U.S.: Retail Sales Downgreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
Headline: Crowds Fill Malls but Not Shopping Bags in Crisis -- Retailers: Consumers cut weekend spending, wary of economy after terrorist attacks
Source: Los Angeles Times, 17 September 2001
Americans seeking a break from tragedy gathered in shopping malls and stores over the weekend, but for the most part they weren't buying.
In large cities such as Los Angeles, the sales decline could be as high as 50% from the previous weekend, according to a report by America's Research Group, as consumers bought necessities and patriotic emblems but little else. The survey of 5,000 consumers and 65 national retailers over the weekend estimated that smaller cities posted sales drops of as much as 20%.
With consumer spending as one of the last supports of an economy tilting toward recession, financial experts warned that shoppers' response to the tragedy does not bode well for the country's financial health. Consumers, who this year were willing to spend despite falling stock markets, an energy crisis and rising unemployment, say their optimism finally may have met its match in the terrorist attacks on New York and Washington and the talk of war that has followed.
"People don't want to spend their money; they're nervous," said Felix Lopez, gesturing at his quiet cash register on what should have been a busy morning at his pet-supply store in Glendale. "What if we have a crisis or go to war? You have to have money at home to be prepared."
Over the weekend, many scenes from the nation's retail districts might have been deceptive. Malls reported roughly their regular level of visitors. Streets were reasonably crowded, and many restaurants filled some, if not all, tables. Big discounters reported fair business.
But a large number of the would-be shoppers were empty-handed. At some eateries, the number of diners masked the fact that the businesses were missing their usual crowds of people willing to wait up to an hour for a seat. Many big-box retailers sold necessities but not the impulse items that round out their revenues.
At trendy French bakery and cafe La Conversation in West Hollywood, the wait staff Saturday morning was in the unusual position of having empty tables.
Claudia Velasquez, who has worked at the cafe for four years, said she and her husband, a baker at the restaurant, worry about the slow week and the potential for continued weakness ahead. The parents of a 6-year-old boy are toying with the idea of delaying their mortgage payment this month.
"What if we need that money for groceries?" Velasquez asked, estimating that her tips would total $40 at best for the morning, rather than her usual take of about $70. "Because of what's happening, nobody wants to go out, nobody wants to do anything. That could be very bad for us."
The timing couldn't be worse for retailers, as the holiday season--when many sellers can bring in up to a third of their annual revenue--is fast approaching.
Amanda Cargill, general manager of the nearly empty Thee Foxes' Trot, is predicting early markdowns of holiday merchandise. Products such as ornaments and Christmas cards may be put on sale as soon as they arrive, she said. "It's kind of hard to get in the mood for Christmas when you see all these families with disaster around them," she said. "I think everybody's a little nervous. It's going to be a scary few months."
Even before the attacks, retail sales had slowed to just slightly above last year's levels and consumer confidence was at an eight-year low. In some cases, particularly for department and specialty apparel stores, sales had fallen compared with a year ago. Discount stores and some consumer electronics stores, however, tallied enough growth to lift the entire sector.
So far this year, consumers' willingness to buy from discounters has led some retailers to believe they could eke out small gains for the year. But as the destruction leads to talk of financial losses, rebuilding costs and thousands of layoffs, even the retailers' best efforts might not be enough to convince Americans to spend.
"I do think there's a pent-up desire to get out, but I'm really concerned about people's willingness to spend," said Richard Giss, a retail analyst with Deloitte & Touche in Los Angeles, after roaming the Santa Anita Fashion Park in Arcadia. "A lot of shopping is based on impulse buying, and impulse buying has just dried up. . . . Buying something on a whim seems wrong."
In a burst of patriotism, Americana seemed to be one of the few impulse purchases. Kmart Corp., Wal-Mart Stores Inc. and other retailers reported record sales of American flags, selling tens of thousands of small hand-held flags on sticks, full-scale Old Glory banners and just about every other representation of the Stars and Stripes.
At movie box offices, overall ticket sales were good, but business dried up in some places. "It's been slow, terrible slow," said Dennis Bowman, owner of Bowman Theatre in Savanna, Ill., a town of 3,000 people along the Mississippi River. "On a good Friday night, we have a couple hundred people; last night we had 40. People are watching television. They want to know what's going on. They haven't gotten that overload yet."
Bowman owns a theater, a video store and a Radio Shack. The video business "is steady. Nothing special," Bowman said. "But the Radio Shack has been dead. Nobody's buying. They are all saving their money."
It may not all be bad news, however. The hesitancy to buy now could lead to pent-up demand, said Michael Niemira, an economist with Bank of Tokyo-Mitsubishi in New York. "Events can change the collective psychology," Niemira said. "Come Christmastime I think the environment may be a lot better in terms of sales because the consumer is building up purchasing power and demand."
Some people over the weekend weren't waiting until the holidays, saying putting money into the economy now is a patriotic duty. "I have to continue on with my life and put something into the economy so it will continue to flow," said Carol Gagne, buying an American flag before heading to an open house in Long Beach with her real estate agent.
And even in New York, where some stores remain shuttered and many consumers are uninterested, some purchases had to go forward. At a Kenneth Cole Productions store near Grand Central Station on Saturday, 34-year-old David Campbell needed a suit appropriate for funerals, because he will be attending the burials of several friends who died in the World Trade Center attack.
"Of course I had something to wear, but nothing really fit and nothing really fit the mood," Campbell said. "I wanted to make sure I had something set aside and special for these events."
-- Andre Weltman (email@example.com), September 17, 2001