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Despite only a few hopeful glimmers, national retailers mostly optimistic

NEW YORK — Relieved after dodging what could have been their second straight holiday season disaster, the nation's top retailers are in a surprisingly upbeat mood.

The annual National Retail Federation convention is usually a time of hand-wringing over missed opportunities and misplaced optimism. But this year, the top store brass here welcomed forecasts of continued slow and weak economic recovery though 2010. This after their holiday sales inched up a meager 1.5 to 2 percent in November and December after stores protected profits by trimming payrolls, cutting costs and balking at overstocking.

"Retailers are rejoicing that 2009 finally ended while they re-engineer their businesses for a consumer that is fundamentally changed for the foreseeable future," said Tracy Mullin, chief executive of the nation's biggest retail trade group.

Stores adapted to frugal shoppers who continue to respond only to deals, trade down to store brands and dine out less.

"I'm optimistic this year will be a minimally better," said Howard Levine, chief executive officer of Family Dollar Stores Inc., a chain of 14,000 neighborhood discount stores that found a need to lower toy prices from $7.50 to $5. "But without more jobs, this fragile economy cannot sustain another shock."

Using words like "some uptick," and "better but not great" to characterize 2010 prospects, several economists see a slight pullback in first-quarter sales after shoppers filled their needs at Christmas. That will be followed by gradual improvement by spring, capped by a 3 to 4 percent gain next Christmas.

"I think you will be pleasantly surprised by the holiday season 2010," said Mark Zandi, chief economist at Moody's economy.com.

In an industry where the status quo is fleeting, retailers are confronted with more than a practical consumer. The apparel industry suffers a multiyear fashion malaise marked by designers' inability to create mass market trends beyond recycling old styles, said David Wolfe, creative director of Doneger Group, which buys apparel for more than 1,000 retailers.

"Fashion designers are too linked to fantasy and entertainment than the clothes people actually wear," he said. "The money is with women over 50 who don't get their fashion tips from people like Kim Kardashian or Lindsay Lohan. So what was St. John Knits thinking signing Angelina Jolie as celebrity spokeswoman rather than someone like Diane Sawyer?"

There are still far too many stores and too many oversized ones than the population can support. While online sales are only 7 percent of the business, Web sites and smart phones can empower shoppers to know more about products than store clerks and comparison shop right in the aisles. Meantime, an ever-changing array of new social networking sites keeps cropping up to keep stores guessing.

For instance, HSN, the St. Petersburg TV shopping network, now claims to be one of the biggest users of YouTube, with 47,000 product demos posted with links to purchase from hsn.com. A Twitter sensation called ThaBookie shared recommendations on books and music with links to amazon.com during the holidays that translated into sales of 20,000 books and 30,000 compact discs.

"That was 30,000 CDs we should have sold," said Mark Williams, president of financial services for Best Buy Inc. "Fending off attacks like that is one reason we committed to building our presence in social networking."

Mark Albright can be reached at albright@sptimes.com or (727) 893-8252.

Despite only a few hopeful glimmers, national retailers mostly optimistic 01/11/10 [Last modified: Monday, January 11, 2010 10:18pm]

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