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October 31, 2010 in Business, City
Local retailers ready to cure shoppers’ ‘frugality fatigue’
Penn Fix of Dodson’s Jewelers shows off an emerald ring of more than six carats Wednesday. Although most can’t afford the giant emerald, Fix is cautiously optimistic that consumers will spend a little more this holiday season.
(Full-size photo)
Penn Fix, president of Dodson’s Jewelers in downtown Spokane, just finished a good week. On Tuesday a customer visited his family-owned jewelry store and left after buying a $14,000 diamond ring as a birthday present.
With an economy still muddling through a recovery, sales like that help inspire retailers to feel they’ve finally bottomed out and are headed in the right direction.
National retail groups this year are predicting holiday sales that will be only slightly better than a year ago. That lukewarm forecast has inspired many retailers to adopt sales pitches and tactics that they hope will bring a few more customers their direction this year.
Fix said he’s glad to sell higher-priced items, but he’s just as happy to ring up more modest purchases.
“I’d rather sell a fine Edwardian piece of jewelry for $50 than sell it to a refiner” to melt down for the gold, he said.
Retailers who’ve survived the past two seasons say they’ll continue doing what’s kept them going so far – having a range of items at different price points, offering free shipping, using social network connections and pushing Web sales to reach a wider group of customers.
The National Retail Federation, a trade group based in Washington, D.C., forecasts a 2.3 percent increase in holiday spending, compared with last year’s sales growth of less than 2 percent.
Based on more than 8,000 answers, the federation identified which products are most likely to land in gift boxes this year. Clothing and books top that list, but in a sign shoppers are ready to cut loose a little, the group found more people reporting they’ll be in the mood to buy jewelry.
Doug Hart, a partner in the retail and consumer product practice of BDO USA, said he believes consumers are ready to loosen the purse strings a little.
He has a term to describe that readiness to buy one or two expensive items, even if the general economy is stagnant: “I’d call it frugality fatigue,” he said, calling it a “sub-trend” that will mean an uptick in sales of jewelry, pricey electronics like smartphones or iPads, and some items of fine apparel.
“Consumers for the past two years have been cutting back on spending. Now some of them feel it’s time to treat themselves to an impulse purchase,” he said.
Even if some shoppers do change from Scrooge to Fezziwig this year, retailers in Spokane and North Idaho aren’t all convinced the shopping season will be better than last year.
Massoud Emami, co-owner of downtown Spokane men’s apparel shop Anderson & Emami Clothiers, has high hopes holiday spending will be up.
“Starting in August, our business started picking up nicely. Spending has been soft the past two years, but we’re now seeing an upsurge” in visitors and amount of money spent per shopper, he said.
Agreeing with Hart that some shoppers are ready to splurge, Emami said the store is seeing gains in custom-made suits and sport coats. “People are willing to spend a little more to have that perfect fit and feel good about what they’re wearing,” he said.
But Chris O’Harra, owner of Auntie’s Bookstore in downtown Spokane, isn’t sure the season will be a lot better than a year ago.
“I think people still don’t have a good sense of what’s going to happen. Last year we had a little more good old American optimism leading into the holidays,” she said.
Still, O’Harra doesn’t plan to wait for things to improve. Like a good number of other business managers, she’s changing how she operates in order to be more appealing to shoppers who do turn up. Auntie’s made a conscious effort to hire younger staff and buyers to target younger customers. “We needed people who knew what books were hot and appealing to younger people,” O’Harra said.
“We want our staff to be ready and on top of things when people come up and ask for suggestions,” she said.
Deena Caruso owns and runs two Spokane apparel and accessory stores, Finders Keepers. Business was good, she said, until mid-October; then purchases tanked.
Caruso uses Facebook to drive sales by offering discounts on slow days or on items that are not moving. “We really don’t see holiday shopping pick up until after Thanksgiving,” she said.
Her other strategy is personal; Caruso has agreed to be part of a flurry of benefits and events tied to area nonprofit groups.
“I’ve said my plan is to work twice as hard for half as much as last year,” she said.
For several years Caruso has been a business volunteer and supporter of the Christmas Tree Elegance fundraiser, held by Spokane Symphony Associates. This year Caruso agreed to take an even larger role, in part to fill gaps in corporate backing caused by another company pulling back.
Her stores will provide gowns for five fashion shows during the event, which starts Nov. 30 at the Davenport Hotel.
Caruso said she’ll be busy but plans on engaging every new person she meets at the event. “I care about the symphony. But I also am campaigning hard for my business,” she said.
