Return to Focus on Home Helps Some Retailers
Not all retailers have struggled since the terrorist attacks.
Some are benefiting by selling low-price general merchandise, cooking utensils, patriotic craft kits and even televisions to consumers looking to make hunkering down at home more pleasant.
Consumers searching for value have been a boon for 99 Cents Only Stores, the discount retailer that on Thursday said purchases after Sept. 11 helped push sales to better-than-expected levels for its most recent quarter. Williams-Sonoma Inc., the cooking goods and furniture retailer that has suffered for much of the year, reported that it will meet third-quarter expectations. Crafts merchant Michaels Stores Inc. said it too will exceed sales estimates because of renewed interest in home-based activities.
“The events of Sept. 11 are causing more people to look inward, toward the home,” said Michael Niemira, a retail analyst and economist with Bank of Tokyo-Mitsubishi. “That’s where people are focusing their spending, and that’s where the market will be, I suspect, even into the next year.”
Other companies set to release September sales next week said they were surprised by the types of products sold after the attacks. Board games, including Monopoly and Candyland, are flying off the shelves at KB Toys and Toys R Us Inc., which also report strong sales of GI Joe dolls and toy rescue vehicles.
In addition to bottled water and flashlights, Costco Wholesale Corp. said it’s been surprised by increased sales of televisions. Southern California electronics chain Ken Crane’s has seen strong sales of big-screen TVs, DVD players and entertainment-related furniture.
“When they’re spending more time at home, they’re upgrading their home entertainment,” said Pam Crane, the eight-store chain’s vice president.
And in addition to cutting travel spending, consumers jittery about rising unemployment and a slowing economy will benefit from lower energy prices, lower payroll taxes and the potential for further government inducements like the tax rebate checks, notes William Blair analyst Dave Ricci.
In the days just after the attacks, almost all retailers suffered significant sales declines as consumers stayed at home, glued to news reports. Later, consumers returned to stores, particularly discount general merchants such as Wal-Mart Stores Inc., Target Corp.’s namesake stores and others who reported good sales of emergency supplies and basic goods.
But in the last two weeks, retailers of more discretionary goods also reported gains.
At Williams-Sonoma, that meant strong sales of heavy stock pots, roasting pans, egg poachers and a new cookbook about soup.
“Anything having to do with ‘comfort food,’ ” said Patrick Connolly, the store’s executive vice president and chief marketing officer. “Sept. 11 increased people’s perspective on what’s important in life and values. It comes back to home and we are a home-centered business.”
The focus on family is the same factor that’s causing a shift in buying patterns at KB Toys, said Chief Executive Michael Glazer.
KB stores are seeing double-digit increases in old-time favorite games, such as Clue and Sorry. Fisher-Price’s Rescue Heroes line, Glazer said, also are new favorites.
“Our initial reaction, when we first saw the trend right after the crisis, was to think that people are cooped up--they’re at home, they’re not traveling and they’re going back to a family value focus,” Glazer said. “But that trend has continued and may continue still.”
At Michaels, sales of fall decorations and craft supplies were up across the company’s nearly 700 stores; customers also all but stripped the store clean of red, white and blue ribbon, said Chris Holland, the company’s vice president of finance.
As uncertainty continues about the overall economy as well as American military response, analyst Niemira said, those kinds of sales trends are likely to continue.
“A change will come from the economy improving,” Niemira said. “But that’s probably six months away, at least.”
Pam Crane, of the namesake electronics chain said good sales during these times are nothing to celebrate.
“There are a lot of people suffering,” Crane said. “We don’t want to get business that way.”
Despite the positive reports, shares in many of the companies fell Thursday because of general uncertainty about the economy and cautious forecasts from many retailers.
Williams-Sonoma closed down 5 cents Thursday to $27 on the New York Stock Exchange, following a 22% gain the day before. Wal-Mart fell $1.23 to $51.50 on the NYSE.
Michaels Stores fell $1.74 to $40.70 on Nasdaq. Toys R Us rose 31 cents to close at $18.80 and 99 Cents Only rose 16 cents to $36.76, both on the NYSE.
KB Toys and Ken Crane’s are privately held.
