Shopping rise for holidays anticipated Consumers will spend 12% more on gifts than in '95, survey predicts

A 'moderate Christmas'

Low unemployment, stable economy may signal increase

November 24, 1996|By Liz Bowie | Liz Bowie,SUN STAFF

For the first time in almost two years, Ken May is optimistic.

May helps run Manor Shop Menswear near Essex and he thinks the critical, holiday retail-selling season, which begins this week, may finally bring the cheer that's been missing for some time.

"I think people have been naked for the past two years. They have been sitting at their computers and they suddenly looked up and said, 'I need clothes,' " said May, the marketing director of the clothier.

The rise in May's business reflects what national analysts are saying this year: Clothes are back on and in these days. And that should provide a big boost to holiday sales.

Retailers are betting the holidays will bring them a 4 percent to 6 percent increase in sales from last year. After the tight-fisted spending of 1995, surveys show consumers seem ready to dish out a little more.

A national survey by Deloitte and Touche LLP for the National Retail Federation predicts consumers will spend an average of 12 percent more -- or about $764 -- on holiday gifts this year. That would represent the greatest increase in the past four years. Women and baby boomers between age 35 and 49 will spend the most, according to the survey.

The Thanksgiving, Hanukkah and Christmas season can make or break a business for the year. Traditionally, retailers make 30 percent of sales and 60 percent of profits.

"I think we are looking forward to a moderate Christmas season. I don't think people will spend hog wild, but I think it will be better than last year," said Steven Thompson, an economist with the Regional Economic Studies Institute at Towson State University.

Americans are not likely to be held back by the large credit card debt they have amassed, he said.

All the signs are there: low unemployment, low interest rates, gains in wages, a stable economy and consumer confidence.

Towson Town Center, which just began charting store sales on a daily basis, saw revenues triple last weekend from the Wednesday before.

At Owings Mills Mall, Britches Great Outdoors sales clerk Debbie Schwartzman said, "Traffic is definitely picking up." And Westview Mall reported increases in customers and sales from a year ago, when federal workers cut back on spending, fearing a long government shutdown.

But retailers temper their optimism with a heavy dose of realism. Last year retailers saw a meager 2.8 percent increase in sales over the previous year. So even a 5 percent gain this year would still only be a moderate Christmas for the industry.

"Their sights have long since been lowered over what they were in the 1980s," said David Nevin, at Nevin Associates, a marketing, public relations and advertising firm in Owings Mills.

In those days, Schwartzman said, a customer would come in looking for a couple pairs of pants, but end up buying a sweater and two shirts as well. "Now, they might buy an [extra] pair of socks. People walk in with lists," she said. "People are being conservative with their dollars."

And there is some evidence suggesting this season may not be as strong as some hope. A survey by MasterCard, the credit card company, predicts consumer spending will be unchanged from last year.

"It's not as rosy as people are predicting. It is going to be a tough year ahead," said Mark Millman, at Millman Search Group Inc., a Lutherville-based national retail consulting firm.

Maryland's economic recovery has lagged behind the nation, and the persistent news of layoffs and consolidations continue to cause anxiety about job security, and that could force people to pull back on spending, he said.

Industry experts expect sales to be led by the clothing segment. After several years of bankruptcies and lackluster sales for the apparel industry, a turnaround has begun. Monthly sales in October were improved, and in the Deloitte & Touche survey, 59 percent of respondents said they would buy women's apparel as a gift this year.

"A lot of people will begin to be sick and tired of wearing the same things again and again," said Kurt Barnard, president of Barnard's Retail Marketing Report, a retail forecasting report. They will say, " 'This Christmas I will be good to myself and replace some clothes.' "

But, he said, "replacement" is the key word because people are not going to go out and buy extras that they don't need.

At Manor Shop Menswear, May said people are buying the basics, particularly the coats they couldn't buy last January during the snowstorms. Boots and sport coats are also selling well, he said.

Analysts expect moderately priced merchandise of good quality to sell well. So department stores and mass marketing merchants should do well, according to Kenneth Gassman, an analyst with Davenport & Co. in Richmond, Va.

On the other end, he said, the very high-end retailers are expected to do well -- companies such as Tiffany & Co., Gucci Group NV and Saks & Co. "They are benefiting from a skyrocketing stock market that has left a lot of people wealthy," he said.

Toys will be hot items, according to Deloitte and Touche, but fewer than 25 percent of people said they would buy a computer or electronics.

While computer sales may not break records, Nevin said, he believes they will "do fine." In general, he said, anything that has to do with the home should do well because more people are staying at home and investing in their houses -- from home furnishings to televisions to adding rooms.

Some merchants and malls are trying to promote early shopping this year because there are five fewer days this year between Thanksgiving and Christmas.

At Towson Town Center, marketing director Leigh Bates said she ran a promotion in the past week offering people who spent $300 in one day at the mall a $42 Mickey Mouse denim shirt for free.

She gave away 1,200 shirts in a little over a week, she said.

"The whole purpose is to drive early holiday sales. The earlier they start their shopping, the more they will spend," Bates said.

Pub Date: 11/24/96

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