FEAR
OF WAR AFFECTS CONSUMER SHOPPING HABITS
By, Emily
Criscione 10/30/01
If Karen Leonard had her way, she would shop until she dropped.
Fear of war may have weaned American consumers away from their usual shopping habits temporarily, but sales are back on the rise. Immediately after the terrorist attacks on Sept. 11, sales were down in almost every industry. The American people were hesitant about spending their money with the uncertainty of war, but within weeks, sales have been slowly creeping back.
"I feel that we should not let the events of Sept. 11 change our shopping habits." Said Leonard, an active consumer and merchandising Marist student "If anything, I think that we should be more willing to spend our disposable income to support our economy," she said.
Robert W. Boscher, a business professor at Marist College said that he anticipates that sales may suffer, but that America will ultimately prevail.
"The terrorist attack did have an immediate impact, but we seem to be recovering from it, however slowly. In my opinion, I believe we'll continue a downward trend at least until mid-year 2002. The magnitude of the drop may be deeper that it would have been without ground zero but we'll recover," he said.
Economic data reiterates that while sales are still well below normal, they are continuing to increase.
Economists are still fearful that since the launch of the bombing in Afghanistan, the American consumers may become worried of the prospect of an economic recession.
A consumer survey showed that approximately 20 percent of U. S. consumers felt that since Sept.11 their sense of safety had been a little rattled.
The concern for economists with this statistic is that the bombing in Afghanistan could increase this number, therefore hurting the economy further.
Elizabeth Purinton, a Marist College marketing professor, said that the consumers' views are more important than economists', and a distinction between the two should be made.
"Consumers are not economists and truthfully don't care if the U.S. is involved in an upturn if they themselves cannot find a job, put food on the table or pay the bills. When we are talking about consumer behavior we're talking about perception," she said.
Ironically, the National Retail Traffic Index has shown "slightly more visitors" to the country's malls in the past few Sundays in comparison to the Sunday prior to the bombing. The overriding mentality for the American consumer appears to be "determined to get on with life."
"The President has asked us to carry on, to show the terrible 'powers-that-be' we have not stopped," said Purinton. "The true American spirit is indomitable and will go on. But, truthfully, we've been wounded. Our spirits have not been crushed but they've been injured. We are not the same people that we were on Sept.10, and like any other time in history, our consumer behavior reflects who we are, what we've learned and how we're feeling."
TRAVEL
INDUSTRY HIT HARD BY TERRORIST ATTACKS
By, Emily
Criscione 11/06/01
Emily Shafonda was infuriated when she called to confirm her tickets with Midway Airlines, only to find that the company had gone out of business.
Midway is one of many businesses that is feeling the impact of economic downturn due to the terrorist attacks of Sept. 11.
"Some people thought that it (the attack) was a sign," said Shafonda, a Marist College junior. "But I am not going to live in fear. I had been planning this trip for too long to just not go. I am just happy that I called Midway when I did, because I have yet to hear from them."
Advertising, retail and travel are the businesses that have been the most greatly impacted by the terrorist attacks in Manhattan, New York and Washington, D.C. For companies like the Walt Disney Company, more than half of the company's revenues are generated from advertising and travel, according to a Sept. 23 New York Times article.
Disney is facing the truth that these terrorist attacks have slowed down the economy almost to a stop, at least for the time being. Consumers seem to be so apprehensive about the attacks that they are at home glued to the television waiting to see what will happen next.
Disney is one of the travel businesses experiencing the wrath of war. In some cases, online travel agencies have made 10 percent job cuts. Other companies wonder if the online travel business can even survive this catastrophe. According to some analysts, the major full-service travel agents such as Travelocity, Expedia and Orbitz will be able to stay afloat.
According to Tom Underwood, an analyst at Legg Mason WHERE investment firm, over half of Expedia's profits are generated through reservations other than airline tickets.
"Travelocity is a little more dependent on air," he said, "but they're also getting a significant portion of their revenues from hotels, rental cars and advertising."
Despite all negative talk about these companies, some analysts remain optimistic that travelers will continue to turn to the Internet for reservations. Many online services plan to offer special promotions after all the terrorist fear subsides. Online travel agencies have bought blocks of airline, hotel and cruise ship inventories that the suppliers have had trouble selling, according to a New York Times article.
Analysts are hopeful that this holiday season will increase sales. They anticipate that families will want to be together this year more than ever.
For Anita and Clifton Damon this is their sentiment exactly. Each year at this time, the Damons, a retired couple from Albany, NY, board a plane and to spend five months in their Bradenton, Fla. condominium to avoid the winter weather.
"We just don't want to be in Florida right now," said Anita. "It is more important for us to be home close to our family, just in case something should happen again."
Elizabeth Purinton, an assistant professor in the school of business at Marist College said that as consumers we tend to look for a sense of nostalgia, in our products and behavior. According to Purinton, when we begin to feel insecure about our environment, we cling to what is familiar and what is associated with safety, often our childhood.
