Jennifer Marks -- Furniture Today, September 14, 2008
One of the great things about market week is the conversation — getting everybody together in one place at one time and finding out what the prevailing point of view is across the industry.
Based on pre-market talks over the past couple of weeks, this is what I expect to find on the agenda during the next few days.
Linens 'n Things: Who is signing on for the Trade Vendor Payment Program and who isn't. Does the new reorg plan — under which the retailer's senior secured noteholders would emerge as the company's new owners in a partial debt-to-equity swap for their more than $650 million in notes — bode well for the long term? Before the plan was filed, the most common response to any question about LNT's prospects beyond year-end was, "I hope they make it." It will be interesting to see if the market is feeling more optimistic on this score now.
Narrow vision: Can Bed Bath & Beyond, JCPenney and Macy's absorb every new product being targeted at them? I can't tell you how many lines are developed for "big box specialty and/or department stores." The phrase has been so over-used it is thoroughly de-coded. Obviously, the larger manufacturers have the greater challenge here, needing really, really big programs in a way that smaller vendors don't. Everybody else — and let's face it, this is not an industry awash in huge suppliers — needs to remember there are other accounts out there.
Return of the middle man: With the economic doldrums expected by many retail execs to stretch into next year, will merchandise managers push some orders back into the hands of third-party suppliers by way of insurance? We've seen it happen before, after overly aggressive pursuit of in-house sourcing left retailers holding the bag.
Inflation: Last week, 99 Cents Only Stores announced the first price increase in its 26-year history. The new price: 99.99 cents. (How do you ring that up?) This past spring, several retailers began acknowledging to Wall Street that they were being forced to raise prices in spots.
"How low can you go?" was the mantra that fueled price-setting during the first seven years of this decade. I'm sure buyers will continue to ask the question. Just not sure they'll like the answer.