Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, November 14, 1993 TAG: 9311120011
SECTION: BUSINESS PAGE: F-1 EDITION: METRO
SOURCE: LON WAGNER STAFF WRITER
DATELINE: LENGTH: Medium
They grew accustomed to occasional layoff announcements. They waited, expecting maybe one day the pink slips would land in their paycheck. For most people, the bad news never came.
The lack of bad news over a period of months became good news, and people started buying again.
"Obviously, when people see others being laid off at their organization or in their neighborhood, they're going to be more conservative," said Richard Sorensen, dean of Virginia Tech's business college.
"When they no longer see that occurring, they think the wave has passedand things are improving."
Economic indicators for the third quarter of 1993 show the region's economy - like the nation's economy - is slowly improving. Nationally, the gross domestic product has been growing at a "real" rate of 2.5 percent - meaning its modest gains have been largely due to low inflation.
But area retailers say their sales are supporting Sorensen's theory: customers put off and put off making big-dollar purchases. Then they got tired of waiting for the economy to boom.
The last three months of every year, primarily due to gifts purchased for the holidays, generally account for 30 percent or more of some retail store's yearly sales. If consumers' spending habits over the past five months are any indication, merchants could be smiling come December.
Retail sales figures for the third quarter were not yet available, but sales in the Roanoke Valley increased by $47 million from the first to the second quarter.
Holdren's Inc. started seeing sales of its big-ticket items - $2,000 and up home theater systems, $1,500-plus multimedia computers - pick up toward the end of the second quarter, in June. General Manager Stan Cross said Holdren's has averaged about a 10 percent monthly increase in sales since then.
"There's a significant amount of pent up demand out there, and I don't think we're seeing the full unleashing of that right now," Cross said, "but we're seeing some of it. We're selling a ton of high-quality audio equipment."
Dan Loyal, general manager of Sears, Roebuck and Co. in Roanoke, wasn't sure whether to attribute his store's double-digit monthly sales increases to the simmering economy or Sears' new promotional campaign. Either way, sales of durable goods - items expected to last three years or longer -- are "real strong," he said.
"You could look at it both ways," Loyal said. "Appliances that could have been put off like stereos, they're buying. But a refrigerator, if it goes up, it couldn't be put off.
"A year ago, if a refrigerator [broke down], you'd get what you needed; now maybe you get one with a few more frills."
Loyal said if current sales are any measure of holiday sales, "it's going to be fantastic."
As usual, with this gleeful outlook comes one or two caveats:
Cross at Holdren's cautions that there might be a statistical dip in November's sales when compared to last November - even if this year's sales are good. It seems consumer confidence rocketed last year after President Clinton was elected, and people went on a buying binge.
"Immediately after the election last year it was like turning on a water spigot - it really took off," Cross said. "So we're going up against some strong numbers from last year. As a matter of fact, if we hit the same numbers as last year we'll be happy."
And Tech's Sorensen warns that some big-companies were slow to restructure - Eastman Kodak Co. may just be starting - and the shocking layoff announcements may not be finished.
"Instead of continuous growth, I'm suggesting you're going to see growth and a delay," Sorensen said, "then some additional growth after some layoffs have been announced and digested."
by CNB