Last-minute shopping to fuel retail profits
Ken Stone, a professor of economics at Iowa State University, said there is no accurate way to gauge retail sales during the holiday season until retailers report their total sales early next year. But he said there are indicators that consumer confidence may be up this year.
“There’s no way of knowing,” he said. “The government said sales were up in November, but it’s a guessing game. I’m fairly optimistic because our income in Iowa is up a little more than 4 percent compared to a year ago this time, and my contention is people spend up to their income.”
Stone said sales can be spurred by media reports that often use isolated sources or studies to measure sales trends. Still, he said, in retail, perception is reality.
“I think the economy is turning around, but consumer attitude is very important,” he said. “I think this year, in general, there is a lessening of anxiety for consumers.”
As the holiday shopping season shifts into high gear, a rush of consumer spending is expected to fuel modest profits, retailers say.
The National Retail Federation, the world’s largest retail trade association, whose members employ about 20 percent of the U.S. workforce, forecast that retail sales will increase 4 percent during November and December.
NRF Chief Economist Rosalind Wells said in an online report that consumers have been cautious in their spending but continue to bolster retailers’ performances.
“NRF sees the economy growing around 3.5 percent in the second half of this year, which should be a solid enough environment for reasonably good holiday sales,” she said. “We anticipate that home-related merchandise and leisure goods will do well this holiday season, and that apparel demand should pick up as many consumers have postponed this purchase.”
Jim Marcovis, owner of G&L Clothing Co. in Des Moines, said sales of insulated footwear and clothing are down due to warm weather, but overall sales are steady.
“We’re doing fine,” Marcovis said. “The cold-weather stuff isn’t selling as well as we would like, but when we have a cold snap, business will pick up. Our business is dependent on the weather to an extent, but our regular stuff is selling well.”
Marcovis said he expects total sales to top those from last year. Like many other retailers, he is counting on the last weekend before Christmas, the busiest shopping days of the year, to bolster his business.
“It’s the biggest weekend for us,” Marcovis said. “It’s the last push.”
Paul Stenderd, manager of Valley West Mall, said business at the mall has been slow since the summer, but recently has picked up. “We’re running about even with last year, if not a little under,” he said. “But sales went well over the weekend and we hope to end up 2 or 3 percent above last year.”
Managers from Merle Hay and South Ridge malls did not return repeated phone calls seeking comment.
Mark McLemore, sales manager for Ultimate Electronics in Des Moines, said sales of moderately priced items like DVD and combination DVD/CD players should help the store surpass last year’s total sales. He said one-third of the industry’s business is conducted in the final two months of the year.
“Compared to our numbers last year, we’re doing better,” McLemore said.
Holiday shoppers who have their sights set on convenience are buying products online and through catalogs. According to the eSpending Report from Goldman Sachs, Harris Interactive and Nielsen/NetRatings, Americans spent $6.2 billion in November on the Web. That’s up 22 percent from November last year, when online consumers spent $5.1 billion. Web businesses like Amazon, eBay and Barnes & Noble captured most of the business, with sales of books, music and video/DVDs leading the way.
Discount stores like Wal-Mart continue to fare well, too. Wal-Mart Stores Inc. reported record single-day sales for Nov. 29, the day after Thanksgiving, of more than $1.43 billion at the company’s domestic stores and Supercenters. This year’s total surpassed last year’s $1.25 billion for the similar post-Thanksgiving day in 2001. For the month of November, Wal-Mart reported net sales of $20.997 billion, an increase of 10.3 percent over the $19.032 billion for the same period last year.
Big-box stores aren’t the only ones doing well this season. Small retailers that offer unique gifts are also flourishing. J.D. Mullen, program director for Valley Junction in West Des Moines, said it is difficult to compare sales to a year ago because there are six fewer shopping days between Thanksgiving and Christmas this year. But he said the area has been bustling with shoppers.
“We have a shorter time this year between the holidays, but the last couple of weeks have been good,” he said. “When I leave my office at night, there is a constant stream of traffic down Fifth Street.”