Byline: David Moin / With contributions from Holly Haber, Dallas / Anamaria Wilson, New York / Georgia Lee, Atlanta / Kristin Young, Los Angeles

NEW YORK — It’s hardly the time for reordering. Or is it?
With stars and stripes the pattern of the season, Federated Department Stores last week decided to boost its fourth-quarter buy on patriotic-themed merchandise by up to 50 percent in “every family of business.” The goal: create a Spirit of America holiday collection to draw bigger crowds and donate some proceeds to relief charities.
Major chains like Wal-Mart have already been doing record volume on the American flag and T-shirts emblazoned with it, as more basic items and accessories get cloaked in red, white and blue and symbols of national pride. Saks Fifth Avenue also is beefing up the holiday assortment with sweaters, Christmas trim, candles, ties, jewelry, compacts and other merchandise reflecting the trend. And on Tuesday, Bloomingdale’s will open a “fire zone” shop at the 59th Street flagship, with specially designed baseball caps and jackets and toy fire trucks. All proceeds will be donated to the FDNY Fire Safety Education Fund.
As the nation’s war on terrorism continues, Americana in the stores escalates. It’s among the few current “pockets of strength” that retailers are banking on for holiday.
They’re also counting on accessories, jewelry, Seventies styles, sweaters and denims that don’t wave the flag, as well as toys, play stations and home entertainment-related products, including decorative objects, tabletop and electronics.
Overall, Christmas is projected at flat, give or take a point or two. Ready-to-wear — particularly higher-priced lines and sexier numbers — and men’s wear are generally seen as losers in a somber season.
Along with those few categories that are selling, many retailers last week said they are encouraged to see traffic starting to pick up, though still far from satisfactory levels. Consumer concerns about job security and personal security against terrorism are keeping people at home, though with travel spending down, there could be more holiday spending. Further government relief in the form of tax breaks and extended unemployment benefits could fuel retail sales, but probably not until spring.
“Business is improving regularly. The trends are getting better regularly. We’re very optimistic about holiday,” said R. Brad Martin, chairman and chief executive officer of Saks Inc. “As travel safety begins to be assured, tourists will return to the big cities,” leading to better sales at the Saks Fifth Avenue flagship here and Saks in other urban areas, Martin said.
At J.C. Penney Co., which planned flat sales this month and is tracking below plan, Vanessa Castagna, executive vice president and president of stores, catalog and Internet, said “stores closer to higher travel areas or tourist areas have seen a significant downturn. In the majority of stores, people are out and living their lives and mall traffic is pretty much holding up.”
Terry Lundgren, Federated’s president and chief merchandising officer, said business “is clearly not back to where we were, but everyday we are seeing more signs of consumers coming back to our stores. New York City has its own unique set of circumstances, making business here more difficult. Most of the rest of the country is slowly and surely coming back to levels that are still below normal, but adding positively in the right direction. Because of the combination of fundamental economics coupled with Sept. 11, it’s been difficult to get customers. There is a blanket of sadness making it hard to get people to shop. It’s also hard to get people to be productive in their jobs. That simply takes time. We are seeing that begin to happen.”
“People are out there looking for the feel-good factor, for things to lift their mood,” observed Ed Burstell, vice president and general manager at Henri Bendel. “That is translated through subtle novelties, nothing vulgar, nothing over the top — items that are a little different, whether it’s the print or the construction. If you’re going to make the purchase now, it’s going to have to have a little bit of personality, and you’re going to have that emotional connection with it. Within each one of our categories, we are going to have to be very savvy in our reordering. That will affect holiday — where we’re able to reorder to get replenishment of some of these items that are selling well.”
Neiman Marcus, which has had a rough year, also sees certain items selling. Joan Kaner, senior vice president and fashion director at Neiman’s, said: “It’s very special items with perceived value and excellent design” that are checking, and often such items are in contemporary denim, designer suited looks, leathers and suedes, as well as designer and couture outerwear.
According to Lundgren, this holiday season is likely to be unique, with families getting closer. “There is an opportunity here. Customers want to spend more on gifts for children and loved ones.”
“Thus far, the traffic that we witnessed has held up reasonably well across the country,” said Bob DiNicola, chairman and chief executive officer of Zale Corp. “Obviously, some areas — mostly in the Northeast — have been more intensely affected, but overall traffic has held up reasonably. Americans are demonstrating that, as always, they have a great deal of resiliency to adversity.”
“To be in retailing, you have to be a chronic optimist,” said Carl Steidtmann, chief economist for Deloitte Touche. But he did agree that stores are seeing higher traffic and that the consumer focus has shifted to the home, where they are spending more time, and spending on things that make the home more comfortable and entertaining. There is also “a real shift to security, buying cell phones, weapons, security systems, stockpiling food and water,” Steidtmann said. “In a time when things seem so crazy, there is a desire to have control. Of all the sectors that will have a hard time, you have to put apparel near the top of the list, but I think everything is going to be struggling.”
Price deflation — the result of supply-chain efficiencies and technology taking costs out of doing business, and the imbalance of inventories and consumer demand — is adding to the woes. Apparel experiencing price deflation at about 2 percent “is really a bargain,” Steidtmann said, though it’s low on most people’s shopping list. Steidtmann predicted a small decline in total retail sales, while general merchandise, apparel and furniture would be flat.