"If I were going to invest in a company," said Purinton. "I'd find one that offered products conducive to people spending their holidays at home engaged in family activities. It should be a good year for turkeys and turkey roasters, cookie cutters, white Christmas lights and craft supplies and kits," she said.
EURO
SET TO BE NEW CURRENCY IN SOME EUROPEAN COUNTRIES NEXT YEAR
By, Emily
Criscione 11/13/01
It's time for some Europeans to clean out their spare change cookie jars, because on Jan. 1, 12 European countries will be converting their currency to the euro.
Fifty billion new euro coins and 14.5 billion new euro notes will begin circulating at the beginning of the New Year. A starter kit to learn how to use the euro will be offered to consumers at the end of Dec., according to an Aug. 14, New York Times article.
Both the former type of currency and the euro will be circulating around all of the participating countries until Feb. 2002.
The euro will be a way to create a common currency between all the countries involved in the European Union (EU). If everything goes well, the euro is expected to generate more trade and investments overseas. This could prove to be a big step towards the unification of Europe. \
Robert Boscher, a business professor at Marist College feels that the decision to implement the euro is a result of thorough analysis and thought by the EU.
"I believe the euro is going to have a positive impact on business," Said Boscher. "The necessity of currency exchange and the complexity associated with establishing prices throughout the 12 trading partners is minimized, if not eliminated."
Unfortunately, though, not everyone is convinced that the euro will be beneficial. According to the Times, a survey done in the EU in Oct. has shown that consumers are "ill informed" about their new currency.
Italy, Spain, the Netherlands, France, Belgium, Ireland, Poland, Finland, Portugal, Germany, Luxembourg, Greece and Austria are all involved in the conversion. Britain, Sweden and Denmark have decided to take the "wait and see" approach. About half of the people that were interviewed in France, Italy and Portugal were not aware that the conversion would be taking place in less than four months. Many did not realize that they would have to trade in their old money in order to receive their new currency.
The switchover will be complicated, but EU officials told the Times that since Sept., the European banks have sent their customers' check books in euros in an attempt to prepare them for the change in January.
The euro will create one interest rate and one exchange rate.
Some psychologist warned the Times that the euro might cause confusion and discomfort to consumers in Europe while getting accustomed to the new form of currency. Depending on the country, prices may seem more or less expensive based on the conversion rate. This could send consumers into an economic hiatus.
Others say that the euro could produce a sense of political alertness. Jacques Birouste, a professor of psychology that studied the psychosocial impact of the new money on Europeans citizens told the Times that the euro may be a real catalyst for change.
"This may be the moment where many Europeans for the first time really look at what the European Union means and the transfer of sovereignty, which actually happened years ago. And this may have a lot of impact on the political world," said Birouste.
Those United States companies that will be doing business with European countries will need to pay close attention to the exchange rates. Companies that have dealt with France and Belgium may have already experienced the effects of the euro. Both the French and Belgian banks have already switched over as of Sept.
TIS
THE SEASON TO BE SPENDING
By,
Emily Criscione 11/27/01
Patriotism is what motivated Marie Fusci to hit the mall at 6 a.m. this past Friday.
She, like many other consumers, is helping the American economy get back on its feet after a long-standing recession.
"I think that the Sept. 11 attack was an attack on our way of life, and as an American consumer I am eager to prove that they (terrorists) will not scare me into hiding behind my wallet," said Fusci, a Marist College senior.
The holiday shopping season is generally the time of year when consumers spend the most amount of money and can generate the largest growth increase for the economy.
The day after Thanksgiving has traditionally been called "Black Friday," because for retailers it is the start of a season that moves sales figures from the red to the black. This holiday season sales analysts have been watching closely to see if American consumers will get out of a recession.
The number of visitors to shopping malls on Friday was down 8.1 percent compared to last year's figures, according to the RCT Retail Traffic Index.
"Put in perspective, these numbers look relatively strong," said Jim Martin, the vice president of RCT Systems in a written statement to The New York Times.
"Though traffic was down versus 2000," said Martin, "the traffic trends show shoppers continue to return to malls in 2001, and their numbers are increasing at a faster rate than in 2000."
A strong day of sales does not ensure a strong season overall, though.
There is a cause for concern, as the cost of merchandise in the stores this season is so low that retailers seem to be practically giving it away. Though they are pessimistic, analysts are anxiously waiting to see if stores can make up for the volume that they will be losing in profit margins.
Compared to last year, a 15 percent increase in marked-down merchandise is being offered this holiday season, according to John D Morris, a retail analyst for Gerard Klauer Mattison.
Despite the increased marked-downs, profits of this years Black Friday were better than analysts had expected, and retailers should be content said William Ford, a senior economic adviser at Telecheck, a subsidiary of the First Data Corporation.
"It certainly is not what retailers as a group would like to see," said Ford. "It is also not a doomsday start at all. It is better than a lot of analyst had expected. Retailers should be pleased."
Not all retail institutions have been suffering. Survivors of the season appear to be giant discount stores such as Wal-Mart and Target. Wal-Mart reached a single day sales record on Friday of $1.25 billion.
