An Up-Close Look At Holiday Retailers

Just back from that long day of last minute Christmas shopping. For fun, I kept copious notes (okay, maybe not so copious, but you get the point) on the busiest and the not so busy storefronts on this quite hectic mall day. Basing this purely on my eye-witness observations and anecdotal evidence, I’ve ranked the top four on a rough density measure - that is, how full the stores seemed per square foot.

First, the best:

4. Yankee Candle Company (YCC) — If someone told me earlier that a candle store was jam-packed with husbands and sons picking up doo-dads and scented wax for their wives and mothers, I would probably have laughed in their face. But it is, indeed, true. Lots of teens and husbands without a clue packed in the tiny store to collect a potpourri of scents for the women in their life. Green apple, red cinnamon, pumpkin pie, buttercream, anything you can think of. The company recently announced that it will be acquired for $1.7 billion by an affiliate of Madison Dearborn Partners, LLC. Looks like they must have done their scuttlebuttin’ homework.

3. Build-a-Bear Workshop (BBW) — Everyone’s favorite do-it-yourself plush toy store (okay fine, the ONLY do-it-yourself plush toy store) was a hopping hit today. Bustling with folks building their own special bears, the store is not-so-quietly proving that their concept is working and sustainable. The stock has hovered since its IPO a few years ago, but the company’s margins, growth rate, uniqueness, and popularity may be reason to put it on the radar. Mama Bear, Papa Bear, and Baby Bear approve.

2. Abercrombie & Fitch (ANF) — Sex really does sell. Alot. I walked by both Abercrombie and Hollister (owned by ANF) to see scantily clad “salespeople” luring customers in to check out the(ir) goods. Not surprisingly, it worked. The store was loaded with teens and 20-something year olds spending their [parents’] hard earned money on ripped jeans, faded t-shirts, and oh-so-soft fleeces (one “saleswoman” flirtatiously insisted that I feel just how soft they were. So I know.) On another note, I had the opportunity to meet ANF’s colorful CFO, Mike Kramer, back in October. He spoke at length about the company’s mission to build a lifestyle rather than just a clothing company. They believe that this lifestyle, however scandalous, is critical to creating and maintaining a competitive edge. If today was any indication, they’ve done this quite well. Good job, Mike.

1. Apple (AAPL). I have one word to describe the volume of shopping at Apple’s storefront. WOW. Apple destroys the competition when it comes to the population density at their storefront this holiday season. I could barely move when I tried to step in the door, and I was struck by just how popular the place was. Now, everyone knows that iPods are in the running for the season’s most popular gift item, but I still could not believe how many people flocked to the little corner store manned by those friendly little geeks (I can call them that because I’m a fellow geek) always looking to lend a helping hand or a thoughtful suggestion. Whoever told Steve Jobs his storefront concept was a bad idea was dead wrong. (Note: A friend of the site forwarded me Yaser Anwar’s blog, which more rigorously confirms the density measures. My senses aren’t so bad after all :-) )

Okay, now the not so good. I’ll exclude the mom and pop shops and focus only on the publicly traded companies that we’ve all heard of. So, here are the three worst of my shopping day — the empty, desolate, and dreary storefronts with no one showin’ them any love. I won’t go into too much detail bashing them, since you get the point. And I feel bad…

3. The Gap (GPS). Looks like the Gap has fallen into itself. There were a few straggling customers, but overall, after passing the store four times over the course of the day, not once did I see any noticeable volume. And when salespeople are caught filing their nails on the job during the holiday season, it’s usually a bad sign.

2. RadioShack (RSH). I’ve looked into the company before when huge sell-offs dropped the stock price to basement levels, but despite some strong cash flows, the company continues to struggle against more powerful competitors (like Best Buy, etc.). I seemed to find much of the same today.

1. Hot Topic (HOTT). A “music/pop culture” clothing and accessories store, I saw no more people than the vaguely Gothic employees sitting idly waiting for the next customer. And waiting. And waiting.

Obviously, none of this constitutes rigorous research in any way, shape, or form, but I thought it would be fun to share. Portfolio food for thought, if you will.

Happy Holidays!