Retail Sales Down – Duh?

I truly found it incredulous today when it was reported that retail sales suffered an unexpected decline in March. How can the greatest prognosticators have expected retail sales to have improved? My incredulousness came not from the decline in retail sales, but from the fact that a number of news sources were reporting this as “unexpected”.

First, 600,000+ people continue to lose their job every month, and have since Fall 2008. Vacancy rates at strip malls and neighborhood centers are growing at an amazing pace. In the 1st quarter of 2009, 8,700,000 square feet of retail space has been vacated, compared with 8.6 million square feet of space vacated throughout all of 2008. Reduced rents by landlords still does not allow for a business to be successful if consumers are not spending.

Another blogger asked the question “Can Retailers Really Blame The Media?” for the decline in sales. I responded by saying the media is always a doomsayer – that’s what sells papers.

When I was Director of Asset Management for one of the most successful REITS in the country I didn’t have to read reports about unemployment, retail sales, vacancy rates, etc. because I was in constant communication with my tenants. I had my finger on the pulse of the situation through direct contact. I easily saw the financial sector tanking as finance companies occupying retail store fronts started to go dark. Forget big box bankruptcies; watch how many Mom and Pops and local or small shop retailers are ceasing to operate. Walk around a mall and see how many people are actually carrying shopping bags.

It should not have been unexpected that retail sales would be down in March. Instead of sitting in an office and analyzing data, the prognosticators need to get out and see for themselves what the situation is like. A firsthand look, touching and feeling the situation, has always been the best indicator for the true outcome of a situation.

As I’ve stated, fear is holding people back from making decisions; be it hiring decisions, CAPEX decisions, or consumer spending decisions. Not the media, not statistical reports, plain old fear. Once people begin to fear that making a decision is less harmful than paralysis, the world will get back on track. As Vince Lombardi said, “The real glory is being knocked to your knees and then coming back. That’s real glory. That’s the essence of it.”

We, as Americans, need to start staging our comeback RIGHT NOW.

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