Upbeat retailers expecting a bright Christmas season

November 27, 1992|By Michael Dresser | Michael Dresser,Staff Writer

The winds of change are blowing through the malls. The cautious optimism that retailers were expressing a few weeks ago isn't as cautious now.

At Columbia Mall this week, store owners and managers say they've noticed an improved mood since the election -- whether from joy at the outcome or relief that the campaign's finally over.

The atmospheric difference this year is dramatic. Last year, retailers approached the holiday shopping season with dark foreboding. The smiles were forced, the expressions of confidence rang hollow. By the end of the fourth quarter, the results were something like Recession 48, Retailers 7.

This year, the question among retailers is not survival but whether they are looking at a good holiday season or a great holiday season.

Some of the retailers interviewed at the mall in Columbia said they had already seen a pickup, others were still waiting, but all were confident it would come with the official kickoff of the holiday shopping season today..

"It's going to be very good. I think it's going to be a strong Christmas. I think there's a lot of consumer confidence," exulted Mike Kornstein, co-owner of I Love Theater, a gift shop that abounds with paraphernalia related to Phantom of the Opera, Les Miserables and other hit plays.

Like many retailers, Mr. Kornstein was cheered by the news Tuesday that consumer confidence, as measured by The

Conference Board, surged in November. According to the business group, there were enough people like Bill Levi out there send its index up 11 points to 65.5.

"I think President-elect Clinton has got to get down on his knees and thank God he's coming in when he is," said Mr. Levi, a Columbia resident who has been retired 14 years and now

concentrates on tracking his investments. "Ninety-three is going be a better year than '92, and '94's going to be better than '93."

But some consumers at the mall were not as confident that their confidence had improved.

Ella-Ruth Long, a spring graduate of the University of Maryland Baltimore County with a degree in psychology, was filling out an application for a retail job.

"I'll be more encouraged when I get a job," she said, adding that she expects to cut back on Christmas spending.

Ms. Long's views reflect the important caveat in the Conference Board report -- that better doesn't necessarily equal good.

"While consumer confidence is up smartly in November, it is still at a level which is historically associated with a lackluster economy," said Fabian Linden, executive director of the group's Consumer Research Center. "We have a long way to go before we are in a full recovery mode."

XTC Some analysts suspect the consumer confidence surveys are deceptive, however.

"I think consumers' mouths and their wallets don't work together," said Kenneth M. Gassman Jr., who follows retailing for Davenport & Co. of Virginia in Richmond. Mr. Gassman said consumers were likely answering "No" to questions about their spending plans because "it's not socially acceptable" in today's climate to admit to spending more.

Mr. Gassman was one of many analysts predicting a strong surge in holiday sales this year. In a report earlier this fall, he projected a 4.5 percent to 5 percent gain in total holiday sales. Now, he thinks he might have been "low-balling" his estimate.

Robert Buchanan, Alex. Brown retail analyst, has predicted a 6 percent gain in same-store sales, which, he said, would represent about a 3 percent gain after inflation compared with a 1 percent decline last year.

"We've come to the conclusion that Christmas 1992 will be the first respectable Yuletide since 1986," he wrote in a report earlier this month. The Conference Board is projecting a 6.5 percent gain in average household spending for Christmas gifts.

At the Body Shop cosmetics store in Columbia Mall, Manager Sheila Rovelstad said she's already seeing this gain in action. Instead of waiting for today -- the traditional "Black Friday" for harried retail workers -- to experience a surge in sales, her store started doing "huge" business Saturday, she said.

But others haven't seen a surge since the Clinton victory.

"We're seeing a waffling effect. It's up and down," said Helen Canet, manager of the Silver Heron jewelry store. Still, she said, the store has laid in a healthy inventory.

"You can't be too lean. You have to stock up for good or you set yourself up for failure," Ms. Canet said.

As optimistic as they were, none of the retailers in Columbibelieve 1992 would bring a return of the free-spending Yuletides of the 1980s.

Almost every store in the mall had some type of sale advertised prominently. But the promotions seemed well-planned compared with the panicky price-chopping of a year ago.

Katherina Trichon, manager of the Pinstripes Petites women's clothing shop, said that where customers a few years ago would see a $42 blouse they liked and just buy it, now they're more liable to wait for a sale.

"If it's even 10 percent off, it makes them feel somewhat better," said Ms. Trichon, who said sales started to pick up this month after several slow months.

A strong start to the holiday shopping season, coming on the heels of a report Wednesday showing the U.S. economy grew at a strong 3.9 percent annual clip during the July-September period, bodes well for retailers' crucial fourth-quarter sales and for the nation's economic recovery.

Still, there were worries that retail spending could sputter again early next year if consumers wake up from a Christmas spree with a debt hangover.

In his recent report, Mr. Buchanan summed up those apprehensions: "Until American consumers pay down some appreciable amount of their debt, and in addition start seeing something in the way of real growth in buying power, they are likely to continue with their parsimonious ways."

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