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Will Consumers Be Spending This Christmas? Bumpy Ride Through 1997 Has Retailers Bracing For Another So-So Season

Velvet slacks and cashmere tops already fill store shelves, and Santa can occasionally be spotted at some malls.

Christmas is still two months away, yet a visit to many of the nation’s stores reveals that the holidays are here.

But while the hype has begun, the tinsel and trees mask the fact that many retailers are pretty anxious about the season. After only slim sales gains last year and a bumpy ride through 1997, many are bracing for a lackluster Christmas.

“Which way is the rollercoaster going to go? We just don’t know,” said Dr. Sandra Shaber, senior vice president at Wefa Inc., an economic forecasting firm. “But we know it won’t be a record breaker.”

Christmas is the most important selling season for retailers, with many depending on the holidays for more than half their annual sales. But in years past, good old Santa Claus hasn’t been so kind to the industry - consumers curbed their holiday spending, and many were only enticed to shop once stores began slashing prices.

This year, there are already fears of the same. September sales, considered a barometer of holiday spending, came in weaker than expected despite record levels of consumer confidence and low inflation and unemployment.

“Looking at the economy, this should be a slam-dunk holiday season,” said Alan Millstein, editor and publisher of Fashion Network Report. “But we know that’s not guaranteed.”

Also weighing on holiday sales is the trillions of dollars in consumer debt, much of it on credit cards, that may deter consumers from taking those shopping sprees.

In addition, the direction of the stock market may depress holiday spending, with recent turmoil raising consumers’ fears that the bull market is coming to an end.

“The bottom 60 percent of households are worse off today than in 1989,” said Carl Steidtmann, chief economist at Management Horizons, a consulting firm.

“They don’t benefit from high consumer confidence and the strong stock market,” he said. “They face issues like substantial growth in consumer debt.”

Most retailers, however, still hope jingle bells will ring. Sears, Roebuck and Co.’s chairman Arthur C. Martinez said last week he was still “very optimistic about Christmas.”

Analysts also say discount stores, including Wal-Mart Stores Inc. and Dayton Hudson Corp.’s Target division, will continue to outperform the rest of the retail industry, as they’ve done for all of 1997.

“For many shoppers, value comes before everything else,” said Kurt Barnard, president of Barnard’s Retail Trend Report. “If the price is right, they will come.”

That’s especially troublesome for specialty retailers and department stores. Last year, many stores panicked over slow sales and slashed prices in the weeks before Christmas to ignite buying. While it saved the season, it also cut into profits.

While predictions have been made, the verdict for this Christmas won’t be known until the last store closes on Christmas Eve. The only known factor is that everyone is starting to think about Christmas.

“Once I see holiday clothes in the stores, I know I better make my gift list,” said Lisa Lewis, who checked out out some wool sweaters at Bloomingdale’s this week. “Next thing you know it’s Thanksgiving, and then Christmas is right around the corner.”

Tags: business

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