Aggressive retailers found to fare well in uncertain economy

One on one

January 13, 1992

One on One is a weekly feature offering excerpts of interviews conducted by The Evening Sun with newsworthy business leaders. Thomas Saquella is president of the 550-member Maryland Retail Merchants Association.

Q. Retailers nationwide reported their third disappointing Christmas in a row. Was Maryland an exception?

A. We won't really see Maryland figures for a few weeks, but I think considering the difficult economy and the very low levels of consumer confidence, it was an acceptable, although not rewarding, session for Maryland retailers. I think those who were prepared and were aggressive in their promotion got through all right. It certainly was not a great season by any means, but it was not the disaster that many predicted. I guess Santa still lives, although he might have been slightly wounded.

Q. Do you think total sales will show a decline for Maryland retailers, compared with a the same period a year before?

A. My experience is that for the holiday season, most ran even or slightly ahead of last year. But I think those stores that predominantly carried higher priced merchandise probably ran behind 1990.

Q. Discounters seems to do the best nationwide.

A. Yeah, I think that's pretty much going to be a national phenomenon. People were very price conscious, looking to buy for the most part lower priced merchandise, and so your discounters, your off-price marketers, those stores probably did better than your higher priced stores.

Q. Did you see any other trends?

A. I really couldn't say, beyond the break between the discounters and your more conventional stores. Toy sales were good.

Q. Have the post-Christmas sales done very well? Is that going to provide any relief?

A. I think retailers learned during the holiday season. You had to be very aggressive in your promotion and your pricing, and if you've noticed, a lot of retailers, right after Christmas, jumped into the sales which usually start in the middle of January. So they're continuing the very aggressive posture, and I think that's going to continue throughout 1992.

Q. It seems the Christmas upturn in the stock market returned a little bit of confidence. Do you think that was reflected in post-Christmas traffic or sales and does it bode well for the immediate future?

A. We sure hope it does, but I think it's too early to tell. We do think consumer confidence is the key to retail sales, and hopefully the stock market will begin pushing up that consumer confidence.

Q. What's the outlook for the year ahead?

A. I think generally you're going to see in 1992 a continuation of what you saw in the holiday season of 1991 -- a lot of emphasis on promotion, a lot of cost controls, especially managing inventory. I think those will be critical items. Those retailers who can best manage their costs, especially their inventory, will probably do better than others. I think specifically in Maryland it's going to be an interesting year. You're going to see the full impact of two major retail giants coming into Maryland, Nordstrom and Wal-Mart. They both came in 1991, but by the end of 1992, I imagine Wal-Mart will have six or seven outlets in Maryland and Nordstrom will have had their second outlet with their store opening in Towson in the fall. They'll be at different ends of the retail scale, but they are major, major competitors and I think that will be an interesting development in 1992 in retailing in Maryland. I think another interesting development will be the continued development of these "hyper" markets, or buying clubs. Their growth and acceptance so far in Maryland has surprised me.

Q. What's the future of the family-owned businesses that once were a staple of people's shopping?

A. Your small family-owned businesses often can do very well in this type of environment. They're very small, they have a very set customer base. They can move their merchandise mix around to reflect changes in the economics. I think the small family owned businesses can do well. Those in rural areas will certainly have stiff competition from Wal-Mart, but what you've got to do is find out what Wal-Mart's not selling and fill that niche. It's very difficult to go head-to-head with Wal-Mart.

Q. What's the outlook for consumers? Is all of this competition going to lead to lower prices?

A. Well, you know I described the recent holiday season as a buyer's market, and I think that will continue through 1992. Not only have the retailers realized they have to be aggressive in their pricing, but a lot of their costs are holding the line. The price they're paying for the merchandise they buy, their other costs are also holding the line. If you've looked at the recent reports on the wholesale price index and the producer price index, they're sometimes below what they were a year ago. So retailers passing those savings on to the consumer have to get the consumer in the store in this present situation. So I think for the consumer it's going to a very good year for 1992 in terms of prices.

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