WILL THE SOUTHWEST RISE AGAIN?
THOUGH THE EXPERTS ARE CRYING “RECESSION,” SOME RETAILERS ARE STILL HOLDING OUT HOPE FOR A YEAR OF STRONG SALES.

Byline: Holly Haber

Many specialty stores enjoyed robust sales in the year 2000, but economic pundits say the economy is cooling off and a recession may be in the works. Still, they add, the Southwest is positioned to do better than the national average, and many specialty stores remain optimistic.
“The long and short of it is, the pace of retail spending has to be seen to decrease somewhat,” said Magnus Kpakol, owner of Visions International retail consulting firm in Plano, Tex., and a visiting professor of economics at the University of Dallas.
“Luckily, because the unemployment rate remains low and job creation remains decent, there shouldn’t be a collapse or anything really bad,” Kpakol said. “This region should be slightly above average, because job growth is much better here than in the Northeast and Midwest. Texas in particular should do slightly better than average.”
Mine Yucel, a senior economist and research officer for the Federal Reserve Bank of Dallas presented a less rosy view of the Southwest’s prospects.
“The national economy is slowing, and a strong national economy always [helps] Texas — so we won’t get as much of a boost,” said Yucel. “We are projecting employment growth at 2 to 2.5 percent, slightly less than in 2000, when it was 3.3 percent.
“We’ve already seen that retailers have reduced their outlook for growth. They’ve reduced their inventories in line with lower expectations, so once they do that, you have a guarantee they won’t be able to sell more. And it does appear that if the economic growth rate slows, we will see consumers spending a little bit less as well.”
The anticipated slowdown is based on myriad factors. European economies are stagnant, and the euro has tanked, rendering the dollar strong and American exports more expensive. The stock markets lost substantial value last year, resulting in some hefty paper losses. Plus, energy prices zoomed up in the last two years, with oil tripling from $10 a barrel to $30 and natural gas quadrupling from $2 to $8 per thousand cubic feet.
Skyrocketing energy prices have both negative and positive effects in the Southwest, where the average person gets socked with higher prices, but the tier of wealth from oil and gas holdings rides high. Still, economists expect a slowdown to make itself felt.
Specialty store retailers are divided about their outlook for the New Year. Some feel shoppers may buy just as much clothing or even more if their attention is turned away from such big-ticket items as houses, home furnishings and cars. They don’t see their customers pulling back at all. Others are pruning spring inventories, fearful that a recession will cause consumers to tighten their purse strings across the board. It doesn’t help that there are few new fashion trends for spring.
“I think it’s going to be tougher,” commented Calli Saitowitz, who owns three BB1 Classic stores in Houston. “We will have to step up to the mark and create the business.”
Nonetheless, she and her husband, Julian, are optimistic and plan about 18 percent growth overall for their three stores in 2001.
“There are people who want to go on buying,” Saitowitz noted. “I had a woman who loved everything and was trying things on, and her husband said, ‘I am half a million down right now, and I’ve told her to calm down and she’s not getting it.’ She got what she wanted and that is the bottom line. But you hear people saying ‘I’m down 30 percent,’ so it obviously must be making a difference in spending.”
Saitowitz also pointed out that Houstonians are excited about George W. Bush’s impending presidency and its potential to help Texas, and she expects that will boost business.
Victoria Jackson, owner of Byzantine contemporary store in Dallas, said she is being cautious and spending less.
“A couple of my customers — one is an economist — are saying to be careful going forward because there may be a recession,” Jackson noted. “There doesn’t even have to be a recession. They just have to think it and they slow down all over about spending anything.”
Greer Grace, owner of Barbara Jean designer boutique in Little Rock, plans to remodel her cosmetics department this year, but she’s waiting until April to see how spring business is. But Grace has no complaints; sales were up 30 percent this year, largely from expanded shoe and accessories collections, especially Elizabeth Showers, Hillary Beane and Michael Dawkins.
She’s planning an 8 to 10 percent increase in 2001, when she plans to begin shopping in Europe to find new items, trying Milan in March and Paris and Milan in October.
“We just decided there are so many lines in the U.S. that people are fighting over, and so much competition with major stores that we will have to find things that you just can’t find here,” Grace observed. “We’re trying to have more fashion-forward special items, because that is what [customers] are looking for.”
Joanne Teichman, owner of Ylang-Ylang designer jewelry store in Dallas, has no fear.
“We are so optimistic,” she said. “Look at the building activity in Dallas. People now are paying cash for houses and cars and enjoying a nice lifestyle. It’s not this fake real estate economy like we had in 1986. The clientele we see is solid and not buying foolishly. People are looking at investment pieces. They’re interested in quality in their houses and what they put around their necks. We’ve seen the value of gifts go up because people are treasuring their friendships, and they want to express that.”
Ylang-Ylang’s revenue was up in “solid double-digit increases” for 2000, with strong business with Cathy Waterman, Devon Page McCleary and Elizabeth Showers, among other designers. And Teichman has high expectations for this year.
“There’s going to be great increases,” she said.

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