Yule Shopping Trends Pose Challenge

High hopes for 1997 ended in disappointment for many U.S. retailers, who struggled through another tough year despite a robust economy and surging stock market.

Consumers were tightfisted, showing little enthusiasm for the merchandise at the nation’s stores and malls. Many shoppers stuck to a budget or bought only on sale.

Heading into 1998, merchants must rethink the future of their businesses and how to adapt to their changing customers.

“Consumers are not spending like they used to,” said Mark Slosberg, a partner at KPMG Peat Marwick in New York. “Retailers are pressed to come up with other ways to lure them to stores and generate sales.”

This isn’t a new problem. Since the stock market crash of 1987 and the 1990-91 recession, many consumers have watched their wallets, not spending as freely as before.

But merchants nonetheless have continued to expand, opening thousands of new stores and mistakenly thinking that would solve the problem. Today, there is almost one-third more retail selling space than a decade ago, according to Kurt Salmon Associates, an Atlanta-based retail consulting firm.

Again misreading their customers, many retailers predicted shoppers would spend more freely in 1997 because of high consumer confidence, low unemployment and fatter paychecks.

But the big sales gains never happened. While consumers had more to spend, they didn’t buy new clothes or electronics. Many Americans put money into mutual funds or savings, or spent on vacations or trips to spas.

Sales were especially sluggish during Christmas, which historically has been the busiest time of the year for retailers. The International Council of Shopping Centers reported sales at 2,500 stores in 49 malls nationwide rose a mere 2.3 percent during the holidays from a year ago.

“We clearly have a re-evaluation by consumers of how they divvy up their money,” said Jay J. Meltzer, managing director at LJR Redbook Research. “That’s really hurting the seller of things.”

Retail experts say merchants must develop more year-round business, especially as Christmas diminishes in importance. Depending on one season to lift yearly sales no longer is possible. Toys R Us increased sales during the year by hyping sought-after toys that they sold exclusively.

“Retailers need to look at the way their year is distributed and come up with some good gimmicks that can get consumers buying all year,” said Kurt Barnard, a retail consultant and president of Barnard’s Retail Trend Report. “But that’s not an easy task.”