I just read the North American Market Outlook for retail. Like many others, it takes a few sentences pointing out the good things going on in retail, chief among them increasing occupancy and rents. Then, it spends most of its time detailing the uncertainties and risks: boomers with money spending more on health care and savings and less on other areas; lack of home equity lending as a source of spending, the discounting trend, and, of course, the growing online assault on brick and mortar stores. I’m not picking on Invesco as this outlook appears to be the predominant view. But then you start talking to colleagues across the country and a different story begins to emerge. One that paints retail in most markets as strong and growing as opposed to recovering. One that sees some markets - especially the coasts and the big 24 hour cities – as seeing significant activity. Most of the brokerage firms we do business with across the country are having great years.
So, what is driving this better than advertised activity? A few thoughts: the general economy is better than it actually feels; while not universal, consumers are feeling pretty good. Many have paid down household debt, their houses are worth more, and wages are increasing in many parts of the country. There has no doubt been some pent –up demand that has contributed as well. We’ve become a country that focuses on the negative. Retail has always had its ebbs and flows, now you just hear about the ebbs. Radio Shack may go away, Sears needs to, and Best Buy may in the next few years – this has happened throughout our lifetimes. Lululemon and Nordstrom Rack start opening stores as fast as they can, just crushing it (at least when Lulu isn’t making see-through yoga pants) and no one pays attention. The point being, the retail market is forever creative, vibrant and changing. It will adapt to internet sales and survive, perhaps even thrive. But, at the end of the day, we are a country of consumers that like and need to shop. So, turn off CNN, put down your I-pad, and go buy something…you’ll be glad you did.
