Desperate Housewares

Observing the Christmas carnage at FAO Schwarz, Bottega Veneta, and Bergdorf Goodman

Daniel Gross of Slate writes: This is shaping up to be a dismal Christmas. The International Council of Shopping Centers, which is supposed to help promote the industry, last Thursday trumpeted an "awful beginning to the holiday season." Excluding Wal-Mart, retailers reported that same-store sales last month fell 7.7 percent, the worst November in recent history. The big crowds that stampeded (literally, sometimes) through the doors of big-box retailers on Black Friday have dispersed. Shoppers seem inured to the relentless Christmas spirit. The Boston Consulting Group says that half the households it surveyed are planning to reduce their Christmas spending, while only 10 per­cent plan to boost it. ICSC projects that holiday sales could actually decline in 2008, "which would be the weakest holiday-sales performance on record," says Michael Niemira, chief economist and director of research at ICSC.

But no indicator was quite so telling as the plaintive message left on my home answering machine over Thanksgiving weekend. A kindly Bergdorf Goodman salesperson invited members of our humble household to stop by and check out the bargains. Now, if you're not a habitué of the his-and-hers luxury department stores on Manhattan's Fifth Avenue, there are a few things you should know about Bergdorf Goodman. This place puts the haute in haute couture. It's about as welcoming to the public as North Korea. It's the kind of store where the salespeople take one look at your shoes and judge whether you're a big spender. Bergdorf Goodman cold-calling suburban shoppers? It's like college kids canvassing for Obama votes at a National Review conference.

But these are desperate times. During the late economic expansion, the well-off—and, in particular, the really well-off—thrived while the middle and working classes struggled. But in 2008, the stalwart customers of New York's luxury retailers have been falling along with the hedge funds. The investment bankers and their significant others? See ya. Rich tourists from points south and west? Not this year, y'all. Europeans and Brits fueled by their powerful domestic currencies? Adios, au revoir, cheers! Russian oligarchs? Da svedanya. In November, according to ICSC, luxury stores saw sales fall 10.5 percent. Neiman Marcus, which owns Bergdorf, reported sales were off 11.8 percent.

Read the whole article here.