Friday, Nov. 16, 2007

Little holiday sales cheer

Merchants expect slow shopping season

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Dan Gross⁄The Gazette
Holiday shoppers were in short supply at the Washingtonian Center in Gaithersburg Wednesday morning, but marketing director Kathy Smith said she expects ‘‘ending 2007 with sales increases at least equal to, and likely greater than, the national retail forecast.”
Maryland retailers could see only a 2 percent increase in sales this holiday season, which would be the smallest gain in five years, according to the Maryland Retailers Association.

The state projection is lower than a forecast by the National Retail Federation. The Washington, D.C., industry group predicts that holiday sales — which account for about 20 percent retailers’ annual revenue — will rise across the nation by 4 percent to $474.5 billion.

Unlike a year ago, gasoline costs are rocketing upward this holiday season. The spike in fuel costs, along with leaps in mortgage foreclosures, declining home values and tighter consumer credit, has numerous local retailers on edge.

‘‘Our annual survey showed our members to be very pessimistic this season,” said Thomas Saquella, president of the 600-member state retailers group.

One-third of business executives who responded to the Maryland survey predicted sales decreases during the holiday season, compared with only 7 percent in 2006. Only one-third believed that third-quarter sales provided some positive momentum for the holiday season, compared with two-thirds last year.

In the survey, sales include those at discount stores, department stores and specialty stores, but not those at automotive dealerships, gas stations and restaurants.

The national survey is taken of consumers — not business executives — more than a month earlier than the Maryland one. The national survey was released in late September, while the Maryland one was unveiled this week.

‘‘I think if [the national retail organization] did another survey today, the results might be different,” Saquella said.

Last year, the Maryland group was about on target with its 5 percent predicted gain in holiday sales — the actual state increase was 4.8 percent. The national organization was slightly further off — but still close — with its 5 percent prediction. The actual jump nationally was 4.6 percent.

If the projections are that accurate this year, this holiday season would see the smallest gain since 2002. Sales that year increased nationally by only 1.3 percent, according to the retail federation.

Sales look good atWashingtonian, Silver Spring

At the Washingtonian Center in Gaithersburg and downtown Silver Spring, which feature Main Street-style shopping centers, sales figures for the first nine months this year are at or above the national averages, said Kathy Smith, marketing director for Peterson Management, the Fairfax, Va., company that manages those centers.

‘‘We anticipate ending 2007 with sales increases at least equal to, and likely greater than, the national retail forecast at both downtown Silver Spring and Washingtonian Center,” Smith said.

Five new businesses have opened at each center this year, she said. At the Washingtonian, new retailers include clothing boutique Imagine and music school Bach to Rock. In Silver Spring, new businesses include Maryland Youth Ballet and Fuddruckers restaurant.

Paul Thompson, co-owner of Ec’clectibles boutique in Frederick, expects shoppers to come out in droves in the next few weeks. The gift shop’s open house, which featured holiday merchandise displays, lights and music earlier this month, attracted more people than last year, he said.

‘‘That may be because we expanded the store,” Thompson said.

Compared with last year, Ec’clectibles sales ‘‘have done extremely well,” he said, though he declined to disclose specific figures.

Other retailers are not quite as buoyant.

‘‘We are cautiously optimistic for a holiday shopping season on par with the projections from the National Retail Federation,” said Dan Cook, marketing director for Lerner Enterprises of North Bethesda. Lerner manages White Flint Mall, which features upscale department store Bloomingdale’s, as well as a Dave and Buster’s entertainment center.

So far, most shoppers have been browsing, said Leslie Atanasoff, owner of Molly’s Meanderings in Frederick. Still, the boutique’s revenues increased 20 percent in September and October compared with the same months last year, she said.

‘‘This time of year, people tend to look at things and keep things in mind, then come back later,” Atanasoff said. ‘‘I can’t complain. My numbers [compared with last year] are up. ... It’s just a little slow to start.”

Hot sales items this season include electronics goods such as digital cameras and iPods, as well as gift cards, according to the retail groups. Recalls of toys manufactured in China, which are sold in many area stores, could cloud that segment, analysts say.

Consumers plan to do about 30 percent of their shopping online, up from 29 percent last year, according to the national retail organization.

National chains see declines last month

Disappointing sales in October by national retail chains that have Maryland stores add to the concerns. Upscale retailers Nordstrom and Macy’s posted year-over-year declines in same-store sales — a key measure in the industry — of 2.4 percent and 1.5 percent, respectively.

Wal-Mart Stores saw October comparable-store sales rise by only 0.4 percent, and executives there forecast that November sales will increase by 2 percent. Wholesale clubs saw some of the largest gains. Costco reported a 9 percent increase for October.

Jos. A. Bank Clothiers of Hampstead, which has more than 400 men’s clothing stores and plans to add 200 more by 2012, reported a 1.8 percent rise in same-store revenue for October. But that was well below the 8.4 percent increase in October 2006 from October 2005. Total net sales increased 8.7 percent to $47.5 million last month from a year ago.

Home foreclosure activity shows little signs of slowing. In the Bethesda-Frederick area, foreclosure filings increased by more than 1,600 percent in the third quarter from last year’s third quarter, according to data company RealtyTrac. Foreclosures in the Baltimore area saw a leap of almost 600 percent.

The average sales price of existing homes in Maryland declined by 1.7 percent to $349,598 in October from a year ago, according to Metropolitan Regional Information Systems. Some counties, including in Montgomery and Howard, still saw home prices rise, while others such as Prince George’s and Frederick experienced declines.

The average cost of a gallon of regular unleaded gasoline in Maryland was about $3.04 this week, according to AAA. That was up from $2.68 a month ago and $2.17 a year ago.

The talk by the Maryland legislature of raising the sales tax by 20 percent to 6 cents on the dollar this year also doesn’t help, Saquella said. While that increase, if it passes, would likely not take effect until January at the earliest, the discussions are ‘‘another thing to make people more cautious,” he said.

Holiday season hiring tends to increase about 4 percent from the first 10 months in the year, according to the National Retail Federation. Retailers across the nation hired an extra 596,000 workers last holiday season, a little below the number in 2005.

Saquella said he hasn’t heard about any Maryland retailers who are not hiring. ‘‘But some employees might see their hours cut, depending on how busy the stores are,” he said.

Staff Writer Rebecca McClay contributed to this report.

Holiday shopping facts, trends

U.S. holiday retail sales, Nov.-Dec. 2006: $456.2 billion

U.S. holiday retail sales, 1996: $287.2 billion

Number of extra workers hired by U.S. retailers during holiday season, 2006: 596,000

Number of extra workers hired by U.S. retailers during holiday season, 1996: 678,000

Percentage of annual sales made by U.S. retailers during holiday season last year: 19.6

Percentage of Maryland retailers predicting a holiday sales decrease this year: 33

Percentage of Maryland retailers predicting a holiday sales decrease last year: 7

Percentage of Americans who plan to use debit, credit or check cards this year: 72.1

Percentage who plan to use cash: 22

Percentage who plan to buy gift cards: 57

Holiday songs most frequently played at shopping centers last season: ‘‘Jingle Bells,” ‘‘White Christmas”

Sources: Maryland Retailers Association, National Retail Federation, International Council of Shopping Centers

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