Holiday sales modest so far Projected 3.5% gain doesn't quite match retailers' optimism


December 16, 1997|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Consumers spent cautiously during the first two weeks of the traditional holiday shopping season, dampening the high expectations many retailers had for the crucial selling period.

A little more than a week before Christmas, analysts are projecting moderate sales growth overall, in the 3.5 percent range. Department stores and shops catering to the middle-market consumer appear to be lagging while mass discounters and upscale retailers are likely to post the strongest sales, analysts said.

"Everyone was so optimistic coming in, I think disappointment will travel close behind," said Skip Briggs, president of Severna Park consulting firm Skip Briggs Growth Strategies.

Earlier, some analysts had predicted sales increases of as much as 5 percent.

In some cases, Briggs said, department stores may have overestimated the season's bounty.

"The problem is a lot of people went in aggressively on inventory, thinking it would be a 6 percent increase," he said. "If you're buying to that and not coming in with that projection, there will be an inventory problem, and if it's seasonal merchandise, that could be a problem."

For the first 10 days of the Thanksgiving-to-Christmas period, consumer spending was up a meager 0.1 percent nationally, according to TeleCheck Services, a check acceptance company that bases its weekly retail index on the volume of checks authorized at more than 27,000 locations. Spending dipped 0.2 percent in Maryland and 0.8 percent in Baltimore, the company said.

The latest numbers appear to show a marked slowing in holiday sales. TeleCheck had reported a 2.2 percent gain nationally on the Friday after Thanksgiving.

"People seem to be waiting until later to shop, and Hannukah is later this year than it has been in the past," said Alisha Park, a TeleCheck spokeswoman.

A senior economic adviser to TeleCheck predicted shoppers will hit the stores in force in the last days of the season. "This weekend we'll see a surge in spending by consumers," said William F. Ford. "The largest single day of the whole year will almost certainly be Saturday. We do expect to see a surge in the final 10 days of the season."

But spending isn't likely to increase wildly.

"The growth of retail sales this holiday season is restrained," said Kurt Barnard, president of Barnard's Retail Trend Report, a New Jersey forecasting firm. "Consumer spending is restrained. I don't see any big buying binges or spending sprees."

Barnard blamed a spate of recent layoffs.

"A lot of people who have good jobs are starting to wonder 'When is that pink slip headed in my direction?' " he said. "That causes them to contract their spending ambitions."

That could help the mass discounters, such as Target, WalMart and Kmart, all of whom saw sales increases in November, as well as other off-price stores and moderately priced department stores, he said.

At the Kmart in Glen Burnie, "They're looking for the bargains," said store manager Matt Ernest, who reported strong sales in toys like the Talking Bubba. "We're getting into the stretch where every day is like a weekend day."

Upscale retailers, too, should post a strong season, Barnard said.

"Quite a few people over the last six or seven years have made a lot of money on Wall Street," Barnard said. "They are the people who can go out and look for something and never ask for the price."

Some of Stephen Weinstein's customers at Dahne & Weinstein Jewelers Greenspring Station store fall into that category. Weinstein has had strong sales in jewelry, including pearl necklaces priced from $20,000 to $50,000.

"Big diamonds, big necklaces, some very large rings with diamonds and emeralds are selling well," Weinstein said. "Very often it's a man coming in, and he wants to do something very special. Generally, they're people with discretionary income, and if they see something they really like, they buy it."

One representative of a retailers' group said he felt far from ready to give up on the season.

"It's a strong season," said John Konarski, vice president of research for the International Council of Shopping Centers, which reported an average 4.7 percent increase in sales at 2,900 specialty stores (no department stores) in 49 regional malls during the first week of holiday shopping.

"I don't hear people saying, 'Oh my God, it's unbelievable,' " he said. "But it's strong. It's solid."

Pub Date: 12/16/97

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