Byline: David Moin

NEW YORK — The Christmas forecast for retail sales overall is bleak, even bleaker for apparel, and don’t count on the weather to help.
A “V-shaped” retail ride, with sales declining as Christmas approaches then picking up after a quarter or two, was depicted at a bearish Retail Marketing Society seminar here at the Fashion Institute of Technology Thursday. Panelists projected retail sales getting worse before better, a holiday season marked by comp and total sales declines, less self-purchasing, and home products outperforming apparel with no signs of any must-have fashion items, if you don’t count Americana.
Near-term, “The real bad news is in the labor market in the last month,” said Carl Steidtmann, chief economist of Deloitte Research, noting that unemployment is approaching 6 percent. “This phenomena alone is setting up this Christmas to be one of the worst in recent memory.”
He said that of 5,000 consumers surveyed by Deloitte, 8.6 percent said they would spend more; 61.5 percent plan to spend the same, and 29.9 percent would spend less. “That’s the largest negative variance we’ve ever had,” Steidtmann said. “There’s a real lack of interest in apparel. Home is clearly where the wallet is….Consumables will do even better than home goods.”
Steidtmann projected a “slight decline” in retail spending for the first time since post-World War II, explaining that uncertainty over jobs, terrorism and the economy “is really undermining business investment and consumer spending.” However, he said that since Sept. 11, there’s been a shift in economic policy to stimulate the economy through tax cuts and government spending, oil prices are coming down, and reforms that make bankruptcies more difficult to declare are on the back burner — meaning bad debt can still be cleaned up easier. All that should encourage higher rates of consumer spending next year.
Steidtmann believes the country is probably more than halfway through the recession, which in his opinion began in April. “There will be clear signs of recovery by the second half. The long-term outlook for the U.S. economy has never been better.”
Daniel Barry, first vice president of Merrill Lynch, said Sept. 11 created a consumer “bunker mentality” though they’re discovering neighborhood stores and restaurants, with some shifting from malls. He projected total Christmas sales at general merchandisers gaining just 0.2 percent — the smallest increase in 33 years and smaller than the 2.4 percent and 1.6 percent gains in the 1990 and 1974 recessions, respectively. Sales would have been projected at over 3 percent if the terror attacks never happened. He sees holiday comp sales down 1 percent at general merchandisers, while most retailers drop 2.5 percent.
Still, “retail stocks relative to the market will do very well,” Barry said. “Retail stocks typically do well when rates come down, and declines in corporate profits are much greater overall than they are for retail.”
Scott Bernhardt, senior vice president of the Wayne, Pa.-based Planalytics, which alerts retailers about upcoming weather patterns, said to expect a sharp temperature drop this weekend, which should spark a hefty sales increase in cold-weather-related products for two or three weeks in the Northeast. By Thanksgiving, the weather will turn more seasonable, driving down demand, he said. The Midwest and Chicago will have a similar pattern, while California will experience “volleyball weather” for a while, not helping sales, then some relatively cold weather around Thanksgiving, bringing sales up.
Mark Friedman, another Merrill Lynch first vice president, projected total apparel and accessory store sales declining 2 percent for Christmas, and comps at specialty retailers that he covers down 4.1 percent. “Materialism and the focus on one’s self has changed to protection and one’s family,” he said.