Walmart sales associates attribute this phenomenal sales increase to the general price point of the store's merchandise and sales promotions on "black Friday."
CONDE
NAST SAYS GOODBYE TO MADEMOISELLE
By,
Emily Criscione
She was the epitome of all that a sophisticated, stylish, young career woman should be. And after 66 years of publication she will be missed. Mademoiselle, with a circulation of 1.1 million, had been struggling both financially and artistically for some time. Last November she died. The last issue may some day be a collector's item.
Almost a dozen magazines are currently aimed at young women. What differentiated Mademoiselle from the competition was they way it spoke to these young women. Mademoiselle's pages were notable for their classy writing, a style few competitors could duplicate. Every issue featured poetry and fiction from fresh, talented writers. Decades ago, Silvia Plath, Truman Capote and Joan Didion were among the writers whose careers were launched at this magazine.
In more recent times the magazine began to lose its competitive edge. As it struggled to sustain its unique identity in the crowded field of women's fashion publications, its long time owner, the $800 million dollar media giant Conde Nast, inadvertently undercut the magazine's strength. Seeking to attract advertisers in an increasingly crowded field, by 1993, Conde Nast executives began hiring and firing editors in chief with alacrity. As the magazine's editorial focus underwent at least two major overhauls, perhaps inevitably the magazine's once-dependable line up of star writers and its formerly stable identity began to fade.
Samir Husni, a magazine analyst and professor of journalism at the University of Mississippi told The Los Angles Times in October of this year, days before Mademoiselle went to press for the last time, "You can only have so many face lifts before it starts eating into the core personality. You look at Rolling Stone, which has changed a lot over forty years as its audience has changed. But you don't see articles in it about how it's changed. Every two years Mademoiselle was screaming, 'We're changing, we're changing.' That was for the advertisers, not the audience. And so they lost their audience."
Identity loss aside, Mademoiselle, like a number of once seemingly invincible publications, including Conde Nast's Mirabella and Women's Sports and Fitness, were killed off in 2000 by the publisher. Further, after the Sept. 11 attack, even some of the largest advertisers were wary of consumer confidence and concerned with appearing insensitive by marketing their merchandise in glossy magazines. Since Sept. 11, they have bought fewer ads. Likely, more magazines will go under as a result of the recession and political concerns raised by world instability.
The magazine's ad pages were down 18 percent this year. From January through September, Mademoiselle had 500 ad pages. During the same period a year earlier, it carried 607 pages. Further, ad revenue was down 10 percent through September, from $35.2 million to $31.7 million, according to the Publishers Information Bureau.
Hillary Johnson, a freelance writer for a variety of publications, said magazines especially are greatly impacted by the economy.
"The magazine industry is exquisitely sensitive to recessions because of ad revenues," she noted.
For decades, Glamour had been the younger sister of Mademoiselle, and Mademoiselle the younger sister of Vogue, the flagship, or some might say, battleship, of the Conde Nast family. Glamour's initial niche market was young females in their late teenage years or very early twenties. But, as the magazine matured, Glamour began catering to a much larger audience, no doubt further eroding Mademoiselle's readership. In January 2002, Conde Nast will begin sending Mademoiselle subscribers Glamour magazine.
Glamour's advertising rate will be raised from $2.1 million to $2.2 million. Nevertheless, Glamour's advertising pages are down nearly 14 percent for the year to date, with revenue down five percent, according to the Publishers Information Bureau.
Lynda Johnson, a fashion editor at Children's Business magazine, disagreed that a loss of identity was responsible for the downfall of Mademoiselle. She attributes its death to other reasons.
"It (Mademoiselle) had a very strong reader base that was quite disappointed in the closing of the magazine. I think that there are many factors that contributed to its demise," said Johnson. "New editors trying to change direction too drastically, a decline in advertising and losing some sort of appeal with its core readers once the new editor made the changes. Overall many publications are being very cautious about putting their dollars into advertising. There will probably be more magazines shutting down their doors in the first six months of 2002."
Betsey Blackwell began as editor in chief of Mademoiselle magazine in 1935, in spite of the economic stress of the Depression. Blackwell believed that there was more to life for women clothing and make-up, and the magazine reflected her philosophy. Edie Locke took over editorship in 1970 and managed to keep Blackwell's style in tact.
According to Locke, "Blackwell's vision was a magazine that combined fashion and beauty with feeding the mind. She really felt that there was more to life for women than what they wore and how they made up their faces. They were hungry for other things."
In 1993, Elizabeth Crow was hired to give Mademoiselle a "make-over." She transformed the traditional and somewhat conservative magazine into Cosmo Part 2. The magazine's articles contained more sexually liberal content and the covers displayed an unattainably thin model. That same year Crow left and Mandi Norwood, the former editor of British Cosmopolitan replaced her and pushed Mademoiselle's Cosmo-like image even further away from it's more highbrow roots.
"When they switched gears (in 1993), everything became about sex and relationships," said Locke. "Nowadays, there is the occasional article in Vogue or Harper's Bazaar that takes you beyond. But the kind of magazine that Mademoiselle was in its heyday--I don't think exists today."