THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Monday, January 23, 1995 TAG: 9501210093
SECTION: BUSINESS WEEKLY PAGE: 17 EDITION: FINAL
SERIES: Forecast '95
SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER
LENGTH: Medium: 72 lines
The market may get crowded and the customer stingier, but that won't stop several national chains from pushing into Hampton Roads this year.
The region is still a popular one for retailers that want to test new ideas before taking them nationwide. For example, A&P, owner of the Super Fresh chain, opened its first Farmer Jack supermarket in bustling Virginia Beach last year.
But newcomers to the area will have to fight for customers loyal to their neighborhood stores. Target, SuperKmart and Hills will battle Wal-Mart, Rose's and several other discount chains that are well entrenched in Hampton Roads.
And strangers Harris Teeter and Hannaford Bros. will have to woo grocery shoppers true to Farm Fresh, Food Lion, Super Fresh and Farmer Jack.
This is a tougher market, for sure, and 1995 won't be easier for Hampton Roads retailers. The region's population and retail sales have grown at a slower pace than the state's, mostly due to defense downsizing. When the economic outlook was rosy last year, Hampton Roads' was a slightly paler pink.
There are signs that sales might slow down in 1995. The Hampton Roads Planning District Commission forecast a 2.5 percent sales gain for this year, down slightly from last year.
Retail sales dropped for the first time in eight months in December, the height of the holiday shopping season. The Commerce Department said this month that sales dipped 0.1 percent in December, the first decline since a 1 percent drop in April 1994.
Especially hurt were apparel retailers - everyone from department store chains to the fancy clothiers in northern Virginia Beach.
``It wasn't a bad year; it was a horrible year for men's and women's apparel,'' said Kenneth M. Gassman Jr., a retail analyst with the Richmond brokerage Davenport & Co.
It may be partly the industry's fault, Gassman said. Women simply don't like the fashions in the stores, so they aren't buying, he said.
It's time for apparel retailers to recuperate from the two-year slump, he said. But economists aren't sure whether 1995 will provide the extra boost.
Debts have piled up on consumers. Revolving credit debt soared 24.6 percent last year, bringing total outstanding debt to $334.4 billion, the Federal Reserve reported.
A slowdown in consumer spending may be on the way as interest-rate hikes begin digging in, said economist David Garraty of Virginia Wesleyan College in Virginia Beach. The figures may get revised, but the changes are usually slight.
``Even if it goes upwards a bit, it still will be below what people were expecting,'' Garraty said.
There is a bright spot: When national figures dipped at the year's end, state and local numbers didn't follow, said Roy Pearson, director of the College of William & Mary's Bureau of Business Research.
This year will be a different story, he said. Retail sales here probably will rise about 5 percent before inflation, compared to about 7-8 percent hike in 1994.
Many retail chains, in their quest to grab the biggest market share, will be slogging it out in 1995. While the ensuing price wars will benefit consumers, there may be some casualties.
In the past, big chains have forced out the little guys. After Wal-Mart moved into the area several years ago, Henderson, N.C.-based Rose's went bankrupt.
The message to retailers remains: Customers aren't that loyal. As much as they love you, they'll whisper ``au revoir'' if your competitors charge less and offer more.
KEYWORDS: RETAIL SALES by CNB