Chris Rossi/The Gazette
Millie McFeely of Silver Spring shops with her 7-week-old daughter, Emerson, at The Children's Place in Westfield Shoppingtown Wheaton on Wednesday.
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One year ago, one-third of Maryland retailers predicted a holiday sales decline. This year, pessimism is rampant, as a whopping 70 percent of state retailers expect their sales to fall this month and next from last year.
Such pessimism was a key factor for the Maryland Retailers Association forecasting no gain in holiday sales this season for the first time since the group started to make such predictions more than two decades ago. Other reasons for the expected tough season include rising unemployment, declining home values, stock market losses and a state sales tax increase.
Maryland retailers such as Joppa discounter C-Mart have shut down entirely. National chains with strong Maryland presences, including Sharper Image, Mervyn's, Circuit City, Boscov's and Tweeter, have filed for bankruptcy and plan to close some Maryland stores.
That will become more common, said Anirban Basu, chairman and CEO of Baltimore economic and policy consulting firm Sage Policy Group. "Sadly, many retailers will fail," he said.
The foot traffic has been good at Westfield Shoppingtown Wheaton so far, while Francis Scott Key Mall in Frederick has seen less traffic than last year, marketing managers at those centers said. At the Wheaton mall, some recent additions — Montgomery Cinema 'N' Drafthouse, opened by the owner of the Arlington (Va.) Cinema 'N' Drafthouse, and DSW, which sells fashion accessories, jewelry and shoes — have helped, said marketing director Sidney Woods.
"Despite the economy, people are still coming out looking for bargains," Woods said. "A lot of retailers are doing discounts and specials now."
At the Frederick mall, foot traffic may be down, but seasonal hiring seems to be on par with last year, said marketing director Christina Steinbrenner.
"I think it's going to be a good season, despite what the reports say," Steinbrenner said. "Especially after Thanksgiving, people are going to look at their calendars and quickly get into the holiday spirit."
Besides using discounts to try to boost sales, Maryland retailers are reducing inventory and trimming marketing budgets to control costs. Seasonal hiring expectations for the nation are at a 17-year low as consumer confidence declines, according to a survey by Milwaukee temp company Manpower.
Moreover, a survey of 1,000 managers released by SnagAJob.com, a Richmond, Va., Internet job site, found that each plans to hire an average of 3.7 seasonal employees — down by one-third from last year. Some 57 percent of managers surveyed said they do not plan on hiring any seasonal employees this year, up from 49 percent last year.
The U.S. retail industry lost 38,100 jobs in October, bringing the total since January to 297,000, Michael P. Niemira, chief economist and director of research at the International Council of Shopping Centers, said in another report. That group is forecasting a 1 percent increase in holiday sales this year, slightly below the National Retail Federation's expected 2 percent increase nationally to $470.4 billion.
Not all merchants
are glum this season
Tom England, owner of Dancing Bears Toys in downtown Frederick, is among the relatively small group of retailers who say they have fared well this year. He expects a 27 percent increase in revenue for 2008 over last year. Many of the city's independent retailers have also seen increases this year, he said.
"It's a totally different atmosphere downtown than anywhere else," England said. "People get better customer service here."
However, October brought the store's first months of "stagnant" sales, with only a 1.2 percent increase, he said. He has few clues as to how the holiday shopping season will play out.
"People are a little scared and unsure of what will happen [to the economy]," England said. "I think they'll be cautious before they get into holiday mode."
At Ec'clectibles boutique in Frederick, owner Paul Thompson said his revenues have dipped slightly compared with last year. "It's been a little bit lackluster recently, but it's hard to know where it's going to go. It's retail," Thompson said. "We're certainly hoping for the best."
Hampstead clothing retailer JoS. A. Bank Clothiers is reportedly doing fine. Executives said net earnings for the second quarter of fiscal 2008, which ended Aug. 2, increased to $8.9 million from $8.2 million in the second quarter of 2007. Comparable store sales rose by about 7 percent.
