US Christmas sales: cautious hope for tinkling tills

The newly opened Burberry's in Boston is comfortably busy. Some are just looking, but many are buying. And when one buys at Burberry's, one doesn't fool around: $675 for a raincoat, $85 for a scarf, $55 for an umbrella.

Downtown, Filene's bargain basement store teems with shoppers. Here you wait in line 20 minutes, next to heaps of disarrayed sweaters, shoes, and lingerie. But when you finally reach the harried cashier, she rings up prices one-tenth of those at Burberry's.

The bustle at these two stores - one polished, one frantic - would lead to predictions that retailers will have a merry Christmas. In fact, Burberry's and Filene's are about the onlym types of stores that are expected to do well this season, because they have at least two of the three key elements for success in this recession: the right product, the right customer, and an area of relatively low unemployment.

Most retailers with their ear to the ground don't hear much rumbling this winter. A commonly quoted figure is 4 percent growth over last year. That has been the pattern of retail sales growth for most of this year. Because of inflation, it means sales are essentially flat. If they are actually up only 4 percent at Christmas, it will be a disappointing year for retailers, as they typically make 60 to 75 percent of their year's profits during the holiday season. Last Christmas was one of the worst for retailers in years.

But retailers are keeping a stiff upper lip.

''I'm beginning to smell a little bit of improvement,'' said Maurice Segall, chairman of the Zayre Corporation, a $2 billion retailer. ''You can see it turning. I'm getting a little more hopeful for Christmas.''

The consumer, he explained, had been ''cherry picking'' goods - just looking for bargains and sales. Now shoppers are buying ''regular needs.''

Susan McKelvey, at K mart, said: ''We wouldn't be surprised if sales jumped in the last week'' before Christmas. ''People are holding on to their money until then because they're doing a lot of comparison shopping.'' But she expects them to break down and buy at the last minute, as they did in 1980 and '81.

''Common sense'' says this should be a moderately good year for retailers, according to John Murphy, vice-president of promotion and marketing at the National Retail Merchants Association. ''You can only go so long darning the same pair of socks.''

Moreover, ''consumers' balance sheets have been looking pretty good recently, '' says Karen Johnson, associate economist at Citibank Economics. ''People are in a position to spend.''

Here's a rundown on what products, regions, and shoppers retailers say are most likely to be active this Christmas season.

* Products: Across the board, practical and utilitarian gifts will move, retail watchers predict. Coffeemakers and ironing boards will be hot. Coats, sweaters, ''wardrobe building'' items, such as blazers and slacks, will sell more than ''trendy'' clothes.

Also, the ''echo baby boom'' - the children of the World War II baby boom - will boost sales in children's clothes, as well as in traditional dolls and games.

A second trend is toward do-it-yourself merchandise that enhances one's life style, such as power tools, says Walter Loeb, vice-president at Morgan Stanley & Co., a brokerage house. ''Whether it's because they have to or because they want to, people are getting handier these days.''

Related to that is what Diane Norton at the J.L. Hudson Company in Detroit calls the ''nesting'' trend. ''The home is becoming the center of entertainment and, increasingly, of work,'' she says. She cites the home computer, which lets kids play Pac-Man and lets parents set up offices at home, as the prime example. No longer out of financial reach for the average consumer - for instance, the Timex Sinclair costs $100 - the computers will probably be the hottest gift this Christmas.

Nor are they a fad, claims Tom Langenfeld, director of corporate relations at Dayton-Hudson, Minneapolis. ''This is an emerging trend. We're beginning to see the impact of those who have grown up with electronics. For the first time, they are buying or heavily influencing their parents to buy electronics.''

* Region: Traditionally strong areas like the Southwest have finally been hit hard. Because of the devaluation of the peso, ''business from Mexican nationals has died,'' says Robert Mooney, manager of corporate economics at the J. C. Penney Company. ''In fact, it's going the other way.'' The company estimates its earnings were reduced 10 cents a share - or more than 8 percent - just from the devaluation. In addition, oil and oil-related firms in the South have suffered from by reduced exploration.

California is bumping along, but slowly. Unemployment in housing and forest markets, as in the recording, movie, and aerospace industries, has curbed demand.

Not surprisingly, the Midwest, where plant closings have become routine, has tightened its belt. J.L. Hudson will be closing one of its 11 stores after Christmas. With unemployment approaching 16 1/2 percent, ''we see no signs that we will get a measurable improvement,'' said Ms. Norton.

The strongest area appears to be the East - not because it is particularly robust, but because industry is more service-oriented, less heavily into manufacturing.

''All in all, though, there aren't many pockets of strength out there,'' said Mr. Mooney at J.C. Penney.

* Customers: Mr. Loeb notes that the recent surge in the stock market is helping to buoy sales at expensive boutiques. He estimates every 100-point surge in the Dow Jones industrial average adds $6 billion to the assets of the affluent, at least on paper.

A large chunk of those assets - which until recently were tied up in All-Savers certificates - are now available for spending. And, says Mr. Loeb, people are unlikely to reinvest their newly redeemed certificates, because the yield is low.

At the other end of the buying scale, there is the ''off price'' customer, looking for value. This is often the person who still holds a job, but feels financially pinched.

Finally, there are the unemployed: mainly blue-collar workers. They are not buying much at all, and, Loeb says, the K marts are suffering.

Nonetheless, retailers are hoping for more than a white Christmas. ''Christmas is an emotional time,'' Mr. Loeb reasons. ''People want to give gifts. In the end, many things will be sold just because of emotion.''

of stories this month > Get unlimited stories
You've read  of  free articles. Subscribe to continue.

Unlimited digital access $11/month.

Get unlimited Monitor journalism.