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Retailers Weigh Holiday Mood
Maine retailers weigh holiday mood
Many say they have cut inventory and plan sales, but a few say early returns give reason for hope.
By BETH QUIMBY, Staff Writer
October 19, 2008
Store owner Jonathan Platt is also already sending out a newsletter to alert customers to sales.
Getting people's minds off the sad state of their 401(k) plans and into the holiday mood is one step Platt and other retailers are taking as they prepare for what could be a less-than-bountiful holiday shopping season.
"My gut instinct, it will probably be down," said Platt of the season that many retailers depend on for most of their annual profits.
Maine retailers say they are heading into their busiest season with a mixture of fear and hope, aware that the holiday shopping season is crucial not only to their businesses but also to the broader economy.
Some retailers are taking strategic steps now to encourage holiday spending. Others say they are still monitoring trends and will have a better feel for the mood of shoppers after the presidential election, and after the stock market digests the impact of the government's economic rescue plan. A few merchants say they are worry-free because business is booming, despite the gloomy news from Wall Street.
A number of state and national economic indicators last week pointed toward what could be a grim selling season.
• U.S. retail sales saw their sharpest monthly decline in three years in September, dropping 1.2 percent from August, according to the U.S. Commerce Department, and the National Retail Federation projected holiday sales would rise by only 2.2 percent this year, well below the 4.4 percent 10-year average.
• A measure of U.S. consumer confidence saw its sharpest monthly drop on record. The preliminary Reuters/University of Michigan Consumer Sentiment index fell to 57.5 in October from 70.3 in September, an 18.2 percent decline.
• The Maine State Planning Office reported that total retail sales statewide dropped 3.8 percent in August, compared to the same month in 2007. Retail sales for the year through August were nearly flat, rising only 0.2 percent.
• New England retailers said they do not expect any improvement for another six to 12 months, according to the Federal Reserve's latest "Beige Book" report.
With all the bad news, some Maine retailers say they will be doing business differently this holiday season. They are trimming their inventories, hiring fewer seasonal workers and stepping up discounts.
For shoppers, that should mean fewer choices, less sales help, but lower prices.
'NOBODY KNOWS WHAT TO EXPECT'
Renys, a chain of 14 Maine discount stores operated by R.H. Reny Inc. in Newcastle, is keeping its inventory leaner than in past seasons, said John Reny, chief buyer for the chain.
"We are being a little cautious that way," he said, though he believes that the stock will be sufficient and the change won't be obvious to customers.
L.L. Bean is reducing its seasonal staff by 23 percent this year and is also keeping tight control of its inventory in anticipation of flat sales over last year. Carolyn Beem, L.L. Bean spokeswoman, said the company will also re-emphasize the practicality of its product line and decide whether to put items on sale later in the season.
Some retail associations say their members are in a waiting mode. Lynn Smith, marketing director for the Kittery Outlets, said the Columbus Day weekend was one of the strongest weekends of the year, and they are prepared for a busy holiday season.
"But nobody knows what to expect," she said.
Some merchants in Brunswick are particularly nervous. They are girding for the initial impact of the Brunswick Naval Air Station closing in December, when base personnel begin to depart. About 400 squadron members out of 2,700 active-duty personnel are scheduled to leave.
"You are either worried or blind," said Paul Faustein, owner of Red Dragon Toys.
Faustein is planning to offer less-expensive merchandise this Christmas. He is stocking up on more $10 items and fewer big-ticket toys.
"People want to give gifts, but there is going to be less money around," he said.
Maine independent retailers say they are also counting on customer loyalty and what they say is growing support for the buy-local movement.
"Everyone feels what they have going for them is people's recognition that when you buy local from local retailers, you are keeping more money in your community and Maine," said Janis Beitzer, executive director of Portland's Downtown District.
But, she said, her members are concerned.
At least one Downtown District store already announced before the holiday shopping season got under way that it would be going out of business after the holidays. Edith & Edna, an arts and crafts store on Exchange Street, is closing after failing to make a profit in all but two months of the three years it has been in business, said co-owner Julie Carlson.
"It is the economy, and it has been evident since March that things have really gone downhill," said Carlson.
MALL PREDICTS INCREASE IN TRAFFIC
But other retailers paint a different picture. Cross Jewelers owner Ralph Pride said he is upbeat about the upcoming season after experiencing record sales at his downtown Portland jewelry store in September and, so far, in October. He said business has been strong because people are looking to buy gifts that retain their value.
Astrid Vigeland reported "magical" sales this year at her Folly 101 home decor items and gifts on Exchange Street. She said she is fully stocked for the holiday season.
"I am not worried," she said.
Craig Gorris, general manager at the Maine Mall, also is optimistic that traffic will be up at the mall this year.
Several new chains have opened their first Maine stores at the South Portland mall this fall, including the Apple Store and XXI Forever, to be followed by Coldwater Creek and H&M in late October.
"They are going to be big draws," he said.
Business at Simply Divine Brownies in Brunswick is up 30 percent over 2007, in part because of the opening of its two retail stores in Brunswick and Freeport. The gourmet brownie company heavily depends on its corporate holiday business, said Trina Beaulier, chief executive officer.
Over the past weeks, she and her staff of 25 have been nervously watching the financial crisis, she said.
So far, corporate sales are strong, and Beaulier is betting that gourmet brownies will prove a recession-proof indulgence. She said she is confident she will use all of the boxes and thousands of dollars worth of ribbons she has ordered for the season ahead.
"You really have to be prepared for the best," she said.
Staff Writer Beth Quimby can be contacted at 791-6363 or at:
bquimby@pressherald.com
Copyright © 2008 Blethen Maine Newspapers
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