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Small improvement in retail won't last, analysts say

Christmas shopping season could be a ‘train wreck'

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By TONY HOLT | Hernando Today

Published: September 22, 2009

NEW YORK - The recent retail trends for September show a slight improvement due to Labor Day appearing further down in the calendar.

The long wait for the holiday caused schools across the nation to start later than usual — so discount and apparel chains have benefited.

Those improvements are not likely to be sustained and the upcoming holiday shopping season is still expected to be well below the desired level, said Patricia Edwards, a retail analyst and founder of Storehouse Partners in Seattle.

"It's going to continue to be tough sledding for a while," she said. "Retail is just not stepping it up. Stores are not buying inventory."

Some large chains, from Walmart to Target, are publically boasting about recent sales trends. Target's CEO recently said his company's sales were "above expectations."

The head of TJX, which owns Marshalls, TJMaxx and other stores, recently said "customer traffic counts remain extremely high."

Sally Marrucci, who co-owns Marrucci Furniture in Weeki Wachee, said the same. Sales are more robust in the fall compared to the summer, she said, and this year has been no different.

"We definitely have seen an increase in traffic and an increase in confidence to spend," she said. "It's been slight, but it's been there … As the holidays draw near, people will want to spruce up their homes."

The International Council of Shopping Centers reported a year-over-year improvement in retail sales for consecutive weeks for only the fourth time since November 2008.

For the week ending Sept. 12, sales went up 1.6 percent compared to the same week the prior year. It was the best one-week showing since September 2008, according to ICSC.

The week ending Sept. 19 still showed a 0.6 percent improvement.

Edwards warned against reading too much into two weeks of data.

"Remember, we also had a really, really bad year last year," she said. "No one is expecting much of anything."

Other retail experts expect more bad news.

America's Research Group published a survey last week showing the long-term effects of the ongoing recession. Eighty-one percent of American consumers say they are feeling added pressure by family debts, which are forcing them to shop less and spend less.

"The data foretells a very scary Christmas shopping season with consumers radically cutting back at a time when retailers need shoppers to shore up sagging retail sales," said ARG founder Britt Beemer. "I am fearful Christmas will be a retail train wreck this year."

Edwards agreed with Beemer, calling the current recession a "seminal event" in American history.

She pointed to another figure in the ARG survey — 60.1 percent of American consumers declared they would adhere to a lower spending level even after the economy improves.

"It's just no longer prudent to spend $200 on a handbag," Edwards said. "It's going to be a board-game-socks-and-sweaters Christmas this year."

Marrucci said she remains optimistic because the holidays always bring a boost in sales. She doesn't rely as much on target numbers as the bigger chains, so any improvements are welcome.

"Definitely 2009 has been a tough year, but we think the change coming will be better than what we've had so far," she said.

Reporter Tony Holt can be reached at 352-544-5283 or wholt@hernandotoday.com.

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