The News: Executive Confidence Plunges
- Nov 11, 2008
Fading consumer confidence is taking an increasing toll on retail executives’ fortitude. After a roller coaster of a year, the view of market conditions among shopping center executives’ is heading sharply south, according to the most recent monthly survey by the International Council of Shopping Centers, released last Wednesday.The organization’s benchmark barometer, measuring retail executives’ views of current business conditions and their six-month outlook, fell to a record low 31.1 percent in October. That rating is on a scale in which 50 percent represents unchanged conditions and anything lower indicates deterioration. The recent score also marks a 16 percent falloff from the previous October. The index has fluctuated for most of the year, reaching its highest level of the year in June at 42.5 percent, dipping to 36.9 in July and working back up to 39 in August in anticipation of the back-to-school shopping season. Still, that modest wave of optimism had dissipated by September as the measure plunged to 32.7 percent.The business barometer weighs current conditions and six-month ooutlooks equally, and the survey shows declining owner confidence in both. For current conditions, scores fell to 29.5 percent, off 2.2 percent from September’s score and 17.6 from the same time last year. The six-month outlook slid 0.7 percent to 32.7 during October.Declining sales and customer traffic clearly form the biggest worries. Only a year ago, the six-month outlook for sales was at the 50 percent equilibrium point, but it plummeted to 30.5 percent during October. The six-month outlook for customer traffic stood at 52.5 percent a year ago, indicating that executives actually expected a slight improvement in business conditions to arrive during the beginning of 2008. By last month, however, the forward-looking index of customer traffic sat at only 32.9 percent.Worries about a poor holiday shopping season are coloring retail executives’ views. Almost two-thirds of the executives, 65.7 percent, told the International Council of Shopping Centers that they expect growth to slow, and another 20 percent predict that growth will be much lower. That poses a stark contrast to October 2007, when only 23.3 percent of executives projected lower year-over-year sales growth and none predicted it to be much lower. Last year at this time, 36.7 percent of those surveyed expected sales growth to rise compared with the previous year; now, only 2.9 percent hold that view.