Coming Christmas selling season doesn't look jolly for merchants

The Outlook

November 05, 1995|By John E. Woodruff

CHRISTMAS, once the season of dreams for retailers, has been very different in the 1990s.

After a fairly promising Christmas in 1994, analysts are forecasting a return to relatively flat Christmas sales for 1995.

Has the Grinch permanently stolen the retailers' Christmas?

What forces have produced this string of lackluster holiday seasons?

And what will it take to bring back the robust holiday sales of past years?

Kurt Barnard

President, Barnard's Retail Marketing Report

What this series of slow Christmas seasons means is that at the present time the economy and the consumer's state of mind and the demographic and societal realities all are working in the direction of making it hard to expand retail sales. It is going to take quite a few years for retailers to get back to genuinely robust holiday seasons.

That won't happen until consumers get back to feeling secure in their jobs, begin to earn more, and get out of the deep debt that they have gone into. And we will have to come back to a time when consumers feel the need for clothing. Today the consumer is very much in a dressing-down mood. The consumer spends more time at home and less going out to places where clothing counts. The consumer spends more money to fix up the home and less to buy clothing. Preening is just not as important to people as it was a few years ago.

These changes reflect fundamental demographic, economic and social changes that will take time to play out. Retailers are beginning to adjust to these changed circumstances, and they will have to adjust further in the next few years.

Mark Schoifet

Spokesman, International Council of Shopping Centers

If an upturn is coming, most retailers in the regional malls who are our members do not think this will be the year. There is considerably less optimism out there than there was last year. Most of the forecasts are for growth of about 4 percent over last year, which is not much more than keeping up with inflation. Consumer spending is not keeping up with economic growth, and no one is sure if this is because wages have been rising slowly or because workers are less sure of their jobs, or what.

There may also be some fundamental changes going on in the ways people shop at Christmas time. Retailers find themselves doing more and more promotions in the middle of the prime season, and constantly doing mark downs and promotions earlier. This of course cuts into their margins, and it may be that they are now paying a price for having taught consumers to wait for markdowns and promotions.

The malls we represent also are under pressure from retail competitors that didn't exist a few years back -- the big category killers like Office Max, Wal-Mart and Target stores. The pie is only so big, and if these new retailers get their share of it, there is of course less for the mall shops.

Another factor for the mall shops is that apparel has been in a prolonged slump, and apparel accounts for 30 percent to 40 percent of the shops in a typical regional mall.

Tom Saquella

President, Maryland Retailers Association

Maryland retailers actually have had a couple of very good years back to back. In 1994, we had an excellent year, and the Christmas season actually was up about 7 percent over 1993, which had also been a pretty good year. In 1993, things had not been as strong as in 1994, but the Christmas season was a good one.

But the recession hit Maryland harder than most states in 1991 and 1992, and the recovery here has been generally slower than in the rest of the country.

Now the looming cutbacks in federal budgets will also affect Maryland more than most states.

A lot of people don't like to acknowledge it, but the reality is that the federal government has been the engine of growth for Maryland for the last 30 to 50 years. Not only federal payrolls contribute to this, but also many companies that serve the government and locate here in order to be close to their main customer. I agree with the new governor and his secretary of economic development that it is important for Maryland to diversify its economy, and it is going to take some time to do that.

Bob Verdisco

President, International Mass Retail Association

There is no doubt that there is concern out there on the part of the consumer about the economy. Couple this with consumer debt, which is way, way up, and put on top of that the mixed signals coming from Washington, and there are real reasons for that concern.

But there are some things that could be done. If we end up this year with legislation that convincingly shows that the country is going to balance the budget and get the deficit under control and the national economic house in order, and if we could give consumers some tax breaks that would make them feel that they could put more of their earnings in their pockets, those would be two terrific messages to send to the marketplace.

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