National Retail Group Lowers Sales Projections
GRAND RAPIDS — Because of the terrorist attacks, the National Retail Federation (NRF) revised its national retail sales forecasts for the fourth quarter and the holiday shopping season.
The NRF, the world's largest retail trade association, dropped its fourth-quarter sales forecast from a previously reported 4-percent gain to 2.2 percent. The association also predicted that holiday sales would rise by 2.5 to 3 percent from last year, which would mark the smallest gain since 1996. Earlier the NRF had predicted a sales rise of 4 to 4.5 percent. A sales figure for last year's holiday shopping season wasn't available. But in 1999, holiday retail sales topped $186 million.
The NRF issued its revised forecasts in reaction to the uncertainty rising from the attacks on Sept. 11, and the week-long hits the NYSE and Nasdaq took after reopening on Sept. 17.
"Since the terrorist attacks are fresh and our country's response not yet known, it is premature to make definitive judgments about the economy. We can only speculate based upon what we think the Administration will do and how consumers will respond," said NRF Chief Economist Rosalind Wells.
"Recession remains a possibility; however, we feel that the strong underpinnings of the U.S. economy and the resilience of the U.S. consumer will force the stalling growth over the next few months to give way to a rebound beginning next year," added Wells.
Larry Meyer, CEO of the Michigan Retailers Association, said last year's holiday sales were flat across the state after a few years of rising receipts. As for the fourth quarter and the upcoming holiday selling season, Meyer said his group was taking things one week at a time.
"Frankly, I think anybody can guess, but it's not even an educated guess at this point. We're, right now, compiling our data from being in the field for our retail sales index, and just the number of returns being sent back has gone down considerably," said Meyer.
"The most dismal part was that week after Tuesday. Nobody was in the stores at all. And I think you really have to look at this one week at a time and see what the return level is," he added.
Meyer said he was told that some malls in the state were full on the weekend of Sept. 22-23. He hadn't had time to verify that when the Business Journal contacted him, but he remarked that if it was true then things may be slowly returning to normal.
"We certainly know that the weekend after the tragedies, the movie theaters were full. Those were some of the biggest days for movies in a long time. So I think people are returning to stores," said Meyer. "I do think we are a very resilient people. So my guess is all of that self-confidence will return. The speed of that return is another question."
Barbara Mannino, marketing director for Woodland Shopping Center, said consumer traffic did pick up for the weekend of Sept. 22-23. She felt that consumers went to the malls because people wanted to be together and they saw shopping centers as comfort zones for some social interaction and reassurance.
"We did a check on our stores, some key stores plus our majors, and Marshall Field's said their sales have been good. Penny's said immediately after [the attacks] they were a little bit slower, but then they had a good weekend. I know that some stores are trying to do some special promotions, at this time," said Mannino.
As for the upcoming holiday season, Mannino said they were putting together a sales forecast, having just received data from the stores. She expects to have that forecast within a week or two. But Mannino remains optimistic about the holiday season because shoppers will find some new fashions on the shelves this year.
"There has been a lot of fashion change in clothing this year, which we haven't had for the last couple of years. There are a couple of 'must-have' items this year, in women's fashion in particular, and in men's fashion in colors," she said. "So we're hoping that will affect fall and carry over into the fourth quarter."
Randy Zimmerman, general manager of RiverTown Crossings Mall, also said that he would have a better handle on expected sales in a few weeks.
"We don't really know what the impact is going to be. We haven't fully cemented our plans, yet. So, it's a little premature for me to talk about it now," said Zimmerman. "Probably by mid-October we might have a better idea of where things are going to be."
Rich Pangratz, general manager of the Lakes Mall in Fruitport, said it was too early for the region's newest shopping center to have a sales forecast for the quarter and its first-ever holiday-shopping season.
"Being that we've just had a grand opening, we really have no sales projections at this point. The merchants, being new here, are a little sketchy too on projecting sales," he said.
Consumers are being counted on to lead the economic recovery. But another 100,000 lost their jobs last month, and economists are worried that those who are still working will cutback on spending.
Consumers spent $728.6 million with stores in the first quarter of 2001, and nearly $807.5 million in the second quarter to keep the economy afloat while business spending fell. The third-quarter estimate of retail sales will be released by the U.S. Department of Commerce next month.
NRF President and CEO Tracy Mullin felt that consumers hadn't stopped shopping, but were limiting their purchases. Mullin, however, feels that will change in November.
"With a few notable exceptions, such as American flags, consumers are currently focusing on basics, buying out of necessity not desire," said Mullin. "We expect consumer spending patterns to begin to return to normal levels as the holiday season approaches."