Where America Shops
THE US retailing industry is breathing a sigh of relief these days after a decent gain in September back-to-school sales. Still, consumers remain skittish about expensive big-ticket purchases. Retailers - who dramatically expanded during the 1980s by adding new stores - will require further consolidation and downsizing to adjust to a changing commercial environment.
In the days when shopping was more a family affair, large department stores dominated. Today specialty stores, such as the Gap, cater to individuals; many shoppers seek the low prices found in discount stores such as Wal-Mart and K Mart. Some upscale chains flourish - Nordstrom and May Department Stores, with its successful Lord & Taylor unit.
Given the flux in retailing, many observers were surprised by a recent decision by Sears, Roebuck & Company. The firm chose to shift away from successful non-retailing ventures and back into retailing. Sears plans to sell its Coldwell Banker real estate operations outright, while selling 20 percent each of its Allstate Insurance and Dean Witter brokerage units. Proceeds will be used to reduce Sears's debt.
Sears remains an American corporate institution. But the company's retailing presence has sagged, largely because of discounters. Fraud charges involving some of Sears' auto-repair shops have not helped. Although Sears has sought to keep up with new trends - as with specialty departments such as optical services and picture framing in some of its outlets - Wal-Mart and K Mart are now the chief forces in retailing in terms of earnings, total number of stores, and capital-development plans.
Sears faces an uphill battle to reclaim its pre-eminence in a rapidly evolving industry. But it still has one of the best-known brand names in America. The challenge - shared by other old-line US companies - is to make it relevant to a new brand of consumer.