THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, November 19, 1995 TAG: 9511190389
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER
LENGTH: Long : 123 lines
Don Pease bets he'll spend the same amount of money - or even more - on holiday gifts this year. His gift list includes everything from jewelry for his wife to accessories for his son's car.
Louis White isn't so sure. His $3,000 shopping spree last year made merchants smile. But the Norfolk resident says things are different in 1995. He's watching his wallet.
``I used to use credit cards,'' he said as he waited in line for an automated teller machine at Norfolk's Janaf Shopping Center. ``Now, I use cash.''
Both White and Pease, a Virginia Beach computer analyst, will help determine whether the holiday shopping season is a success for local retailers. Merchants can reap as much as 60 percent of their sales during the last two months of the year.
But so far, the outlook for the season is, well, who knows? If you're talking to analysts and economists, the forecast calls for sluggish sales. But even they acknowledge that retail sales have risen in the first two weeks of November.
Last month, things didn't look as hot. Retail sales in October fell 0.2 percent, the first decline in three months, according to the Commerce department. For November and December, most analysts anticipate smaller hikes over last year's figures. They forecast a 2-5 percent increase in retail sales for the two months. For the same period in 1994, sales rose 6 percent.
The figures essentially measure dollars through the cash register. They do not include auto and gas station sales.
There's nothing wrong with the U.S. economy - at least if you're looking at the statistics. But to consumers, ``it feels like a recession,'' said Kenneth M. Gassman Jr., a retail analyst with Davenport & Co. of Virginia Inc.
Gassman and other analysts said people might be worried about corporate restructurings, possible layoffs and mounting credit card debt.
In Hampton Roads, for example, concerns about the federal shutdown and cutbacks at local shipyards could impact retail sales if the situation is not resolved soon, he said.
``If there's a chance these folks don't get paid, the federal government could wind up being the grinch that stole Christmas,'' Gassman said.
People also might tighten their spending because their credit card debts are growing, analysts said.
``My general impression is that things are pretty slow,'' said Edwin Underwood, an analyst with Scott & Stringfellow. ``Consumer installment debt is at a very high level. I would expect there is some concern on the part of the consumer.''
In addition, Underwood said he thinks retailers could end up hurting themselves if they ordered less inventory this season. He said companies that ship imported merchandise have not seen as much business from U.S. retailers during the tradition peak season.
``In imports for retailers, the peak period is from the end of June until the late part of October,'' he said. ``Last week, they admitted that the peak didn't occur this year, which tells me that there isn't a lot of inventory out there.''
Still, forecasting retail sales is like predicting the weather. In fact, the two are often linked. Last year, lingering warm weather in the fall hurt retailers who had stocked up on sweaters, coats and mittens.
So, who knows what the season will bring?
``I think if you say business is bad, then shoppers might say, `Well, I was going to buy this and that, but maybe I should be conservative with my spending,''' said Tracie Burlage of Hang-Ups, a specialty clothing store in Virginia Beach's Great Neck Village Shopping Center.
Retailers see signs that the holidays will not be as bad as forecasted. First, frigid weather in November has helped sell winter clothing. Secondly, people are buying gifts earlier this year.
Burlage, for example, wrapped her first holiday gift for a customer early last week.
``That's the earliest that I've done that,'' Burlage said. ``It's a good sign. It seems like people are more willing to buy.''
At Greenbrier Mall, Ruth Holmes said the parking lots were packed last weekend.
``It has already started,'' said Holmes, manager of Gordon's Jewelers in Greenbrier. ``That's the big surprise.''
Holmes is smiling these days - and for good reason. Jewelers are expected to be among the big winners this year. Customers also are expected to buy a lot of computer products, home electronics, upscale apparel and activewear. The losers are expected to include discounters.
Which raises this question: If consumers are so worried about the economy, their credit-card debts and job security, why would they buy expensive stocking stuffers this year?
``That's a good question,'' said Underwood, an analyst. ``It doesn't make a lot of sense to many of the retailers out there, but that seems to be the trend.''
Gassman thinks consumers have finally learned that you get what you pay for. While they may rein in their spending, they will spend selectively on items they consider to be investments, he said.
So, what will be hot this year?
Local retailers say women's chenille sweaters, which are soft and plush, are a hit, as are cellular phones. Shoppers also are buying leather holders for cell phones and beepers.
As for jewelry, people are snatching up little beaded necklaces like the ones worn by Today co-host Katie Couric and the stars of television shows Melrose Place and Friends.
``Everybody wants them,'' said Gloria Siegel, owner of Pizazz Jewelry in Virginia Beach's Hilltop North and Loehmann's Plaza. ``The first day we got them in, there was a stampede. They are the hottest item.''
At Egghead Software in Virginia Beach, educational and entertainment CD-ROMs are expected to sell well this season, partly because an increasing number of personal computers are being built with CD-ROM drives, said store manager Shawn Dailey.
For those who like strategic games, the Command and Conquer program allows the computer user to send out troops and complete missions. For the kids, there also are a wealth of educational programs, like the Magic School Bus, which takes users on deep-sea explorations.
As for toys, retailers won't find parents stampeding through their doors and rioting over Mighty Morphin Power Rangers. Those toys are now behind Batman figures and Pocahontas, which aren't as likely to turn parents into fanatics. ILLUSTRATION: Color photo
BILL TIERNAN/The Virginian-Pilot
Eric and Leah Woelper check out products at Egghead Software.
Computer products are expected to be among the hottest sellers this
holiday season.
by CNB