Source: EyeCareBiz.com
South: Sun Belt Sees Some Light
Posted: July 6, 2009
While it is still hard hit, compared with most of the other U.S. regions, the South, with the exception of areas like South Florida, is slightly less affected by the country's turbulent economy
Atlanta
ECONOMIC OVERVIEW
The South is experiencing both ends of the spectrum-South Florida on the downside, and parts of Texas on the upswing. It makes for quite a study in contrasts.
JOB LOSS
This region's unemployment rate was 8.9 percent in April 2009, a number that matches the 8.9 percent experienced as a whole by the entire country for the same period, according to the Bureau of Labor Statistics. Still, this rate represents a significant increase from the region's 5.0 percent unemployment rate in April 2008.
PRICES
Providing some relief for consumers in the South, the Consumer Price Index (the prices paid by urban consumers for a representative basket of goods and services) decreased here by 0.7 percent from April 2008 to April 2009 while remaining flat on a national level.
In addition, the Gross Domestic Product (GDP) in Southern states fared somewhat better than other regions, especially in Texas, Florida, Georgia, and North Carolina. Some states, notably Arkansas and Missouri, had a poorer GDP showing, but the region is still faring better than some.
Miami
CONFIDENCE LEVEL
How do Southern consumers feel about their economy? In May 2009, only 30 percent reported that they were "confident/very confident" about the chances for a strong economy in the next six months, according to a consumer survey conducted by BIGresearch. This represents a 10 percent drop over those that felt the same way in May 2007.
PRACTICAL AND REALISTIC
A direct result of their economic downturn, over 46 percent of residents in the South report that they have become more practical and realistic in their purchases, according to the May 2009 BIGresearch survey. Additionally, over 53 percent say they are focusing more on what they need versus what they want.
HOPE SPRINGS.
"We are seeing more hesitation in the South," says Pam Goodfellow, a senior analyst at BIGresearch, "but at the same time they are more hopeful than other regions, probably in part because these states are heavily democratic and we have a democrat in the White House."
LENS MARKET
· TRIVEX. The South is second-highest in preference for Trivex as a premium material (21 percent), and lowest in 1.60 support (11 percent), indicating that Trivex material has made headway over poly for high-impact lens materials.
· FREE-FORM. With significantly higher free-form preference (27 percent versus other regions all in the teens), it appears that the South is successful in promoting free-form's features and benefits to patients.
· PALS. With 70 percent of ECPs preferring PALs over other presbyopic options, the South ranks the second-highest region in its support of PALs over standard multifocals.
· TINTS. In the area of add-ons, the region has the lowest photochromic preference (18 percent), and more enthusiasm for tints (5 percent) over polarized (1 percent).
EDGING STATS
More Southern ECPs edge in-house than anywhere else in the U.S. And, when it comes to increasing those services, the South is tops, as well, with 29 percent of practices surveyed reporting they're edging more now than last year. Southern-based ECPs may have invested in in-house finishing labs to help cut processing costs and gain more control over product quality and turnaround times. More respondents in the South edge in-house than in the other regions.
29%.more than last year
28%.same as last year
5%.fewer than last year
38%.don't edge in-house
FRAME FOCUS
Regardless of whether it's style or comfort in the heat determining material choice, the "Metal Rules" rule is broken in the South as a majority of these patients opt for plastic styles over metal.
· MATERIALS: Plastics rule the roost with a 39 percent market share while metal falls behind at 37 percent. The South also leads the nation in rimless eyewear at 20 percent.
· PURCHASE PATTERNS: The Southern market is in the number-two spot (76 percent) when it comes to buying new eyewear rather than putting new lenses in their current frames.
· SECOND PAIRS: In the Sun Belt, sunwear is the natural second-pair choice, weighing in at 74 percent while the remainder split the market: casual eyewear, 14 percent; clips, 5 percent; and other, such as work eyewear and computer eyewear, 7 percent.
· PRICING: Product ranges have stayed the same for 57 percent of Southern respondents. Sixteen percent are adding higher-priced options, 11 percent are adding lower-priced choices, and 17 percent are adding both to their lineups.
