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Holidays looking glum for retailers

Georgia sales figures lower than nation

POSTED: January 2, 2009 5:00 a.m.

People walk past Sound Shop, a store advertising various sales and discounts, Tuesday at Lakeshore Mall. Statewide and nationally, retailers report a weak Christmas this year, due to the sagging economy.

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In a month that merchants rely on to put their ledgers in the black, it's been a dark December.

Consumer spending in the face of a growing economic crisis shrank in Georgia more than the national average in what was expected to be one of the weakest holiday shopping seasons in 15 years, according to the Georgia Retail Association.

"It's down a little," said Gainesville Jewelry owner Phil Forrester, one of the few local retailers who would publicly acknowledge a sales slump. "Anybody who tells you different is not being truthful."

Forrester said traffic in his store remained steady this season, but customers tended to be more budget-conscious.

"People are shopping, but they are spending much less money," Forrester said.

He said while it has not been unusual for his store to sell one or two items approaching six figures or more during Christmas, "It seems like the limit for customers this year is $1,000 or less."

And while in years past cash transactions were the norm, "this year it's mostly credit cards."

Forrester said he saw the shopping slowdown coming and cut back on inventory purchases to be conservative. Smart retailers will roll with the economic punches and emphasize strengths like customer service in tougher times, he said.

Some store owners who are stuck with large inventories at the end of the year are going to have some soul-searching to do, said John Heavener, president of the Georgia Retail Association.

"You're going to see some small retailers see if they can really make a go of it and see some chains cut down on locations," Heavener said, noting Circuit City electronics chain's recent pullout of Georgia. "The mom-and-pops are going to be really stressed by this."

December sales can account for anywhere from 20 to 40 percent of a retailer's overall business and prove crucial in turning a profit. This year, there was one fewer week of shopping between Thanksgiving and Christmas, compounding an already gloomy sales outlook.

Holiday shopping was expected to grow by 1 percent in Georgia this year, Heavener said, compared with 3 percent growth in years past. He said only 2002 had comparably weak sales growth figures in the past 15 years.

Officials with the National Retail Federation said that predicted holiday sales gains of 2.2 percent for the nation would be considered "meager" compared to the 10-year average of 4.4 percent.

"Retailers are definitely feeling challenged and feeling the pinch of the economy," National Retail Federation spokeswoman Kathy Grannis said.

Some stores took to promoting drastic markdowns in an effort to get shoppers in the doors.
"We've seen after-Christmas-type sale prices before Christmas; almost clearance prices," Heavener said.

Others, like Forrester, still plan on offering new after-Christmas deals in anticipation of bargain-shopping holdouts, but many retailers have cut as far as they can already.

The economic downturn has made many shoppers more conservative, Heavener said.

"I think more people are being careful because of the uncertainty of what lies ahead," Heavener said.

Preliminary data from SpendingPulse indicates total retail sales nationwide were down between 5.5 percent and 8 percent from a year ago. SpendingPulse is a division of MasterCard Advisors that tracks total sales paid for by credit card, checks and cash.

A separate measure of holiday spending, from the International Council of Shopping Centers, is expected to fall 1.5 percent to 2 percent from last year, making this the worst season since 1969. A full picture of the season won't be known until Jan. 8, when major retailers report their sales results.

Clothing sales, especially the most expensive clothing, were dismal, SpendingPulse said. Sales of women's clothing dropped 22.7 percent, according to SpendingPulse. Men's clothing sales dropped 14.3 percent and footwear sales fell 13.5 percent.

Total sales of luxury goods, defined as the highest priced tenth of jewelry, clothing and leather goods, fell 34.5 percent. Sales of electronics and appliances were down 26.7 percent, leaving electronics retailers more rattled than any others.

The Associated Press contributed to this story


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