“You meet people face to face and that, for me, is the best way to invite them to experience what you have in the store.”
Paul Fish, owner of north Spokane’s Mountain Gear outdoor outfitters store, is upgrading his building this fall with new lights and carpeting and fresh paint to provide a more comfortable shopping experience, he said.
Like others, Fish has been hearing predictions that online retailers can expect sales to grow 10 percent or more this holiday season. To spur sales online, he said he’s ready to launch his first free-shipping deal for MountainGear.com customers. Although he’s still tweaking that offer, he said it likely will apply to orders of more than $49.
Hart, with BDO USA, said shoppers this year will be greeted by a wide selection of discounts, promotions and deals.
Department store retailer Target, for instance, is changing the discounts available with the use of Target credit cards. Last year the Target card gave the cardholder an initial 10 percent discount, plus occasional deals after that.
“This year they made it a full 5 percent card discount on everything in the store and for the full holiday season,” said Adam Hauge, logistics manager of the Coeur d’Alene Target store.
In San Francisco, where Hart lives, the economy is experiencing a bloom of consumer confidence that’s due to Silicon Valley tech companies having a good second half of the year.
In that climate, Hart said he’s ready to break his own self-imposed frugality. He plans to buy his wife something with a little bling.
“I’m a conservative accountant, so I won’t go overboard,” he said. “I’ll probably buy her some jewelry or a pearl.”
Garco awarded $35.8 million Joint Base Lewis-McChord contract 
Albert on October 31 at 7:37 a.m.
Interesting…if’n I had an extra 14K, Union Gospel Mission could feed the hungry for a bit longer. Funny how we find $$ for “our priorities”.
lewis8457 on October 31 at 8:44 a.m.
and this was most likely not one of the unemployed workers in our area. I don’t see how one 14K purchase is going to get the people spending.
if the diamonds are not over 1/4 carat they have no resell value.
maria on October 31 at 9:31 a.m.
I’m going to do most of my holiday shopping at thrift stores.
509ifyourlucky on October 31 at 9:33 a.m.
I will continue to be frugal because prices are way too high, sales tax is too high. Prices need to come down to where people think they are getting their money’s worth, and the sales tax thats another issue. There should be 1 month every year of no sales tax on any purchases or services.
Bruce (aka thatoneguy) on October 31 at 10:00 a.m.
1-income household (used to be 2-income) + 2nd year of a salary freeze + higher health insurance premiums = LESS money than last year. Nobody is getting jewelry or iPads this Christmas, at least not from me.
We bought our wedding rings at Dodson’s though, so I’m glad to see they’re still doing OK.
biker on October 31 at 10:01 a.m.
Really, Does the media think we really care how retailers will perform for the holiday season. It’s a cheap and easy story that is grossly over-reported. Here is my take on consumer spending for the holidays. If a local store or corporate giant has structured their business on the notion that their survivals relies on the incessant and irrelevant spendng pattern of the American consumer….they deserve to fail. It’s obvious that we have not hit bottom yet if this kind of mentality is still present. Sidenote…..there are still plenty of people who will spend money as detailed in this story. There are plenty more who could never dream of such a purchase and this gap is growing larger.
wdavidson on October 31 at 12:36 p.m.
Albert, your priority must be being self righteous. Did you ever think this same person who bought the ring might also of donated thousands of dollars to charity and volunteer at the food kitchen for the homeless? They possibly could help with any number of service type activites, giving of their time? It does happen you know. But it is their money. You and Obama probably want to tax it away from him or her so they don’t have the choice of having to donate. I’m so tired of snobs who think they understand the whole context of a situation by reading a brief story about someone. Please take a deep breath and consider you don’t know it all…and STOP judging people without knowing them.
misjustice on October 31 at 2:14 p.m.
wdavidson; I didn’t read Albert’s post in the same light as you. I took his post as a lament; what he’d do if he had that much disposable income, not as an attack on those that do.
Perhaps you were too harsh. And a tad judgmental.
Shadedmuse on October 31 at 2:51 p.m.
Want to get people spending money then eliminate all sales. Like Montana and Oregon and Alberta.
If the income tax passes then eliminating the sales tax completly both sales and local add on portion, so you pay no sales tax at check out, only idiots pay both an income and sales tax. Until then You can find me shopping in Missoula what has more stores then Spokane.
Dazzeetrader11 on October 31 at 3:01 p.m.
Sadly, Shaded is correct. Wa St needs to relax the gas and sales tax. Don’t vote for Marr if you want tax relief. He’ll quietly increase both.