RETAIL REAL ESTATE
While the overall U.S. vacancy rate for retail real estate rang in at 9.5 percent during the first quarter of 2009, the vacancy rate in the South Atlantic region came in slightly lower at 9.2 percent. Interestingly, in the Southwest region, vacancy rates tipped the scales at 12.5 percent, according to Reis, Inc., which provides updated trends and forecasts of rent, vacancy, and inventory in the real estate market.
COMMERCIAL RENTS
As might be expected in this down market, asking rents dropped accordingly. In the Southwest, they dropped 0.3 percent to $15.46 per square foot. In the South Atlantic region, asking rents fell 0.5 percent to $18.46 per square foot.
"The Southwest region currently has the lowest effective rent, but this is historically consistent as the Southwest is made up of metros with a very low cost of living," says Chris Stanley, a research associate at Reis.
Nashville
BEST BIG BIZ CITIES
In April, Forbes.com ranked the best big cities in the U.S. in which to find jobs.
Surprisingly, the top five are all in one state-Texas.
1. Austin
2. Houston
3. San Antonio
4. Fort Worth
5. Dallas
FORECAST
The forecast for these areas of the country doesn't paint a much prettier picture for the next five years.
According to Reis, the South Atlantic will see vacancy rates tip up to 11.3 percent and the Southwest will rise up to a whopping 15.1 percent as asking rents will continue to slide.
METRO MARKETS
There are some slivers of good news in the South region. According to Reis, the top five ranked metros in retail real estate inventory growth during the first quarter of 2009 were: Louisville (No. 1), Columbia, Charlotte, Charleston, and Richmond.
RETAIL CENTERS
"Places like Florida were harder hit by the housing market and that put a lot of the retail there in jeopardy and feeling the economic slowdown," says Erin Hershkowitz, a spokeswoman with the International Council of Shopping Centers. "However, our chief economist expects that by the second quarter of the year, their numbers will pick up overall and retail centers will undoubtedly survive."
FASHION TRENDS
The South has traditionally been just a few steps behind the fashion trends, but this is no longer the case. "It used to be that Texas was five years behind the times," says Paula Correri, a fashion editor with the Tobe Report, published by The Doneger Group, a retail analyst/trend forecaster for the fashion industry.
COLOR
"There are some regional differences down south-like they might gravitate more toward color," says Correri. "But they are subtle because trends are so well broadcast today."
CONSERVATIVE
Still, fashion devotees in the South do tend to lean toward more conservative styles. "We definitely tend to think of the deep south as a bit more conservative. Overall, people in the South seek out classic pieces that never go away," says Correri. "But they are classics inspired with a modern twist."
NEW CENTERS
Certain Southern cities are cropping up as new fashion centers, according to Rita Nakouzi, director of the U.S. office of Promostyl, a trend forecasting service. "Atlanta is an interesting city to start keeping an eye on; we have been watching southern Florida, and Dallas is a really cool and sophisticated fashion city. There is a lot more sophistication in Texas."
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Source: EyeCareBiz.com
Midwest: Tough Times in the Middle
Posted: July 6, 2009
Encompassing the West North Central states and the East North Central states from Ohio to North Dakota, the Midwest is facing a unique set of challenges
Detroit
ECONOMIC OVERVIEW
When it comes to fallout from the current economic downturn, the Midwest is one of the hardest-hit regions in the U.S.
JOB LOSS
While a few states remain relatively unscathed, overall, unemployment rates here soared up to 9.2 percent as of May 1 (versus 5.5 percent a year earlier), according to the Bureau of Labor Statistics.
That jobless rate is second only to the West. In the nation's hardest-hit state, Michigan, there are counties where the unemployment rate "reaches Depression-era levels of 25 percent," reports The New York Times.
NO CONFIDENCE
As unemployment skyrocketed here, the Midwest populace's confidence in the economy plummeted. According to a consumer survey conducted by BIGresearch, over 40 percent of Midwesterners queried in May 2007 felt "confident/very confident" about the chances for a strong economy in the next six months while under 30 percent felt the same way in May 2009.
Chicago
"When we looked at confidence between all four regions, it was lowest in the Midwest," says Pam Goodfellow, a senior analyst at BIGresearch. "They are generally more conservative, but they are also more fearful about losing their jobs and pessimistic about the economy."
She also points out that this region is home to the beleaguered auto industry, which has made the economy here even more difficult.
