Holiday sales outlook looks flat

Sales are expected to be stagnant during the November-December holiday shopping season in South Sound and around the nation because of the slowing economy and a historic stock sell-off on Wall Street last month that rattled consumer confidence, according to two national surveys and a local retail expert.

Statewide, including South Sound, holiday sales are expected to be flat compared with last year's, said Jan Teague, president and chief executive of the Olympia-based Washington Retail Association.

Confidence needed

Retailers are offering discounts earlier this year and are catering to consumers looking for value, but that won't be enough to stimulate much sales growth, she said.

She thinks the U.S. Congress should consider another stimulus package for consumers. Earlier this year, federal government stimulus checks for $300, $600 and $1,200 were mailed out to individuals, couples and families.

"They need to take steps that give consumers some confidence, and they need to give Wall Street some confidence so it stops gyrating," she said in reference to the recent seesaw movements in the Dow Jones industrial average and other stock indexes.

"Those two things need to happen to still the worry we have," Teague said.

Curtailing expenses

Shoppers at Westfield Capital mall said they planned to cut back on spending.

University of Puget Sound senior Steven Ojo, who works as a promoter and event planner, said he expects to spend 75 percent less on holiday gifts this year than last year. He said he used credit cards to pay for gasoline when it hit record-high prices over the summer and now wants to pay down debt rather than spend money on gifts.

Lacy Phillips of Olympia, who works as a hair stylist in Lakewood, said she began noticing a drop in business in September.

Fewer customers are paying for higher-priced services, she said, adding that her commission sales have fallen by $300 to $400 a month. She said she plans to cut her holiday spending in half this year.

The National Retail Federation forecasts that nationwide, consumers will spend 1.9 percent more this year than last year, the lowest increase in consumer holiday spending since 2002, the federation said.

The International Council of Shopping Centers predicts a 1.7 percent increase over last year.

"The 2008 holiday season will be challenging for many of our nation's retailers, but relatively good for discounters and wholesalers as consumers focus on basics and value," the council said in a news release.

Retailers

For retailers, the holidays are critical, a time when they can earn 20 percent to 30 percent of annual sales in two months, Teague said. She said a slower holiday shopping season might not result in store closings, but it could mean more restructurings, such as the Chapter 11 bankruptcy recently filed by electronics retailer Circuit City.

Employees and owners at South Sound retailers said last week that they have adjusted their businesses to reflect the slower economy.

Olympia Downtown Association board president Daniel Furrer, who also works at the gift shop Archibald Sisters, said he expects a strong holiday shopping season for downtown. At the same time, Archibald Sisters has prepared for the slower economy by cutting back on business expenses, he said. As a result, the store has been more profitable than in 2007, Furrer said.

In Lacey, Olympic Cards & Comics co-owner Gabrielle Shephard, whose business recently expanded into a 7,000-square-foot location off Pacific Avenue, said she has noticed customers spending money on smaller items.

"They may not spend the money on a diamond ring, but they may spend it on a board game," she said.

At Capital mall, Darcy Berry, who works at the Alaska Smokehouse kiosk, said that although the kiosk's opening-day sales topped last year's, mall shoppers didn't appear to be buying in great numbers or carrying bags. The kiosk opened Nov. 14.

"It's kind of bizarre," she said.

Berry hopes for a strong holiday shopping season but said she doesn't expect it to be better than last year's. The Smokehouse kiosk is open through Jan. 1, she said.

Rolf Boone covers business for The Olympian. He can be reached at 360-754-5403 or rboone@theolympian.com.