Stores ready for a jingling sales season

Shoppers show early enthusiasm, but will it last?

Harry Potter is waiting

Merchants hope nothing occurs to keep wallets closed

November 21, 1999|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

At Eastpoint Mall, scented lotions and soaps are nearly buried in an avalanche of (artificial) snow, snowflakes and snowmen at Bath & Body Works. Michelle Horton, manager of Wilson's Leather, is pushing the fur-trimmed leather jackets she says are hot this year. And Pokemon, the Japanese monster phenomenon, has taken over a chunk of the children's department at Sears, Roebuck and Co.

It was more than a week before Thanksgiving -- the traditional kickoff to the holiday season -- but retailers were wasting no time preparing for their most profitable time of year. At the mall in Essex, spirits were running high, with merchants convinced they can beat last year's holiday sales.

Sears is already luring toy shoppers with its mix of Pokemon apparel, video games and toys such as walkie-talkies and pinball games.

"The first day the merchandise was out, we couldn't get it out of the boxes as fast as people were getting it off the shelves," said Jennifer Vincent, manager of the children's department. Such enthusiasm and an increase in store traffic over the past two weeks bode well for the season, said Terri McAllister, general manager of Sears' Eastpoint store.

Retailers throughout the state and nation -- and some analysts -- share the optimism. Others, though, warn that sales will likely rise by a smaller percentage than last year.

Last week's interest rate increase by the Federal Reserve could dampen consumers' willingness to spend, some fear. Retail spending in general grew by a smaller percentage in October than it had for most of the year -- a trend some expect will continue throughout the holiday period. Sales could be further impeded by storms or a volatile stock market.

And consumer fundamentals, including earnings and debt levels -- while healthy -- are weakening, said Michael P. Niemira, a vice president of the Bank of Tokyo-Mitsubishi Ltd. He is calling for an increase of 4.5 percent in chain store sales, less than 1998's 5.1 percent gain but on a par with 1997's increase.

"It seems that November is coming in even softer than I'd anticipated, but I'm still hopeful that it picks up toward the end of the month," Niemira said.

That's not to say it won't be a solid season -- even with slower growth in the industry -- thanks to a humming economy with low unemployment, no signs of inflation and high consumer confidence.

"There is one truism about American consumers: if they make it, they will spend it," said Kenneth M. Gassman Jr., an analyst with Davenport & Co. in Richmond, Va. He expects solid consumer and economic trends will make Christmas 1999 one of the strongest on record. Sales of goods and services, including items such as gasoline, should jump at least 7 percent to 8 percent over last year's, he said.

In a survey by the National Retail Federation and Deloitte & Touche, retailers said they expect sales to grow by 4.4 percent over last year -- with profits up by 17 percent for November and December, compared with those months last year. But those expectations are likely too conservative, NRF and Deloitte & Touche believe. They expect holiday sales to reach $185 billion, a 6 percent to 6.5 percent increase over last year.

"Shoppers will spend more than they spent last year, partly because incomes are up from last year and partly because you've got more shoppers, with population growth," said William F. Ford, senior economic adviser to TeleCheck Services Inc., the nation's biggest check authorization company. TeleCheck is calling for a same-store sales increase of 3 percent to 5 percent -- or 4 percent to 6 percent including all stores, not just those open at least a year. Retailers are stocking their stores in anticipation of a 5 percent gain, he said.

The biggest shopping day this year is expected to be Dec. 18, the Saturday before Christmas, with the day after Thanksgiving and two days before Christmas among the next biggest, he said.

In Maryland, increases in retail sales are expected to jump above the national average, to 6.5 percent, said Tom Saquella, president of the Maryland Retailers Association. The group's forecast is based on a survey of members and recent sales performance, he said.

Almost half of those surveyed said they expect increases of 6 percent or more. None said they expect sales to fall. About three-quarters of the retailers said sales through September have been above last year's.

Saquella expects the season to be marked by more sales and promotions than ever.

Among the expected big sellers: big-screen TVs, home entertainment centers and DVD in electronics, casual wear including sport jackets and leather jackets in apparel, formal wear for millennium celebrations and Pokemon, Furbies, Beanie Babies and Power Rangers in toys.

"They know the business is out there," he said. "It's a matter of reaching the consumers with the right promotions."

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