CONSERVATIVE SPENDING
A direct result of the slide in consumer confidence in this region has been that Midwesterners have become much more conservative with their spending. In the same May 2009 BIGresearch survey, almost 50 percent said they have become more practical and realistic in their purchases in the last six months.
Additionally, almost 60 percent said they focus more on what they need versus what they want.
CPI/GDP
As with other regions, the Consumer Price Index (CPI, the prices paid by urban consumers for a representative basket of goods and services) decreased in the Midwest, but the slide was greater. Bringing a margin of relief for residents, CPI fell by 1.5 percent in April 2009, an amount more than double the decline in all other regions.
The Midwest fared better than most regions in Gross Domestic Product, with states such as Ohio and Illinois showing stronger results than most others across the country.
LENS MARKET
Midwesterners are buying into premium lens benefits such as clearer, crisper vision with edge-to-edge clarity, wider fields of view, and no lines.
· MATERIALS. Strong lens material categories in the Midwest are 1.67-with 57 percent of practices indicating it's their premium lens material of choice-and Trivex, coming in with 16 percent. Poly, however, is substantially less popular with Midwestern practices surveyed than those in other parts of the country.
· LENS TREATMENTS. AR ranks as the most popular lens treatment, with 75 percent of practices rating it their lens treatment of choice. That's right in line with the nation's other regions.
· PALS. When it comes to progressives, the Midwest out-ranks all the other regions in its preference for PALs (72 percent prefer them to standard multifocals).
EDGING STATS
If steady-on wins the race, the Midwest may come out ahead when it comes to in-house finishing. While many ECPs don't edge in-house (43 percent), those that do report their in-house output is:
· 31%.same as last year
· 18%.more than last year
· 7%.less than last year
FRAME FOCUS
According to the Vision Council's Vision Watch, the Midwest Region faced a 9.3 percent drop in unit frame sales from December 2007 to December 2008. "Much of the slowdown in unit frame sales has occurred in the Midwest, which has also experienced a larger share of the general economic decline," says Steve Kodey, director of industry research at The Vision Council.
· MATERIALS: Matching the Midwest's practical reputation, metal frames represent 64 percent of frame sales. The Midwest also likes other frame options, 18 percent are rimless styles, but the bolder plastic looks are limited to 16 percent of the market.
· PURCHASE PATTERNS: Midwesterners are getting the full update when it comes to renewing prescriptions, as 79 percent opt for new eyewear and only 21 percent refill their old frames with new lenses.
· SECOND PAIRS: Sun rules with 69 percent of second-pair purchases, while casual eyewear and clips pull 13 percent each.
· PRICING: Nearly half of the Midwest market is revamping its frame pricing as 13 percent expand their product ranges to include higher price points, 9 percent expand to include lower price points, and 15 percent expand to include both.
RETAIL REAL ESTATE
The Midwest's economic slide has also been realized in its retail real estate market.
VACANCY RATES
Vacancy rates in the Midwest reached 12 percent in the first quarter of 2009, according to Reis, Inc., which provides updated trends and forecasts of rent, vacancy, and inventory in the real estate market.
This rate is significant, especially when compared with the overall U.S. vacancy rate of 9.5 percent for the same period. And, with GM's bankruptcy and imminent closings, that rate is sure to rise.
DIPPING RENTS
In an effort to attract renters, lessors dropped rental rates 0.1 percent to $16.25 per square foot. Still, the prognosis for the near future looks anything but rosy for the Midwest, according to a five-year forecast by Reis. Asking-rent growth is expected to decline again; vacancy rates are expected to spike to almost 15 percent; and inventory growth will slow to 0.7 percent.
Cleveland
METRO MARKETS
There are pockets of retail real estate growth in the Midwest, however, and optical sales for some companies reflect the trend.
CITIES TO WATCH
Specific Midwest metros of interest, Reis says, include the top-ranked first quarter rent growth leaders: Cincinnati, Minneapolis, Columbus, Wichita, and Dayton. On the downside, Reis indicated the metros with the highest vacancy rates as Milwaukee, Omaha, Minneapolis, Chicago, and St. Louis.
Incentives offered by Kalamazoo and Toledo are pulling high-tech companies from Silicon Valley and Boston. In terms of new construction leasing activity, however, Chicago fared much better. It was ranked 14th in the U.S., according to the first quarter 2009 CoStar Retail Report.
