Sony struggles in the recession

Sony - which laid off 8 thousand or 4% of its global work force - is now struggling with an overpriced gaming console it has yet to make money from - the PS3 (right).
Now comes new US sales figures for November from NPD showing PS3 sales dramatically falling while its rivals increase. Sales of the PS3 fell 19% last month from a year earlier, while sales doubled for the Wii console and rose 8% for the Xbox 360.
The WSJ speculates this morning that Sony's strategy of selling a pricey game machine with advanced features and cutting-edge components appears to be backfiring as a deepening recession has U.S. consumers more price sensitive than ever.
It points out that if Sony doesn't close the gap with its rivals, it could risk making the PS3 an afterthought to game publishers, who focus most of their resources on the machines with the most users. that it's possible to buy a Blu-ray player and an Xbox 360 for less than a PS3 and that Sony gambled and lost in its stupid policy of not cutting PS3 prices to boost sales before the holidays because of Sony Chief Executive Howard Stringer's commitment to making the games division profitable after heavy investment in the PS3 machine.
Businessweek gives some suggestions on what's needed if PS3 is to be saved.
Information Week notes it's cheaper now to make a PS3 after Sony cut costs but this may still be too late.

Consumers lost -confidence plunges

US consumer confidence plunged to a historic low in December amid the rapidly deepening recession and the outlook for the next six months is "quite dismal," according to a private research firm, which has been measuring consumer confidence since 1967.

Consumers' outlook for the first half of 2009 remains "quite dismal," and they see "only a modest recovery" in the second half of the year.

Australian stocks are among many to end 2008 with their worst annual fall on record after a year scarred by the global financial crisis.

Big UK retailers go bust

The Independent reports two more big UK retailers have collapsed into administration, becoming the latest victims of the Christmas retail crisis and sparking fears over hundreds of jobs.

USC, the 58-store branded fashion chain backed by the business tycoon Sir Tom Hunter, appointed the accountancy firm PKF as administrator and Passion for Perfume, a 45-store fragrance chain, has also called in the administrators.

They follow the appointment of administrators by Whittard of Chelsea, the coffee and tea specialist, The Officers Club, the menswear chain, and Zavvi, the entertainment retailer.

Good on you, President!

"The market is in the process of correcting itself." -- President George W. Bush, in a Mar. 14, 2008 speech.

Check out the other bad predictions of the year compiled by AP.

Empty space as retail chains trim their store numbers

The amount of abandoned and empty office, warehouse and business space continues to grow.Watch for two other retail trends in the next few months.

Stores will close - and chains will reduce their number of stores.

Bloomberg reports a prediction from the International Council of Shopping Centers that US retailers may close 73,000 stores in the first half of 2009.

Talbots Inc. and Sears Holdings Corp. are among chains already closing underperforming locations.

It's like the old Soviet Union

A Toronto Sun columnist, Eric Margolis, likens the US car industry to the old Soviet Union:

Economically declining, bereft of new ideas, producing unwanted products, run by dimwitted careerist bureaucrats.

America produces the wrong cars, and far too many. The bloated auto industry must downsize. It has been selling cars only thanks to the steroid of cheap, easy credit — in effect, almost giving them away. Now that the drug is largely cut off, sales have nosedived.”

He makes the excellent suggestion that Americans (and us all) must

relearn the old verity that one must save for purchases and rainy days; that gambling with your home is idiotic; that there is no substitute for hard work or manufacturing; and that it’s always very risky to trust politicians or financial “professionals” with your money.

WSJ today quotes analysts estimating that from about

10% to 26% of all US retailers are in financial distress and in danger of filing for Chapter 11.

Retailers will trim inventory and reduce the number of suppliers. That, in turn, will cause a ripple effect, prompting a number of weaker manufacturers, small brands and underfunded fashion labels to fail. New retail formats and concepts stores are likely to be curtailed in the coming year. And luxury-goods makers already are working to cut the long lead times between orders and store delivery as a way to reduce risk.

“We will have a lot fewer stores by the middle of 2009,” says Nancy Koehn, professor of business administration at Harvard Business School. “It’s happening very, very quickly because of the financial crisis and the recession.”

Gloom heading online?

In what may be an early indicator of broader Web advertising trends, the New York Times announced today that it saw total Internet advertising revenues decline 3.8 percent.

The online falloff contributed to a 20.9% drop in overall ad revenues and a 13.9% decline in the company’s total revenues last month. It also signals a further chilling of the online ad market for newspapers and other Web publishers. The company is counting on rising digital revenues to offset the long-term decline in print advertising and circulation battering the entire newspaper industry.

