise trips back to the U.S. might bring. Many retail chains are bidding goodbye for good. Wickes Furniture closed down its 36 stores. Friedman's is in the process of selling off jewelry and is closing its 377 stores, while hall Jewelers is liquidating its 300 stores. Even those keeping some open are significantly reducing their store numbers: Foot Locker is closing 140 stores; Wilson's Leather is closing 160; Ann Taylor, 117; and jeweler Zales has closed 105.

This year has also seen many prestigious and well-known retail companies filing Chapter 11 bankruptcy (which gives companies time to reorganize in hopes of dealing with its debt): lectronic gizmo retailer Sharper Image, Linen ´N Things, Boscov’s department-store chain, Mervyn’s chain in California, Shoe Pavilion, Goody’s, Wickes, Lillian Vernon and Dan River. By the end of August, even Mrs. Fields revealed that the loyal friend of mall-shopping sweet teeth is crumbling.

The sad reality is that almost all of the retailers that filed for Chapter 11 protection in the first three months of 2008 dissolved quickly and were forced to close down stores given the shortage of financing. Among them was Sharper Image. This puts into question the fate that awaits the rest. Many might be forced to liquidate quickly like Sharper Image, case,eans we might soon be bidding goodbye to those too. So on your next visit to the States don’t be surprised if you find the retail scenario has changed considerably

Meanwhile, in Panama, as I walk across the halls of Albrook Mall or Multiplaza Pacific I wonder if U.S. consumer spending trends are reverberating or will soon reverberate in this country. The lack of sales across town makes me think that stores are not suffering as much, but then again, Panamanian retail stores do not tend to go on sale as often as their U.S. counterparts regardless of the economy.

According to recent reports, the Panamanian Consumer Confidence Index (ICCP) for August showed that consumers in Panama seem more optimistic about the future compared to the last couple of months, which makes me think that for now the hoard of people I see in malls—whether residents or tourists—are involved in more than mere window shopping. For the sake of our local retailers, let’s hope that’s true.