THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Sunday, December 25, 1994 TAG: 9412230479
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY LON WAGNER, STAFF WRITER
LENGTH: Long : 106 lines
At Lillian Vernon's national distribution center in Virginia Beach, employment swells from a permanent work force of 750 to a seasonal work force of 3,000.
At Visa's processing SuperCenters in McLean, Va., and Basingstoke, England, computer networks are re-engineered to handle up to 1,900 transactions per second.
And the $4.4 billion perfume industry makes 75 percent of its annual sales to men during the holiday season, according to the Fragrance Foundation.
The lament that ``Christmas has become too commercialized'' has been grist for social scientists and scrooges for decades. But what's the point?
Turning back or toning down our country's holiday habits seems a remote possibility, so pining for the good old days of passing out homemade gifts seems irrelevant.
Perhaps a more meaningful and timely question is whether the concentrated blizzard of spending and selling at year's end is good for the economy. In other words, is our buying blitz ideal for merchants and shoppers?
In many cases, a store that fails to rake in money between Thanksgiving and Christmas fails altogether. In the name of giving, shoppers ring up debt that will take months to pay down.
Rare is the early-bird shopper who spreads out shopping and spending evenly over the last few months of the year. Black Friday - the day after Thanksgiving so named because it put retailers in the black for the year - may be the biggest shopping day of the year, but it's not the biggest spending day.
Visa and MasterCard show people charging up more on Dec. 23 than any other day. MasterCard's Michael O'Brien speculates that with many people traveling Dec. 24, the 23rd is really the de facto last shopping day before Christmas.
Visa speeded up its processing network after its peak shopping day last year - two days before Christmas - when the McLean SuperCenter set a record: 1,012 charges every second.
Mail-order catalogs, which now account for up to 15 percent of credit-card charges, aren't about to be left out of the last-minute shopping. J. Crew, for instance, offered free express shipping last week, guaranteeing delivery by Christmas.
In any case, 1994's buying season has been a good one for the debt card companies. MasterCard customers charged just under $12 billion from Black Friday through Dec. 16, the last day for which figures were available. Visa recorded $21 billion - more significantly, it pinpointed $16.8 billion of those purchases to retail stores.
For perspective, the nearly $17 billion Visa processed in three weeks is about four times the annual revenue of Norfolk Southern.
MasterCard says people quickly pay off their balances, because it doesn't see a lot of money carried forward on January statements. But it doesn't track lingering debt the way it does sales, which makes people wonder.
``People don't save up all year for the holidays,'' says Scott Roberts, a consumer behavior researcher at Old Dominion University. ``What they do is they put it all on credit and pay for it the next year.''
But at least all that buying is good for the merchants, right? Yes, it's good for them. No, it's not the most efficient way to run a store.
Retailers such as Proffitt's, Leggett, Sears and others have long since adjusted their buying habits to stuff their racks full during the end of the year. Some merchants count on November and December for 40 percent or 50 percent of their profits for the year.
Lillian Vernon does 60 percent of its business from September to December. But would it like to have its business spread more evenly over 12 months?
``Oh, of course,'' says David Hochberg, vice president of public affairs for the company. ``It's extremely challenging to gear up for that last-minute frenzy of activity.''
Vernon's difficulty is finding 2,000-plus people to pack and ship gifts. Hochberg said Virginia Beach was a good location for the distribution center because summer resort workers are looking for work just when Vernon needs more people.
When the bloated seasonal work forces at big stores, warehouses and shipping companies deflate in January, those temporary workers will again be looking for jobs. And just when they have plenty of shopping bills coming due.
ODU's Roberts says the concentrated consumerism around the holidays is only likely to escalate. People have nearly become immune to responding to advertised discounts, so stores have to go after buyers with increasingly aggressive sales. It's not uncommon to see markdowns of 50 percent at pre-Christmas sales.
``Now, you've got a really jaded consumer,'' Roberts says. ``Over the past 15 years, after hearing `sale, sale, sale,' everybody says, `Yeah, right.' ''
It wouldn't be ridiculous to ask: Why do we do this every year? And how do we manage?
In the case of Retha Smith, a Windsor, N.C., mother shopping at Greenbrier Mall last weekend, the answer to ``Why?'' is easy: boxer shorts.
``My son runs around in his boxer underwear all the time,'' Smith says, paying for some boxers with yellow ducks on a blue background. ``I might as well look at something creative.''
Two Saturdays before Christmas, Smith shopped from 9 a.m. to 6 p.m.
How does she manage? Like most of us, probably: with a sarcastic wit, a quick wallet - and somehow, a smile.
``I'm going up there, and they're going to be 20 percent off,'' Smith says, picking out a battery-powered shoe polisher for her husband. ``I'm sure. Ha. Ha.''
Cruising from one department store to another, she spots a familiar face.
``We must shop at the same places,'' she calls out as she scurries past. ``Merry Christmas.'' ILLUSTRATION: KEN WRIGHT/Staff
by CNB