FASHION TRENDS
Historically, the Midwest had been the stepchild of the fashion industry with lag times on trends that ranged from a few seasons to a few years. Doneger Group's Paula Correri says today Midwesterners are getting hip to fashion trends at the same time as the rest of the country.
COMFORT QUOTIENT
"In the Midwest, maybe the motto is not 'fashion first'-they do need to see the trend for a while before they feel comfortable wearing it or modifying it," says Correri.
For example, she points to metallics. "The Midwest consumer isn't someone who wants an all-over metallic bag," she notes. "They will address this trend with trim or a belt, and savvy retailers will take that trend and modify it, depending on their targeted customer base."
OBAMATOWN
Chicago "has become a really fashionable city," says Rita Nakouzi, director of the United States office of Promostyl, a trend forecasting service. The rise to fashion fame is, in part, due to the country's first lady (and Chicagoan), Michelle Obama.
"She is bringing American fashion back into the foreground, especially in the way she mixes high and low style," says Nakouzi. "We're in this period of not just wanting aspiration, but wanting authenticity, and she brings this out."
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Source: EyeCareBiz.com
Northeast: Surviving the Downturn
Posted: July 6, 2009
Like all other regions of the U.S., the Northeast is feeling the effects of the economic downturn. However, its unemployment rate remains lower than that of any other area.
Philadelphia
ECONOMIC OVERVIEW
Though home to many financial fiascos, the Northeast's economic picture is challenging, but not as grim as many other areas of the nation.
JOB LOSS
While it's faring better than other areas, this region saw a jump in unemployment this year and a downslide in consumer confidence at the same time. According to the Bureau of Labor Statistics (BLS), the unemployment rate grew here from 4.9 percent in April 2008 to 7.9 percent in April 2009, when more than 2.2 million people in this crowded region were unemployed.
MOST SKEPTICAL
Though their unemployment rates were lower, Northeasterners remained skeptical about the economy. A May 2009 survey by BIGresearch revealed that 74.4 percent of people in the Northeast said they were not feeling better about their economic situation, higher than the U.S. average of 71.6 percent.
SPENDING
Part of the reason could be that these residents saw their personal income fall by as much as 0.3 percent in the fourth quarter of 2008, according to the Bureau of Economic Analysis (BEA). "Consumers need sustained proof before they start to invest again in the economy," says Scott Krugman, a spokesperson for the National Retail Federation.
CPI/GDP
On a more positive note, the BLS reports that the Consumer Price Index (the prices paid by urban consumers for a representative basket of goods and services) actually decreased by 0.1 percent in the Northeast from April 2008 to April 2009, while it remained flat on a national level.
Looking at Gross Domestic Product in the Northeast in 2008, states such as Pennsylvania, New York, and New Jersey had much stronger results than the rest of the country, according to the BEA.
RETAIL REAL ESTATE
VACANCY RATES
A direct result of the difficult U.S. economy, retail real estate vacancy rates increased significantly in the first quarter of 2009 to 9.5 percent for the U.S. and a slightly more palatable 7.7 percent for the Northeast, according to Reis, Inc. Lessors looking to fill their space dropped rents accordingly to attract interest. In the retail mecca of Manhattan, asking rents saw a six-month freefall of 11 percent, the first drop since 2001 according to the Real Estate Board of New York.
New York
LENS MARKET
Polycarbonate plays a strong role among dispensers in the Northeast.
· WORKPLACE. With a 14 percent usage, poly's strength in the Northeast may be due to more workplace settings requiring industrial safety lenses. In these settings, poly is definitely the impact resistant lens of choice, partly due to lower cost factors compared to other high-impact resistant lens materials. Conversely, use of Trivex was lower in the Northeast than the other regions (8 percent preference rating versus the Southwest's 26 percent).
· LENS TREATMENTS. The Northeast also shows the highest preference for photochromic (26 percent), perhaps in an effort to create a one-pair-does-it-all economic choice versus two pairs.
· PALS. The region is the lowest region in support for PALs-only 65 percent-versus standard multifocals. One reason: Many occupational contracts require standard multifocal lenses.