But who needs jewelry? Or high priced clothing when people need food….I’m not one of them…
zelda on October 31 at 3:33 p.m.
Before the Great Recession, consumer spending accounted for 80% of the GDP. It had been rising steadily for more than 15 years fueled by credit given to anyone who could fog a mirror. It was unsustainable and it’s not coming back anytime soon.
We created too many stores selling too much of what people don’t need. But, hey, the economy was marketing-driven (not the same thing as market-driven) and the essence of that is turning a want into a must-have.
What needs to happen is what’s happening — retrenchment and consolidation. The stores that survive will be the savvy ones that didn’t get over-leveraged and continue to provide superior products and services. With deflation taking hold in some areas of retail, more than eve a product truly is worth what somebody’s willing to pay for it. Merchants have to move inventory but housing is at a stalemate. The big lurch downward is on the way, some say. Many homeowners can’t hold out much longer.
But for the upper one-half of one percent, it’s let the good times roll. I got an magazine insert in the WSJ last week that was obscene. It practically defined “wretched excess” in terms of status-seeking consumption, e.g. Maserati’s and Van Cleef & Arpels. Tiffany’s is for ne’er-do-wells.
And Daisy, I’m not buying the argument about Dodson’s customers being major charity donors. It’s well documented that the rich give a much lower percentage of their income. So while the individual’s donation may seem large, as a percentage of income…not so much. The middle class is much more generous (back when there was a middle class).
de3 on October 31 at 4:54 p.m.
I’m sure the ghost businesses at the empty, weed covered parking lots and the empty store fronts along Sprague or North Division or Indiana or … will do well this shopping season.
Or may be at the nearly empty “Opportunity Center” Mall at Sprague and Pines?
What ever - let’s go squander and “save” on more useless stuff we don’t need! Yippee!
Wheezywilson on October 31 at 9:30 p.m.
Zelda has much of it right. Spending “equity” in homes in the form of “home equity loans” drove so much of the frenzy and it HAD to turn upside down. It will take much longer to get this economy right side up, if indeed it isn’t too late.
The poor and lower middle class statistically give a much bigger percentage of their income to charity than the rich - that’s been true for a long time.
Spokane’s Union Gospel Mission is plugged in and a “happenin’ place” as far as raising funds. I would suggest you check out some of their annual fund raising events - you’ll meet some of the finest folks in this city - what an amazing and wonderful organization!!
Dazzeetrader11 on October 31 at 10:36 p.m.
I’d like to see a link full of data showing less fortunate give a higher percentage of their income to charity.
No matter though…in terms of absolute dollars, I’d be surprised if the wealthy don’t give much much larger gifts to charity. They sure give more in taxes….48% of the country pays No tax. Families making over $200K pay over 80% of the taxes in the US. Somehow, I don’t think the wealthy should be criticized. And wait till January! Smart money says Obama will continue his redistribution….such a nice lil Robin Hood he is……..whatta crock.
48 hours and we’ll know more about his future…
zelda on October 31 at 11:01 p.m.
I am convinced that a lot of people in the U.S. now think that the American economy is a giant lottery system. As long as there is even an infinitesimal, astronomical chance that someone can strike it rich or hit it big, it’s OK for the rest of the population to grind it out day to day. It used to be called aspiration but now it’s just gambling. The only game to play is the hustle; learn to be an operator; take before you get taken.
Don’t get me wrong, I’m not advocating for socialism, communism or living on a collective farm, but there is an immoral advantage in duping people into thinking that they have a legitimate shot at being rich. The truth is that the “shot at being rich” is more like my odds of being the first astronaut to Mars. Sure, there’s a possibility but the probability is so minute it’s not worth calculating.
I know that many immigrants come here because for social and class reasons they are locked out of any chance of betterment. But now the chances of success are vanishingly slim. Perpetuating the idea that you can be anything you want to be has turned into a mass delusion. That’s not democracy.
greenlibertarian on November 01 at 9:22 a.m.
“Ten per cent surge in worldwide luxury goods sales projected for 2010
Unexpected rapid return of US shoppers to luxury stores and continued double-digit growth in China propel spike in worldwide sales. “We’ve seen a number of new behaviours and trends emerge now that the crisis is reversing,” says Bain & Company.” (continues)
“US sales will increase by 12 per cent, to €46 billion ($64.4 billion), representing the largest absolute revenue increase for the year.” (continues)
http://www.cpifinancial.net/v2/fa.aspx?v=0&aid=667&sec=Wealth%20Management