Placeholder Image

Subtitles section Play video

  • bjbjLULU JEFFREY BROWN: As shoppers make their last-minute holiday purchases, much attention

  • is on just how much consumers will spend this holiday season amid a weak economy. At the

  • same time, our economics correspondent, Paul Solman, is finding a fundamental change taking

  • place in the world of retail. It's part of his ongoing reporting Making Sense of financial

  • news. WILLIAM MCCOMB, Liz Claiborne: The Kate Spade shopper loves color and she loves sparkle.

  • PAUL SOLMAN: CEO Bill McComb runs the Liz Claiborne company, which owns premium brand

  • Kate Spade. WILLIAM MCCOMB: This is a Sparkle Gia bag, which is selling out in all of our

  • stores right now. PAUL SOLMAN: At $95, a steal, since Kate Spade bags can cost $500. WILLIAM

  • MCCOMB: This is one of our classic items. It's a quilted paneled leather with a beautiful

  • chain with leather inside. PAUL SOLMAN: In a limping economy, $298 shoes? WILLIAM MCCOMB:

  • But it's not just a regular pump. Look at the twist on the back. PAUL SOLMAN: Once a

  • 50-brand conglomerate, in the fall, Liz Claiborne, Inc., announced that the teetering mid-market

  • company would unload almost all of its divisions, including those that catered to its once core

  • middle-income shoppers, like the Liz Claiborne brand itself, sold to J.C. Penney. WILLIAM

  • MCCOMB: What you're finding in the marketplace today is that those that are chasing the value

  • customer and those that are in effect pursuing the high-end customer are doing the best.

  • Those in the middle are really getting squeezed at both ends. PAUL SOLMAN: And that's what

  • Liz Claiborne was. WILLIAM MCCOMB: Liz Claiborne absolutely was focused in that middle. It

  • became very clear, sort of a blinding clarity, that we needed to pick a direction to go,

  • because that middle was no man's land. PAUL SOLMAN: So, the firm went upscale and is staking

  • its corporate life on provisioning the posh: Kate Spade, Lucky Brand Jeans and Juicy Couture.

  • WILLIAM MCCOMB: Our focus on great brands brought us to a market segment of the higher

  • end, accessible luxury consumer. And even though the economy's bad, they're spending

  • money. They have disposable income to spend. PAUL SOLMAN: It should come as no surprise

  • to those following the economic inequality debate. Retail is increasingly bifurcated

  • into high-end and low, with an ever-shrinking middle, forcing do-or-die decisions on companies

  • like Liz Claiborne. WILLIAM MCCOMB: If we were still supporting the 50 brands that we

  • had, we would have had to declare bankruptcy. PAUL SOLMAN: But designer jeans are still

  • selling. Direct-to-consumer sales at Lucky are up 23 percent year-to-year because it

  • has status value. WILLIAM MCCOMB: One of the staple trademarks is the "Lucky You" label

  • right inside the zipper. PAUL SOLMAN: Investors also seem to like the high-end trademarks.

  • Since the Liz Claiborne makeover, its stock is up dramatically. Now, an upscale focus

  • is no guarantee of future performance. Though sales are up at Kate Spade and Lucky Jeans,

  • they're not at Juicy. And the company still posted a loss last quarter. But the point

  • is, Liz Claiborne could see clearly that the middle market had lost its luster. Luxury

  • spending, by contrast, is on the up and up. MILTON PEDRAZA, Luxury Institute: It's been

  • up since 2010 and it's been up essentially for many brands 10 percent to 15 percent in

  • the U.S. PAUL SOLMAN: Milton Pedraza tracks high-end consumption. MILTON PEDRAZA: There's

  • been a flight to quality and a flight to pedigree. So the Guccis of the world, the Louis Vuittons,

  • the Chanels, all the brands that we think as classic have done far better than brands

  • that are let's say not so pedigreed, don't have a long history, don't have classic products.

  • PAUL SOLMAN: The well-heeled can and will up the ante to demonstrate their prosperity

  • in a high-low economy, it seems. And sales are climbing at high-end retailers. Saks Fifth

  • Avenue stores are up 9 percent year-over-year. CEO Steve Sadove on FOX Business News. STEVE

  • SADOVE, Saks Fifth Avenue: We're seeing very good performance in areas like handbags, shoes,

  • accessories, jewelry. And we're seeing the best full-priced selling we have seen in years.

