Boutique owner Marchel’le Barber is not afraid of selling things some people find distasteful.
Jim Crow signs and Aunt Jemima cookie jars are just a few of the offerings at Martha’s Crib, an Afro-centric arts, crafts and memorabilia store in south suburban Country Club Hills.
Her wares are popular with collectors who do not want to forget a painful chapter in American history, but Barber’s anxiety level is rising nevertheless. Customers are increasingly edgy and cautious about making discretionary purchases, worried about their jobs and the economy.
So she is playing it safe–making more of her products in the back room and ordering less from outside suppliers.
“This year, I’m going to be realistic,” Barber says. “It would be unrealistic to think we would hit the high sales numbers we hit in `97 and ’98. I’m buying smart.”
The bulk of the nation’s retailers are thinking the same way, worried that consumers will pull back this holiday season, rattled by stock market volatility and talk of war with Iraq.
But the resilience of the American shopper has been underestimated before. It happened as recently as last Christmas, when a last minute shopping surge left retailers with much better numbers than expected.
In fact, consumer spending, which accounts for two-thirds of the economy, has been one of the few bright spots in an otherwise lackluster recovery.
Already, there are some early signs that Christmas 2002 may not turn out to be as miserly as many merchants are expecting.
Personal incomes rose 0.4 percent in August, a sign that consumers might have the financial staying power to continue shopping. Real disposable personal income–what’s left over after taxes and inflation–actually increased even more, rising by 2.3 percent, helped by the virtual disappearance of inflation.
Noting such trends, Carl Steidtmann, chief economist with Deloitte Research, is predicting a very healthy 6 percent gain in fourth-quarter sales at general merchants, apparel and furniture stores.
“The consumer is flush with cash,” he says. “When you get high levels of refinancing or dramatic tax cuts, it generally produces a good retail environment. We’ve got both of them.”
Other prognosticators aren’t going as far out on a limb as Steidtmann, but they are not anticipating a complete washout, either.
The National Retail Federation, the industry’s largest trade group, is expecting a 4 percent increase in sales at general merchants, apparel and furniture stores during November and December.
While that is still quite respectable, it would be the smallest increase since 1999.
Last year, NRF lowered its original 4 percent forecast to 2.2 percent after Sept. 11, but the usually optimistic group was pleasantly surprised when the season ended with a 5.6 percent gain.
Sandy Horwitz, owner of Clothes Minded, is planning for another surprise on the upside this year.
Shoppers at her Bucktown boutique have not been shy about snapping up unusual items like a dressy black organza skirt with white appliqued flowers. Horwitz, who specializes in casual clothing that can be dressed up or down, sold six of them at $148 apiece in one weekend, her entire inventory.
She immediately reordered the skirt “with no trepidation. People are in the mood to have a little fun,” Horwitz says.
Horwitz, a retail veteran of 30 years who recently moved her shop to trendy Bucktown from Lakeview, is so optimistic about her new location and the economy that she increased her holiday buying by 45 percent.
Bucktown’s upwardly mobile masses may not be an appropriate leading indicator for the rest of the country. But a recent survey found that a majority of consumers say they will not be timid when it comes to holiday shopping this year.
More than 60 percent of those surveyed by BIGresearch said they plan to spend the same amount on holiday gifts as they did last year. Fewer than one-third said they plan to spend less, while about 8 percent said they plan to spend more.
Consumers who said they plan to spend less cited supplementing their savings or paying down debt as reasons for doing so.
Those are legitimate motivations, says Carl Tannenbaum, chief economist for LaSalle National Bank. But he expects most families to put off their financial reckoning until after the holidays.
“People will take the occasion of the holidays to enjoy themselves and be generous. My sense is, if there’s belt-tightening, it will occur after December,” Tannenbaum said.
Not every retail expert is so jolly.
Representing the pessimists, veteran retail consultant Kurt Barnard is looking for a miserly holiday season with same-store sales in November and December rising only 2.5 percent.
“The worst enemy the retail store has today is interest-free auto loans and very low-interest mortgages,” says Barnard, president of Barnard’s Retail Trend Report in Upper Montclair, N.J. “Americans have been buying cars and houses like crazy.”
Certainly, consumers have been less than enthusiastic about back-to-school shopping, prompting even hot retailers such as Wal-Mart Stores Inc. and Target Corp. to lower their estimates for September sales.
But consumers have a more sentimental attachment to holiday shopping than they have to stocking up on sneakers and jeans, retail experts point out. And less fall spending may even be a sign that consumers are saving something for an end-of-the-year run.
If anyone prospers this Christmas, it should be discounters that help stretch the family budget and retailers that cater to the home, retail experts say.
Consumer electronics are likely again to be popular as prices on home-entertainment centers and plasma TVs continue to fall.
Computers also will be a popular family gift purchase, says Diane Swonk, chief economist for Bank One Corp., including at her house.
Many households last bought a computer in advance of Y2K, and those machines are now very slow or unable to run the latest games in some cases.
“We’re running up against the obsolescence issue,” Swonk says. “I need a new monitor for the one I bought in 1998, but once you spend the money on a screen, you’ve bought half of the whole package. I’m going to get the whole thing.”
The bigger question is whether consumers will return to buying apparel such as cozy sweaters and coats, experts agree. They certainly didn’t last year, encouraged by one of the warmest winters in decades.
That could mean there is pent-up apparel demand, some experts say, especially if winter sends us a frigid blast early in the season. Others such as Barnard believe that Americans’ closets are still stuffed with clothes from previous seasons.
“Apparel retailers will be limping with crutches. The priority in people’s minds is things for the home, not things for the body,” he says. “Money is being spent more as an investment today than as a frivolity.”
