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Retail Sector Facing Tough Times if Economy Gets Much More Sluggish

NEW YORK CITY-Here in a shopper's paradise, concern over the significant drop in retail sales has particular bite as retailers pay some of the highest rents in the world. Meeting overhead could break poor performers.

By Amy Vaughn | Updated on December 28, 2000

NEW YORK CITY-Industry experts all seem to agree, the economy isn’t looking too bright and it could make times tough for retailers here who have some of the highest overheads in the world. On East 57th Street, for example, rents can soar as high as $700 per sf, a price that in a bear market, could break the bank for any business not excelling in the face of reduced spending. While almost all agree that crying recession may be too dire a prediction just yet, they all seem to agree the weak will fall.

The Federal Reserve last week began warning about the weakening economy and he word recession has started to pop up with ever-increasing frequency. The retail sector has been enjoying the longest economic expansion on record. Now, big spenders during the high times are looking at their credit card bills, contemplating a possible looming recession and thinking twice about racking up any more debt. Now retailers, even offering huge holiday sales, are worrying about their own finances.

Even President-elect Bush has been fanning the flames, stepping up his warnings about the economy just before Christmas and the start of Chanukah. While some on Wall Street are pondering the lack of a Bush rally on the floor of the Stock Exchange, retailers are hoping people have just been holding off on making their purchases until after year-end bonus checks clear.

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