  • And, in fact, what we're seeing is the customer going towards the more special, differentiated,

  • best, unique products. PAUL SOLMAN: At Neiman Marcus, profits in the most recent quarter

  • surged 88 percent over last year. And fantasy gifts in Neiman's annual Christmas book are

  • selling like hotcakes, exorbitant hotcakes. A custom library for $125,000 sold -- all

  • five $5,000 private Johnnie Walker tasting packages, gone in two days -- 10 special edition

  • Ferraris with custom-made luggage to match the cars leather interior, $395,000 apiece,

  • snatched up in 50 minutes. But in an increasingly high-low economy, says luxury maven Pedraza,

  • such spending may pay off. MILTON PEDRAZA: When somebody walks into a negotiation, and

  • they get out of their Ferrari, Enzo Ferrari, and they may have a very high-end watch, it

  • isn't just showing off. It is showing off to make a point. PAUL SOLMAN: And what's the

  • point that's being made? MILTON PEDRAZA: That, I have power. I, mean, for example, Louboutin

  • shoes with the red soles, extremely conspicuous, right? And when we asked women, well, why,

  • they said, it shows that I have power because I can afford these products, I have made the

  • money myself, and I'm still feminine, and, frankly, I'm still sexy. PAUL SOLMAN: Meanwhile,

  • unemployment and stagnant wages continue to hammer the middle class and the middle-priced

  • retailers who have long catered to it. J.C. Penney, new owner of the Liz Claiborne brand,

  • is a current casualty of mid-income malaise, says stock analyst Anthony Chukumba. ANTHONY

  • CHUKUMBA, BB&T Capital Markets: The J.C. Penneys of the world, the Kohls of the world, they're

  • struggling. I mean, in many cases, their sales are really not growing at all and their profit

  • margins are declining. PAUL SOLMAN: Case in point, Thanksgiving sales began earlier than

  • ever this year and deep discounts have continued since Thanksgiving. Layaway is back, free

  • shipping is up, profits down at Wal-Mart, the Gap and Best Buy, to name a few. But,

  • as at the top, at the bottom, business is really good. At Jack's 99 Cent Store in Midtown

  • Manhattan, the joint was jumping. Why? WOMAN: The prices, of course. MAN: Because of the

  • economy and the way things are, you have to try to watch every penny. WOMAN: My hours

  • have been cut. I own a home and all that, so everything has -- I have to be budgeting

  • right now. PAUL SOLMAN: Analyst Chukumba, who's been tracking dollar stores for 14 years,

  • says they're benefiting from what we, among others, have called the hourglass economy.

  • ANTHONY CHUKUMBA: They're growing their sales. They're growing their profit margins. They're

  • growing their earnings. And the stocks are reflecting that as well. In addition to their

  • core low-income customers, you have a lot of sort of middle-income customers who are

  • trading down to the dollar stores. PAUL SOLMAN: At Dollar General, the largest national chain,

  • profits were up last quarter by 34 percent -- sales at Family Dollar stores and Dollar

  • Tree also booming. And Jack's 99 Cent Store was doing a brisk business, too, especially

  • for a weekday afternoon. ANTHONY CHUKUMBA: Given the time of day and the day of the week,

  • I'm very surprised by the amount of traffic here. And, as you can tell, it's not people

  • browsing. These people are shopping. I see a lot of full baskets, a lot of full shopping

  • carts. And it's not just your person paying with food stamps. PAUL SOLMAN: And dollar

  • stores are investing to serve the pinched consumer. ANTHONY CHUKUMBA: It's not like

  • they have just been sitting around counting their money. They have been aggressively opening

  • stores, renovating stores, improving the store experience, bringing in more national brands.

  • PAUL SOLMAN: What products are popular in stores like this? ANTHONY CHUKUMBA: They're

  • definitely focusing a lot more on needs, so your food items, your health and beauty care

  • items, your household cleaning products, and less on wants. They're catering to what the

  • customer is buying. PAUL SOLMAN: So, then, as the holiday shopping season enters its

  • final few days, the retail takeaway seems pretty obvious: Aim low or aim high, but don't

  • mess with Mr. In-Between. urn:schemas-microsoft-com:office:smarttags Street urn:schemas-microsoft-com:office:smarttags

  • address urn:schemas-microsoft-com:office:smarttags country-region urn:schemas-microsoft-com:office:smarttags

  • place JEFFREY BROWN: As shoppers make their last-minute holiday purchases, much attention

  • is on just how much consumers will spend this holiday season amid a weak economy Normal

  • Microsoft Office Word JEFFREY BROWN: As shoppers make their last-minute holiday purchases,

  • much attention is on just how much consumers will spend this holiday season amid a weak

  • economy Title Microsoft Office Word Document MSWordDoc Word.Document.8

bjbjLULU JEFFREY BROWN: As shoppers make their last-minute holiday purchases, much attention

Subtitles and vocabulary

Operation of videos Adjust the video here to display the subtitles

B1 US solman paul solman paul liz william spade

Making Sen$e: Rich Shopper, Poor Shopper

  • 29 1
    li posted on 2018/10/04
Video vocabulary