With whispers of a recession on the horizon, the usual holiday spending rush lagged dramatically this year.\nThe decline affected everyone from the large chain department stores to the small independent businesses.\n"A lot of stores are going to have to rethink their strategies to adjust to a slower pace," said Michael Niemera, vice president of Bank of Tokyo-Mitsubishi Ltd.
National chains\nWal-Mart Stores Inc., usually a vital staple of the retail industry and the world's largest retailer, reported December sales drastically lower than expected. Having expected sales to increase in the 3 to 5 percent range, they reported a gain of only .3 percent last year.\nSears, Roebuck and Co. announced not only a decrease in revenues, but closed 89 under-performing stores as well. \n"Like other holiday retailers, general industry softness and difficult weather conditions dampened our holiday season sales," said Chairman and CEO Alan J. Lacy in a statement.
Local stores\nIn Bloomington, small stores such as Cha Cha, 427 E. Kirkwood Ave., are refining their role. While Cha Cha noticed only a small decline in sales, it is narrowing its focus to specialty items, to adjust to the change in the economy, said owner Jeff Green. He said the store tried to expand the types of merchandise it offers, but found that the market wasn't there. \n"We're not breaking into any new trends at a time like this," Green said. "It's better to be safe." \nAlthough many stores that cater to the teen market, such as American Eagle and Gadzooks Inc. reported solid earnings, Urban Outfitters noticed a significant decline in sales compared to last year. \n"We are having lots of sales, trying to move the merchandise around more, to offset the decline," said Kelly Hall, manager of housewares at the Kirkwood store.
Factors in the decline\nA combination of factors contributed to the decline, such as the stock market's volatility, interest rates, higher fuel prices and a harsh winter, the first since 1997.\nAnd consumer confidence continues to play a role in the decline, and is at its lowest level in two years. According to the latest Money Magazine/ABC News poll, U.S. overall consumer confidence declined in the latest week, and the consumer comfort index fell to 25 percent in the week ending Dec. 31, 2000, from 27 percent the week before. This is four percentage points below its 12-month average of 29 percent and 13 percentage points below its 12-month high of 38 percent.\n"The Grinch stole Christmas," said Kurt Barnard, publisher of the Barnard Retail Trend Report. "I haven't seen anything like this in nine or 10 years. We are seeing a consumer badly strapped for spending money and under the influence of pessimism."\nAnalysts project the malaise will spread well into the first quarter earnings, especially since fears of recession and the stock market volatility have not been quelled.