BNET notes an even bigger online issue:

An entire wave of Web 2.0 players – YouTube, MySpace, Facebook, Digg, Twitter, Flickr, etc. – have started losing their luster as it became clear they had not developed a sustainable business model. Although venture capital continued to fuel a vibrant sector of startups, the major question looming over these emerging companies was how they would attain the necessary scale to become profitable.

Cheap prices give Amazon a boost

Amazon.com is calling this holiday season its “best ever,” saying it saw a 17% increase in orders on its busiest day — a rare piece of good news in a season that has been far from merry for most retailers, including online businesses.

Amazon customers ordered more than 6.3 million items on Dec. 15, compared with roughly 5.4 million on its peak day last year, the company said. It shipped more than 5.6 million products on its best day, a 44% surge over 2007, when it shipped about 3.9 million on its busiest day.

Amazon’s best-sellers included the Nintendo Wii game console, Samsung’s 52-inch LCD HDTV and Apple Inc.’s iPod touch.
Forrester Research analyst Sucharita Mulpuru said Amazon’s experience shows the current economy is favoring discount retailers, both online and offline.

Figures show how deeply retailers have been hit

Some shops will definitely have to replace Boxing week sales with Closing Down sales like this one.

Figures in the US out today show just how badly retailers have been hit over Christmas.

Sales at specialty apparel retailers like Gap Inc and Abercrombie & Fitch Co fell 19.7 percent this year, SpendingPulse said. When factoring in department store results, sales fell about 20 percent, McNamara said.

Women’s apparel sales fell 22.7 percent; men’s clothing sales were off 14.3 percent, and footwear sales fell 13.5 percent, SpendingPulse said.

This year, the higher the price, the more consumers did without, SpendingPulse said. Sales at specialty electronics and appliance chains such as Best Buy Co Inc fell 26.7 percent, it said.

Luxury sales, which include sales at high-end department stores, leather goods boutiques, pricier jewelry stores and restaurants, fell 34.5 percent, SpendingPulse said. Excluding jewelry, sales fell 21.2 percent.

Thanks for the present darlin - but I need the money

So much for the Christmas spirit.

The Dominion Post reports that online auction sites were flooded with new goods once people opened theior presents. “Christmas lunch was yet to settle when hundreds of members of auction site Trade Me listed items such as earrings, DVDs, digital photo frames and cosmetics on the website, some complete with photos of the items and comments such as “Unwanted Christmas gift, just not my kinda thing”.

Consumer behaviour changes dramatically

Sorry Sky City casino but the dangling of carrots like $20,000 doesn’t work anymore to get hard up people through the door.

They don't have the $20 to get a cab to the place!

Consumer behaviour is changing -and now with the recession

major changes are happening

Over the past year, shoppers have drastically changed their spending habits in ways not seen since the 1970s, switching to store brands and discounters like Wal-Mart. During the holiday shopping season, they cut back on their spending, took advantage of big discounts and bought practical gifts.

This AP writer notes One of the big worries for stores is what to do with the mounds of items they still have to sell. If 75 percent off before Dec. 25 didn’t make people splurge, will even bigger deals afterward do the trick? Another problem is that shoppers shunned gift cards this season. That means they are less likely to return to the stores after the holiday.

“The new consumer mantra for this coming year is: If I don’t need it, I won’t buy it,” said C. Britt Beemer, chairman of America’s Research Group. “America has going from a consuming society to a planned-buying society. Everything is focused on saving more money.”

The retail industry could be looking at its biggest contraction in 35 years, according to Burt P. Flickinger, III, managing director of consulting firm Strategic Resource Group. He estimates that 160,000 stores will have closed in 2008 and predicts that an additional 200,000 will shutter next year. In March and April of 2009, Flickinger expects 2,000 to 3,000 malls to shutter.

A number of stores struggled just to make it to Christmas. Circuit City Stores filed for bankruptcy protection last month. It plans to keep operating, but KB Toys, which filed for bankruptcy protection earlier this month, has already begun to liquidate all of its stores and will shut down completely.

Finlay Fine Jewelry, which operates stores such as Bailey Banks & Biddle, warned a week ago that it may not have enough cash to operate through the end of its fiscal year on Jan. 31, and may have to “significantly curtail” its business.

In Christmases past, stores could rely on a surge before or after the holiday to help save the season. But this year, it was virtually over before it began as stores had to slash prices on holiday goods as soon as they hit the shelves.

How low can prices go?

A series of gloomy economic reports shows that consumers holding tight to their wallets with job losses expected to mount in the months ahead.

Meanwhile retailers seem unable to express how low they have to go to express their desire for consumers to spend. A women’s clothing chain is now talking of very low prices.

