WASHINGTON — Retailers in the South and Midwest are anticipating a stronger Christmas than those in the Northeast and Mid-Atlantic states, and are building up fourth-quarter inventories to a greater degree.
That’s a key finding in the Federal Reserve’s Survey of Current Economic Conditions, known as the Beige Book, released Wednesday. The book polls businesses in the Fed’s 12 regional districts around the country. The report found that retail inventory strategies varied depending on the economic health of their region. In Atlanta, many retailers are building inventories in anticipation of a strong Christmas “although some continue to purchase closer to the time of need than they have in the past,” the Fed’s report said. However, Boston retailers are keeping “lean and more tightly controlled inventories,” the report said.
Retailers in Chicago and Atlanta reported declining demand for home-related goods, which apparently has spurred apparel sales. In these areas, retailers expect apparel to make the strongest year-over-year gains of any commodity during the fall and Christmas seasons. Boston merchants reported the opposite trend. “Retailers of apparel anticipate sales increases of less than 2 percent compared to year-ago levels, while hardware and food retailers expect sales to continue growing at a steady 4 to 5 percent,” the report said. New York-area retailers reported strong sales in men’s wear, juniors, jewelry, accessories and appliances. “Several retailers noted some softness in sales of women’s apparel, but expressed hope about the new fall fashions,” the report said. In Philadelphia, overall retail sales were slightly higher than last year, with discounters reporting the largest gains. Several retailers expressed concern that rising interest rates would cause consumers to reduce their holiday spending. Shoppers in both Philadelphia and Chicago have been enthusiastic about fall fashions, retailers reported, adding that’s “a good sign” for the next few months.
The Dallas district reported continued sluggishness along the Mexican border, which stores attributed to a limit on goods Mexicans can take from the U.S. Although sales were up overall in the district, several chains said their Texas stores were posting weaker sales than units elsewhere. “Continued entry of high-volume discount retailers was keeping competition stiff,” the report said. Sales in California were reported to be showing small gains in some areas, while the booming Nevada, Idaho and Utah economies are expected to begin slowing down slightly, the report said.
In St. Louis, sales in July and August increased between 4 percent and 5 percent compared to the same period of 1993. Retailers expect “good volume in the holiday season.”