NEW YORK — After December’s dogfight, retailers may finally get a break. Industry analysts and consultants predict that when it’s all said and done, stores will report a decent Christmas, and are in for increases in the first half of...
NEW YORK — After December’s dogfight, retailers may finally get a break. Industry analysts and consultants predict that when it’s all said and done, stores will report a decent Christmas, and are in for increases in the first half of 2003.
Following two mediocre holiday seasons in a row, "This holiday season, consumers are reaching into their pockets and discovering they have more money to spend. As the shopping season continues, there’s no reason to think this will stop," Carl Steidtmann, chief economist at Deloitte Research, said in a report last week.
Steidtmann sees consumer spending up 6.5 percent by midyear, and 2002 holiday spending up 5.5 percent, compared with the current growth rate of 4 percent. "At last, a lot is going right for retailers. Between the continued strength of consumer spending and lower overall operating costs, in the form of inventory levels, lower head count and a slowdown in store openings, the outlook for retailers is merry and bright, beyond the holidays."
Steidtmann based his comments on the Deloitte Research Leading Index, which is designed to predict consumer behavior four to eight months out and the impact on the economy.
Arnold Aronson, managing director of retail strategies at Kurt Salmon Associates, said retailing will continue to be difficult through the holiday season. "The mainstream customer is still going to be influenced by the deepest of the bargains," he said. "All stores will face margin challenges. However, the silver lining is that nothing lasts forever. Retailers will finish [the season] as clean as ever. They planned so lean, and will be able to get into spring merchandise with more clarity and focus, earlier than they normally would. Spring goods won’t be in competition on the selling floor with loads of clearance. Minus any kind of cataclysmic world event, there is the potential that the consumer is going to feel better about putting some new things in her closet, and this will be a post-9/11 spring where business comparisons will be easier."
Aronson sees 4 to 5 percent gains in the spring due to "some new liquidity on the part of consumers on the basis of spending deferrals from before, if presented with fashion newness." Retailers have previously given spring offerings positive reviews, citing less frilly, but still feminine, close-to-the-body and sexy enough styles to sell."One of the bright spots will be in business dress, particularly men’s apparel," added Art Spar, ceo of STS Market Research. Though he’s cautious about the first half, citing unemployment and the prospect of war, "There is demand for a stepped-up, dressier look in the workplace, and there is a lot of new fabrications that address the need," Spar observed. "There is a very dressy kind of cotton-blend slack that is new and inexpensive. The old khakis that men have in ample amounts don’t cut it anymore."
Kathy C. Yohalem, principal of Tait Advisory Services LLC, management consultants, said, "There are two major variables: war with Iraq and the unemployment rate. We need to see jobs opening for more consumer confidence, and the consumer debt load is heavy. Those scenarios can have a tremendous effect on how we move through the first half of the year. On the good-news front, clients and businesses are talking about how to grow businesses next year, whereas in 2002, it’s been very closed, psychologically. Moving into the new year, people are starting to think differently."
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