Jobs go, retail moves to 50% off

The number of Americans filing first-time claims for unemployment insurance rose last week to a 26-year high, indicating employers are stepping up job cuts as the recession deepens, according to reports today.

Meanwhile a trip up and down the main retail outlets have shown shops are now so desperate after a terrible Christmas that they are discounting at 50% off - even major retailers.

List of retail failing is growing

There’s very little joy left for retailers this season,” says C. Britt Beemer, founder of America's research group. “Wal-Mart continued to dominate shopping this year predicting a rash of financial problems for retailers in the wake of the dismal holiday season. A number of major names, such as Macy’s, are in trouble over the long run, and we will undoubtedly see more retail bankruptcies in the New Year.
NBR reports the list of smaller retailers being forced into receivership or liquidation is growing as consumers keep spending under tighter control.

Tie Rack was placed into liquidation by Corporate Finance and insolvency firm Staples Rodway is managing several recent receiverships such as high-end Auckland furniture stores Eon Design, which has this notice (above right) on its now-empty Britomart Place store.It’s also dealing with the receivership of Garlands Furnishing Specialists after 50 years in business and also managing The Fine Wine Delivery Company through voluntary administration, is trying to offload wine stocks from the recently closed Christchurch outlet.

Make or break week- worst for 40 years

It’s a make or break week for retailers. After a dismal Christmas, some will rely on massive Boxing Day sales to generate much-needed hard cash to pay bills.

But crazy discounting on top of pre-Christmas discounts means the margins are so low, it won’t help the bottom line and some businesses will fail.
The Washington Times reports that recession worries have put a monumental chill on holiday sales, which are on track to be the worst in at least four decades raising the possibility of many retail bankruptcies next year.

The slump comes as the nasty turn in the economy continued to eat away at consumer wealth and confidence, with home sales hitting a 17-year low last month and home prices falling at the fastest rate in at least 40 years. The rapid decline of home values - the largest source of wealth for most consumers - is contributing to the funk that is sinking holiday sales.

Christmas retail a disaster

As Christmas shopping froze, shops like this one kept changing the discount eventually pasting over the older ones with 50% off. Watch for 70% on Boxing Day.
U.S. holiday sales will fall more than forecast after recession fears kept shoppers from spending in the last weekend before Christmas according to a US retail group.

Last weekend had the lowest U.S. shopper turnout in at least six years.

House sales mirror the Great Depression

Bloomberg reports that sales of single-family houses in the U.S. dropped in November by the most in two decades and resale prices collapsed at a pace reminiscent of the Great Depression, dashing speculation the market was close to a bottom.

Can literature survive the recession?

Salon asks if the recession will kill literary works. “The end of days is here for the publishing industry — or it sure seems like it. On Dec. 3, now known as “Black Wednesday,” several major American publishers were dramatically downsized, leaving many celebrated editors and their colleagues jobless. The bad news stretches from the unemployment line to bookstores to literature itself.

“It’s going to be very hard for the next few years across the board in literary fiction,” says veteran agent Ira Silverberg. “A lot of good writers will be losing their editors, and loyalty is very important in this field.”

Retail profit slices in half

Smiths City’s first half profit halved to a net $820,000, after it warned shareholders last month that lower sales and poor results for its property company would hurt profit. The Christchurch-based retailer said operating revenue fell 14 percent to $114 million for the six months ended October 31, in part due to the sale of a business a year earlier. Same store retail sales declined 7.7 percent.

Meanwhile you can hardly see some buildings now as there are so many for lease signs as every real estate agent in town tries to get a deal.

Shock forecast from Toyota

A grim forecast from Toyota that it will lose money this fiscal year on its vehicle business for the first time in seven decades is the latest sign of the global auto industry’s sharp slowdown after years of rising profits and rapid expansion.

Meanwhile if you have lots of cars - we have a big carpark for you - hey we will throw in a lovely garden and wait there’s more - a massive big floor. we may be a bigtime lawyers building but we need you to rent.

Lease us please- any conditions

How desperate is this - short term, long term.. OK then hey any term. You name it.

Meanwhile the governor of the Bank of Spain on Sunday issued a bleak assessment of the economic crisis, warning that the world faced a “total” financial meltdown unseen since the Great Depression.”The lack of confidence is total,” Miguel Angel Fernandez Ordonez said in an interview:”The inter-bank (lending) market is not functioning and this is generating vicious cycles: consumers are not consuming, businessmen are not taking on workers, investors are not investing and the banks are not lending. “There is an almost total paralysis from which no-one is escaping,” he said, adding that any recovery — pencilled in by optimists for the end of 2009 and the start of 2010 — could be delayed if confidence is not restored.