Amidst changing tides of retail, market remains strong

Real Estate Weekly, Sept 3, 2003 by Charles Aug, Faith Hope Consolo

We have just been through what could be called challenging times: a difficult economy that caused consumers to gradually become less confident, more prudent and desirous of making every penny of their purchases count. In response, retail developed more aggressive marketing strategies, ranging from the mundane--e.g., dollar points on all purchased merchandise, a free pair of very expensive gloves when spending over a certain amount, afternoon teas and complimentary food and drink while shopping--to the real blockbusters, such as Caribbean cruises for the biggest, heavy spenders.

As the bottom bottomed out, the most active segments of the retail market dealt with necessity items, comfort food, home furnishings, lifestyle products, practically priced restaurants, and value-priced clothing. The retail luxury market dipped and then held.

Some unfortunately fell by the way and didn't make it back. Glamour was put aside for a while.

In the retail real estate market, there was a moderating pause as rents ceased spiraling ever upward. But in the past few months, there have been signs that good times are returning. Nationally, the financial picture is getting better every day. The job market is opening up. The tax cuts are kicking in. Starts on new homes surged in July to the highest level in seventeen years. Clearly, consumer confidence is returning.

For New York that means an economic balance is being recovered. Even the tourists have come back!

Retail in Soho is renting again and some neighborhoods like the Upper West Side have the lowest retail vacancies in thirty years. Many stores are undergoing renovations including Bergdorf's, Saks, Barneys, Bloomies and Bendel's.

Once again, shopping is the order of the day, but with a new twist. Whereas in the old days, one shopped exclusively for either luxury or basic, today's shopping covers the gamut. Nowadays, one no longer limits one-self to a special group, but mixes and matches with elan (glamour is returning).

For example, a fabulous designer top matched with a skirt or pants from one of the super value-pricers (H&M, Mexx, or Zara) and last season's designer footwear (found on sale at Century 21) constitute a trend-setting fashion statement. Shopping this way can be applied to just about anything, even food. Money goes farther--a lesson learned in the challenging times ...

At the pinnacle of the luxury pyramid, there are the jewels--Asprey's expanding and reopening in Trump Tower; the scheduled unveiling of a newly renovated Piaget at Fifth Avenue and 57th Street; and the new Boucheron store on Fifth and 55th Street.

Also on the luxury beat: the opening of the fabulous new and expanded Salvatore Ferragamo flagship on Fifth Avenue this fall and the Louis Vuitton extravaganza scheduled for the Crossroads of Luxury, Fifth Avenue and 57th Street, next year.

There are also the Fast Fashion Wars. A great example of this trend is the Mexx, H&M, and Zara competition taking place on Fifth Avenue, Union Square, lower Broadway--and practically all over town.

All are indications of a return to better times, resulting in a successful autumn shopping season that will culminate in an equally profitable Christmas.

The Retail tide has been low for a while, but high tide is coming back. Watch for the Splash!