COVER STORY, NOVEMBER 2009

DECLINE IN CHICAGOLAND RETAIL
Melaniphy & Associates’ recent report outlines the decline in retail sales in the Chicago metro area.
John C. Melaniphy

During the first half of 2009, Chicago’s metro area saw its retail sales decline by $5.9 billion (11.45 percent) compared to a similar period in 2008, the largest dip ever recorded! Retail sales loss from 2008 totaled $5.2 billion. In the first half of 2009, the city of Chicago’s retail sales dropped by $1 billion (9.19 percent), and suburban Cook County declined by $2.4 billion (12.93 percent). The retail sales data is based upon Illinois Sales Tax Receipts for the first and second quarters of 2009.

Is the worst over? Have we hit the bottom? I say no! For example, in the first quarter of 2009 retail sales fell by $2.5 billion (10.68 percent). Additionally, in the second quarter of 2009, retail sales declined byLet’s look at individual retail categories.

FOOD STORES

Sales for food stores declined in the first half of 2009 by approximately $120.8 million (1.87 percent). Many thought that food sales would stay about the same or even increase slightly as more consumers choose to dine at home instead of dining out. Actually, the consumer cut back in both areas. Note that this occurred even in light of considerable food price increases over the first half of 2009.

GENERAL MERCHANDISE

General merchandise sales, including department stores and big boxes, declined in the first two quarters by $228.1 million (4.24 percent). The first quarter saw a loss of $60.4 million (2.39 percent), while the second quarter saw a loss of $167.7 million (5.87 percent). Most of this decline was in felt in department stores sales.

RESTAURANT/BAR

Restaurant and bar sales declined by $377.2 billion (5.96 percent), consisting of a $142.4 million (4.84 percent) decline during the first quarter and a $234.8 million (6.93 percent) slide in the second quarter. Previously, sales in this category increased by $54.2 million in the fourth quarter of 2008.

APPAREL/ACCESSORIES

Apparel and accessories store sales dipped in the first two quarters by $268.2 million (12.02 percent), with a $93.7 million (9.46 percent) decline in the first quarter and a $174.5 million  (14.04 percent) decline in the second quarter.

FURNITURE/APPLIANCE

Furniture and appliance stores experienced a downswing in sales, with a decline of a $659.1 million (21.98 percent) during the first half of 2009. Sales dropped in the first quarter by $303.8 million (20.17 percent) and by $355.4 million (23.80 percent) in the second quarter.

HOME IMPROVEMENT

Home improvement stores recorded a sales decline in the first half of 2009 by $344.1 million (13.31 percent). In the first quarter, sales fell by $131.1 million (12.66 percent) and the second quarter saw a drop of $213.1 million (13.76 percent).

DRUG/MISCELLANEOUS RETAIL

Sales for drug/miscellaneous retail stores dropped in the first half of 2009 by $348.3 million (4.76 percent), the lowest percent decline of any category. Sales in the first quarter sank by $176.4 million (4.99 percent), while second quarter sales declined by slightly less at $171.9 million (4.54 percent).

AUTOMOBILE/GASOLINE

Automobile and gasoline stations saw the largest decline at approximately $2 billion (18.94 percent). First quarter sales declined by $971.1 million (19.66 percent), while second quarter sales declined by $1 billion (18.30 percent).

No matter how the data is viewed, the declines are staggering. The acceleration of the drops in the second quarter indicate that we will not see the bottom for some time. We may see some improvement because of the government stimulus, but not enough to get retailers excited and landlords smiling. The consumer is the key to the recovery and the their disposable income will not support significant sales growth in the near term.

John C. Melaniphy is president of Melaniphy & Associates in Chicago. $3.3 billion (12.13 percent). Rather than slowing, the decline is increasing.

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