Retailers Expect Tough Christmas Shopping Season

This year's Christmas could really be dismal for retailers. The National Retail Federation is predicting a tough year and one retail analyst suggests sales could actually drop this season for the first time in recent memory.

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And now, as we think about how financial troubles are affecting other sectors of the economy, we're going to hear about the outlook for holiday sales. The retail industry has a habit of hyping its holiday expectations, then not quite living up to the hype and then claiming disappointment even though sales weren't all that bad after all. But this year holiday sales could actually be dismal, as NPR's Tamara Keith reports.

TAMARA KEITH: Individual retailers keep their sales expectations close to the vest and what they do say can be pretty vague.

Ms. SHARON BATEMAN (Spokeswoman, Macy's): We are continuing to very carefully manage our inventory levels.

KEITH: What does that mean?

Ms. BATEMAN: It just means we're watching the receipt of merchandise.

KEITH: That was Sharon Bateman from Macy's. Things don't sound a lot better at the GAP. Here's spokesperson Louise Calaggy(ph).

Ms. LOUISE CALAGGY (Spokesperson, GAP): No retailer is insulated from the macroeconomic pressures, and at GAP we're looking to manage promotions to drive traffic and to turn around the momentum of our business.

KEITH: Oof, even the rehearsed statements sound pretty grim. Ellen Davis, VP of the National Retail Federation, says, sales are projected to be weak in November and December and retailers are ready.

Ms. ELLEN DAVIS (Vice President, National Retailer Federation): I don't know that they necessarily expected what's been happening on Wall Street or with the credit crunch or with the bailout. But they knew it was going to be a tough holiday season and they knew that they were going to need to scale back on inventory and take a look at hiring so that they could compensate for lower than average gains. Still the trade group predicts year over year retail sales will increase 2.2 percent this holiday season worse than the 10 year average but an increase nonetheless. But the thing is, those predictions aren't always accurate. Adriane Tennent(ph) describes herself as more on the negative side of things.

Ms. ADRIANE TENNENT (Analyst, Specialty Apparel, Friedman Billings Ramsey): There is something intangible that is happening in the mall that they can't point to exactly what it is, but it's just, it feels different. You know, definitely feels like the consumer has just gone away.

KEITH: Tennent is an analyst in specialty apparel for Friedman Billings Ramsey. She thinks retail sales in November and December will actually be down from the year before. She says, back to school sales were only up about one percent this year and the economic news has gotten a lot worse since then. So Tennent says, she just can't see how spending would accelerate enough to meet the retail federation's predictions. But she doesn't fault the industry for trying to avoid a self-fulfilling prophecy.

Ms. TENET: So if they were to come out and say, holiday's a bust and no one's shopping, then you know, people kind of go, oh, if no one's shopping then I guess I shouldn't be shopping.

KEITH: So analysts are down on the coming retail season, but what about consumers?

(Soundbite of people talking)

KEITH: A very unscientific survey of people I stopped outside a Washington, D.C., department store came up with mixed results. Jeremy Gatarawski(ph) says, he's already eyeing bargains.

Mr. JEREMY GATARAWSKI: I'll probably look for more sales so I don't have to spend so much money and I have to save for bills and things like that.

KEITH: While Sarah Womack says, she expects to spend as usual.

Ms. SARAH WOMACK: I already have the money set aside for this year. But next year, you know, if things are lean then maybe I won't have the money to set aside for next Christmas.

KEITH: Michele Pensa(ph) is the only person I spoke to actually carrying a shopping bag.

You have a red purse in there, is that for the holidays?

Ms. MICHELE PENSA: It was on sale. Drastically reduced.

KEITH: Expert say, drastic reductions may be what it takes to draw shoppers into the malls in the coming months. Adriane Tennent says, it's too late for retailers to cut back their holiday inventories in light of recent economic troubles. So there's not much they can do at this point but hope and cut prices. Tamara Keith, NPR News Washington.

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