Christmas Sales Climb, But Consumers Remain Cautious
SHERMAN OAKS, CALIF.
`TIS the week after Christmas and all through the mall, consumers argue over price tags, both big and small.Skip to next paragraph
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"Thirty-seven dollars for a baseball cap?" says Donald Ames to his younger brother Timmy, eyeing merchandise at a Bullocks department store here. "Let's wait till you can find it cheaper."
American consumers have been cautious this Christmas season. But the urge to splurge has won out just enough to make 1992 the jolliest Christmas in four years for United States retailers. Spurred by consumer confidence that took a turn for the better after the presidential election, Americans spent more and bought smarter than during any Thanksgiving-to-Christmas season since 1988, economists say.
"By all indications it was a very good Christmas," says Steve Marotta, a retail industry analyst at Johnson Redbook Service. "Consumers are making their dollars stretch by buying less expensive items, but at least they have loosened the purse strings."
Though complete figures will not be ready until January, Mr. Marotta is predicting nationwide retail sales for the fourth quarter of 1992 at 4 to 5 percent higher than during the same quarter of 1991. Some credit-card companies report pre-Christmas sales on charge cards running at 15 to 16 percent over last year. A `modest upturn'
Lawrence Hunter, chief economist for the US Chamber of Commerce, predicts total 1992 retail sales will be 5 to 6 percent higher than in 1992. And since there are 54,000 fewer jobs in the retail industry than a year ago, Mr. Hunter says, the small percentage gains translate into profits.
"Compared to where we've been for four years, these modest upturns are very significant," says Jim Weidman, a spokesman for the National Federation of Independent Businesses.
Others say the average national gain will be lower. According to data from TeleCheck Services, the nation's largest check acceptance and check guarantee company, sales from Nov. 26 to Dec. 24 were averaged 1.3 percent higher nationwide than during the same period in 1991.
"A lot of indicators are showing that the country is emerging from the recession," says Dr. William Ford, senior economic adviser for TeleCheck. "But these retail figures suggest that consumers continue to be cautious...."
Economists attribute this year's gains to several factors:
* Two more shopping days in 1991 between Thanksgiving and Christmas than in 1991.
* Better inventory planning that will obviate the need for costly price-slashing after the holidays to sell merchandise.
* An inflation rate that is substantially lower than in previous seasons.
Some economists say they feel that the political changes in Washington have added to consumer confidence. "People turned on the TV during the Clinton [economic] summit and saw the best economic minds in the country trying to tackle our problems," says Jack Schultz, president of the National Retail Federation. "It made them feel things were going to get better." No boom in California
The retail sales boom has not been felt equally in all regions of the US, however. Sales climbed the most in the Southeast and Midwest, but did not increase significantly - and may even have dipped - in the Northeast and West. The economy is especially weak in California.
"We are coming off a real hole," says Jack Kyser, chief economist for the Los Angeles Economic Development Corporation. He says the hardest hit counties of California are Orange, Los Angeles, and San Diego - areas that have lost many defense industry jobs.
Mr. Kyser and other observers say the retailers that have been doing badly these year are upscale department stores, such as California's Nordstroms, Robinsons, and Bullocks.
Art Shaw, chief economist for the L.A. County Chamber of Commerce, says the bad economic times are reflected in the new demand for stores such as K-mart, Wal-Mart, and Price Club. "People are getting back to basics," he says. "They are becoming more utilitarian and less interested in designer stuff they don't need."
At the Fashion Square Mall in Sherman Oaks, Calif., retailers agree.
"People are looking at price more than ever," says George Collin, owner of Celio, a men's clothing store. "We've been able to stay competitive, but to do so we have had to drop our price points."
Bill Fleetwood, a clerk at the Williams-Sonoma store, says customers have shifted away from "junk" gifts to practical items.
Steven Bay, owner of a concession stand in the mall, says business has been better but that he remains cautious. "People are just not coming back to shop with their Christmas money," he says. "They are socking it away because they know they may still need it."