EDGING STATS
The Northeast is tied with the Midwest in consistency, as the same percent of practices in both areas (31 percent) are edging now as were a year ago. That said, the Northeast has the second lowest number of practices doing edging in-house (45 percent), perhaps because of the plethora of conveniently located wholesale labs in the region. Those that do edge in-house are likely ECPs who are adept at processing multiple lens materials and treatments and want to save in wholesale lab costs.
· 31%.same as last year
· 15%.more than last year
· 9%.less than last year
· 45%.don't edge in-house
FRAME FOCUS
The Northeast is fighting a sluggish economy more aggressively than any other region with changes in product offerings as 54 percent of respondents noted changes in their pricing structures for the year to include more high-priced and low-priced models.
· MATERIALS: Metal is the classic choice in the Northeast (58 percent), while plastic frames drew 31 percent of the market and rimless drew 11 percent.
· PURCHASE PATTERNS: Conservative and cutting-edge blend in this region as 70 percent opt for new frames for every Rx update while 30 percent refill their existing frames with new lenses.
· SECOND PAIRS: Leading the nation in clip-on selection for second pair at 15 percent, the Northeast also has a strong casual eyewear showing at 11 percent. Sunwear still leads the second-pair market at 66 percent while computer eyewear and readers reached 8 percent.
· PRICING: Times are changing in the Northeast as frame pricing is moving to reflect expanding product options. Although 46 percent remained the same, 20 percent noted they were expanding to include higher price points, 15 percent were including new lower-priced options, and 19 percent were playing the odds and adding higher- and lower-priced choices.
DROPPING RENTS
"The Northeast region is the second-worst-performing region with current quarter effective rent growth of negative 1.9 percent [and an average rent per square foot of $18.30]," says Chris Stanley, a research associate at Reis, Inc.
"While all regions appear to be suffering the effects of the slowdown in consumer spending, relatively 'more expensive' markets (in terms of rent per square foot) are registering larger magnitudes of rent drops. This is not surprising, given that this is the first time in 17 years that the American consumer has pulled back on spending, and more expensive markets are taking more of the brunt, given the pullback in consumer spending and business investment," Stanley says.
Boston
METRO MARKETS
Certain metro markets did, however, fare better than the whole (see sidebar). Northern New Jersey, ranked number four, also came up second in the U.S. for gross leasing area within new construction activity, showing more forward motion here than anywhere else in the Northeast or the country, according to the first quarter 2009 CoStar Retail Report. Other Northeast metros that ranked in CoStar's Top Ten for new gross leasing area include Westchester/Southern Connecticut, Philadelphia, and New York City.
The International Council of Shopping Centers reports that most retail real estate growth being realized in the Northeast is in mixed-use development, such as lifestyle centers that include shopping as well as hotels, residential buildings, and office space. "These are usually found in and around larger cities," says ICSC spokeswoman Erin Hershkowitz. "The benefit is built-in consumers who work and live within that complex." From an architectural perspective, new centers aim to capture the theme of the region, such New England fishing huts and villages.
FASHION TRENDS
While the Northeast has historically been the nation's fashion leader, the proliferation of information via the web and other media has this region losing a bit of its style edge. "For the most part, today, the major trends happen simultaneously across the country and this has to do with the media," says Paula Correri, a fashion editor with the Tobe Report, published by The Doneger Group, a retail analyst and trend forecaster for the fashion industry. "The consumer now has access to so much information."
CITY FILE
According to Forbes.com, as of April 2009, the best small American cities for jobs and business are:
1. Odessa, Texas
2. Grand Junction, Colo.
3. Longview, Texas
PACE SETTERS
Still, Correri refers to Northeast trendsetters as "the groovy girls on the coast" who are more adventurous and set the pace for the rest of the country. The Northeast also has more seasonal changes and, thus, more new fashion throughout the year.
"Even though there are all these media influencers, you need a certain confidence to pull off a new look-you need to feel like it's part of your tribe," says Rita Nakouzi, director of the U.S. office of Promostyl, a trend forecasting service.
ADVENTUROUS VINTAGE
One strong fashion trend to look for in the Northeast this summer and fall is an emerging vintage theme in ready-to-wear and accessories, says Correri. This theme extends itself to eyewear as well, with retro-inspired, smaller shapes.