A brighter perspective came Friday from the International Mass Retailers Association, which said U.S. consumers expect to spend $61 on average for Halloween purchases, compared with $43 in 2000. Those numbers are based on a survey of about 1,000 consumers during the weekend of Oct. 12-14. “Americans are looking for a reason to have some fun in these trying times,” said IMRA president Robert J. Verdisco.
“I think things are moving slowly, but there is a rebound,” said Arnold Aronson, managing director of retail strategies, Kurt Salmon Associates. “The elastic hasn’t snapped all the way back, but it is moving in the right direction. The comfort zone is going to be in things for the home, making the home warmer, nicer, with decorative accessories, food and home entertainment.”
As for fashion, Aronson predicted the trend will be in accessorizing, with hair ornaments, fragrances and costume jewelry, not conspicuous consumption.
“People are considering their human relationships more strongly,” he said. “With a sense of not knowing what’s going to happen tomorrow, that’s drawing people closer and wanting nice things for each other. This will help the gift and thoughtfulness business. Everybody is wearing American flags, lapel buttons, but to stand out is not the thing to do. A new social sensibility is dictating, at least for the time being, more conservative, serious fashion.”
DiNicola said that well before Sept. 11, the company prepared for a challenging fourth quarter, but has also made some “additional adjustments” that vary by category and division, in such areas as the expense structure and part-time staff buildup for holiday. “I would classify them as adjustments. We haven’t made any wholesale changes. Full-time staff is staying intact, we reduced or eliminated anything we considered fringe, kept intact all of our core marketing.”
For Zale, strength is being seen in bridal-related merchandise, particularly engagement rings and more moderate prices. “Young people are moving their plans ahead,” DiNicola said. This holiday season overall will be “one of sentimentality, emotion and love, and people will look to provide a gift that has longevity, lasting value and lasting emotion. Any jewelry item can fall into that category.”
At Highland Park Village, a luxury shopping center in Dallas, “sales have picked back up in October, but they are still down from a year ago. That has been the trend all year,” said Henry S. Miller 3rd, president of Henry S. Miller Interests, which owns and operates the center. For the year through August, sales declined 4 percent, and they fell about 9 percent in September. “I don’t expect a huge boon in holiday sales like we normally have,” Miller noted.
Lester Melnick, a three-unit better chain in Dallas and Fort Worth, has seen receipts jump 10 percent this month against last year, said owner Lester Melnick, with bridge sportswear, coats and jewelry strong, while the cocktail business is rebounding for the first time in three months.
“We’ve sold about 150 flag pins by Kenneth Jay Lane,” Melnick said. He expects the pattern will be sustained this month, but he does not expect to make up for the 12 percent shortfall in September, which rivals December as his biggest month of the year.
Business is also up this month at Tootsies in San Antonio, Tex., where equestrian leggings and cocktail dresses have been popular, according to manager Sharon Sizemore. However, traffic remains a bit slower than usual at Lilly Dodson, a contemporary-to-designer boutique at Highland Park Village. Dodson got a lift by a Bob Mackie appearance and three-day trunk show this month, booking 15 gowns valued at more than $100,000; and by a simultaneous appearance by Kathrine Baumann, selling about $50,000 of her pave crystal minaudieres and accessories, including orders for nine items with an American flag motif.
According to Robert Taubman, president and ceo of Taubman Centers Inc., “Generally, mall traffic throughout the country has returned, with the exception of high-tourist destinations. Orlando, New York City and Las Vegas were dramatically hurt by the events of Sept. 11, but if you talk to individual retailers, even in the New York suburbs, business has returned — as it has in the Midwest and on the West Coast.” Taubman said his Short Hills, N.J., mall experienced traffic down 17 percent the week of Sept. 11; down 9 percent the next week; and by the first week of October, traffic was up 1 percent.
“By December at the latest, absent some other tragic event, even markets like Orlando will be back,” Taubman predicted. “People are going to want to take their families on vacation.”
However, while Taubman said his malls and those of other developers are “on high alert, with very visible security,” he added that “maybe there is a general concern about going into a stadium, a basketball game. Anywhere people are congregating, there is a concern about terrorism in the back of most people’s minds. These kind of things seep into the environment, and then the customer has sort of a subtle second thought.
“The personal freedoms represented by a shopping center really are immense and an embodiment of the American way. You park for free. You don’t go through a gate to be checked. You walk through the doors and nobody checks your parcels or makes you go through a metal detector. You see 100-plus stores all welcoming you.”
“There’s business, there’s definite business. It’s not bad, and I guess right now ‘not bad’ equals good,” said Jeffrey Kalinsky, owner of Jeffrey New York.
SoHo boutique Kirna Zabete reported business as good, but in an odd way. “There is no foot traffic. The people who come in are already committed to buying,” said co-owner Beth Buccini, adding that “cozy things,” such as shoes, roomy sweaters and coats, are selling.
Stefani Greenfield, an owner of Scoop, said her foot traffic is increasing.
“People are coming out of their shells. They’re not looking to forget, but incorporate what has happened into their daily lives,” said Greenfield.
And Jean Nicholson, owner of the J.Nicholson women store in Jacksonville, N.C., said October sales would match or beat last year’s figures. Military balls, homecoming events and cool weather have boosted sales. “People are still getting married, still going to occasions,” Nicholson said, “even if they may be deployed next week.”