Retailers and economists are predicting holiday shoppers in the Lawrence area will spend about as much as they did last year, but the wild card in their predictions may be the credit card.
Kansas University economist Luke Middleton said he anticipated retail sales totals in the Lawrence area to be on par with totals from last year, but he said there was one major question looming that could push sales totals downward.
Are shoppers, now in the second year of an economic downturn, still comfortable saying, "Charge it"?
With some layoffs hitting the area, a stock market that Middleton describes as "not a happy place," and little to no salary increase for LawrenceÃ¢ÂÂs thousands of state employees, families may have to rely more on credit-card spending this year than usual.
"If people have already been incurring debt this past year, it may be to the point that by December theyÃ¢ÂÂre saying enough is enough," Middleton said. "A lot of families go into debt for the holidays on a routine basis, but what may be different this year is they see this debt as a continuation of a pattern that began months ago."
Middleton is guessing that enough people will continue to keep their credit cards busy during the holiday season to give area retailers at least a moderately merry Christmas.
"I donÃ¢ÂÂt think the expectation is that it will be a bum holiday season," Middleton said. "It will probably be about the same as last year. IÃ¢ÂÂm not predicting it to be a disappointment for retailers or anything tremendously negative. If it goes down, it will be by a small amount."
So far, so good
Several Lawrence retailers seem to agree with that assessment, mainly because theyÃ¢ÂÂve already started to see holiday shoppers.
Ã¢ÂÂOur expectations are high,Ã¢ÂÂ said Steve Wyss, store manager at LawrenceÃ¢ÂÂs J.C. Penney. Ã¢ÂÂCertainly there are some concerns with the economy, but consumers have shown to be very resilient up to this point.
Ã¢ÂÂOur sales are currently in the plus column (compared to last year), and when Christmas is over, I think weÃ¢ÂÂll still be in the plus column.Ã¢ÂÂ
Linda Lester, owner of The Etc. Shop, said she was optimistic that this yearÃ¢ÂÂs sales would reach last yearÃ¢ÂÂs total or slightly exceed them because shoppers arenÃ¢ÂÂt waiting until Thanksgiving, which comes late this year, to begin their gift buying.
Ã¢ÂÂLast weekend we were very busy,Ã¢ÂÂ Lester said. Ã¢ÂÂIt caught me off guard that we were so busy. Even with the economy, it still seems that if people find something they like, theyÃ¢ÂÂre still going to buy. And weÃ¢ÂÂre very thankful for that.Ã¢ÂÂ
Brett Schubert, store team leader at SuperTarget, isnÃ¢ÂÂt so sure consumers will be as free-spending with their money as in years past.
Ã¢ÂÂI think it will be a bit of a flat year,Ã¢ÂÂ Schubert said. Ã¢ÂÂIÃ¢ÂÂm expecting a lot of the businesses out there will see decreases, but I think some of the department stores will feel a bigger hit than stores like us because shoppers are trying to stretch their dollars further.Ã¢ÂÂ
Joe Flannery, president of WeaverÃ¢ÂÂs Department Store, said he was not bracing for a drop-off.
Ã¢ÂÂUp to this point, sales have been OK this year,Ã¢ÂÂ Flannery said. Ã¢ÂÂI think anybody who has any type of retirement plan has been affected by the stock market and it is absolutely on their mind, but weÃ¢ÂÂve been pleased with November sales.
Ã¢ÂÂPeople still love Christmas.Ã¢ÂÂ
But according to state sales tax numbers, 2002 hasnÃ¢ÂÂt been a banner year for Lawrence retailers thus far. From July, the beginning of the stateÃ¢ÂÂs fiscal year, through October, sales tax collections are up by 1 percent. ThatÃ¢ÂÂs a poorer showing than several area cities, including Topeka, which is up by 4.6 percent; Overland Park, up by 4.8 percent, and Olathe, up by 4.6 percent.
One of the few major cities in the state with a slower rate of sales tax growth is another university town, Manhattan. Its sales tax collections have grown by 0.7 percent through October.
Statewide, retail sales for the first half of 2002 are down compared to the first six months of 2001, said Janet Harrah, director of the Center for Economic Development and Business Research at Wichita State University.
She thinks that might be a sign of things to come for retailers across the state.
Ã¢ÂÂThis year in Kansas we expect holiday sales to be rather lackluster compared to last year,Ã¢ÂÂ Harrah said. Ã¢ÂÂPrimarily consumer confidence is down, and itÃ¢ÂÂs down for a variety of reasons. ThereÃ¢ÂÂs layoffs, and thereÃ¢ÂÂs the rising unemployment rate.Ã¢ÂÂ
In Lawrence, the problem may be more of a lack of income growth for the roughly 15,000 people who are employed by state or local governments, Middleton said.
Ã¢ÂÂSalaries for state employees have not really gone up, but the cost of living has, so theyÃ¢ÂÂre going to have a little less to spend,Ã¢ÂÂ Middleton said.
He also said state employees might be even more pessimistic about the outlook for their finances than members of the private sector.
Ã¢ÂÂWhere I feel the difference is, in the private sector the attitude is this is just a slump in the economy,Ã¢ÂÂ Middleton said. Ã¢ÂÂWith the stateÃ¢ÂÂs finances, people feel the problems are much deeper. There is a real problem with the stateÃ¢ÂÂs financial system. The stateÃ¢ÂÂs problems may endure a little longer.Ã¢ÂÂ
Looking for deals
Opinions are mixed on whether retailers will feel the need to do abnormally deep discounting of prices to bring consumers in the door.
Ã¢ÂÂI think weÃ¢ÂÂre going to see a lot of motivated retailers,Ã¢ÂÂ Harrah said. Ã¢ÂÂAs a consequence, it is going to be a good year for consumers. You are going to find a lot of deals. If you have the money to spend, youÃ¢ÂÂre going to find that it goes a long way this year.Ã¢ÂÂ
Middleton is not so sure. He thinks retailers believe they overreacted to concerns last year that shoppers were going to stay home after the terrorist attacks.
Ã¢ÂÂI think last year they got burnt by lowering them more than they had to,Ã¢ÂÂ Middleton said. Ã¢ÂÂPlus, I donÃ¢ÂÂt think a lot of retailers can afford to do much discounting this year.Ã¢ÂÂ