Wal-Mart Stores of Bentonville, Ark. — Maryland's second largest private employer with about 18,000 workers — reported last week that comparable U.S. store sales in the fiscal 2009 third-quarter, which ended Oct. 31, increased by 3 percent from a year ago. Operating income for U.S. Wal-Marts rose by 7 percent to $4.3 billion.
A new Wal-Mart supercenter opened in Severn this year, replacing a smaller one in Glen Burnie.
Same-store sales at discounter Dollar Tree of Chesapeake, Va., which has numerous Maryland stores, increased by 6 percent in its fiscal 2008 third quarter. Overall sales rose by 11.6 percent to $1.1 billion, as Dollar Tree has opened a net 171 stores nationally in the past year.
One trend that may put a bit more cash in shoppers' pockets is the drop in gasoline prices. The average price for a gallon of regular unleaded gasoline in Maryland this week was $2.02, down from $4.05 in and $3.04 a year ago, according to AAA.
Tough October
across the nation
Last month was the "worst month on record for retailers," Basu said this week at an economic symposium at Frederick County Community College.
The Commerce Department reported last week that U.S. retail and food service sales fell 2.8 percent in October from September. The federal agency includes non-general merchandise retail categories such as automobiles, gasoline and restaurants in its figures, unlike the national retail group.
Circuit City Stores of Richmond, Va., is among the retailers that have recently filed for Chapter 11 bankruptcy. Circuit City plans to close 155 stores, including three in Maryland, by the end of the year.
The affected Maryland stores are at 11011 Baltimore Ave., Beltsville; 3551 32nd Ave., Marlow Heights; and 8823 Pulaski Highway, Baltimore. Three stores in Virginia are also targeted, including one at Tysons Corner in McLean.
Circuit City will continue to operate 15 stores in Maryland, said Jim Babb, a Circuit City spokesman. Most Maryland stores are hiring seasonal help, but he did not have any figures.
James A. Marcum, acting president and CEO, in a statement called the closings "difficult, but necessary," citing the weakened economy. The stores being closed have had lower sales than the ones remaining open and were unprofitable, executives said.
Canton, Mass., electronics retailer Tweeter also recently filed for bankruptcy, and executives said they are closing all 94 stores. Tweeter has seven Maryland stores in Rockville, Bowie, Glen Burnie, Owings Mills, Towson, Columbia and Bel Air. An employee at the Rockville location said that the store is scheduled to close Nov. 30.
Boscov's also filed for bankruptcy this year. The Reading, Pa., department store operator shut stores in Baltimore, Owings Mills and Glen Burnie, laying off almost 400 workers this year, according to state figures.
Maryland restaurants are also trimming costs, offering more value specials and buffets, said Paul Hartgen, CEO of the Restaurant Association of Maryland. "Restaurateurs understand the day-to-day pocketbook issues that impact consumers' spending decisions and plan accordingly to keep costs down for both themselves and consumers," he said.
The Maryland retail association's forecast is based on a representative survey of its 600 members and a review of industry data. Only 20 percent of respondents said sales so far this year were even or ahead of last year's pace. A mere 5 percent said third-quarter sales provided positive momentum for the holiday season.
Electronics and apparel will likely top many shopping lists, as will more affordable toys, according to the association. Online sales are expected to increase more than sales in stores.
Holiday shopping
-Percent of Maryland retailers predicting a sales decrease, 2008: 70
-Percent of Maryland retailers that predicted a holiday sales decrease, 2007: 33
-Percent of Maryland retailers that predicted a holiday sales decrease, 2006: 7
-Expected U.S. holiday retail sales, 2008: $470.4 billion
-U.S. holiday retail sales, 2007: $460.2 billion
-Number of extra workers hired by retailers during holiday season, 2007: 618,000
-Fewest holiday season employees hired by U.S. retailers in past decade: 402,500 in 2001
-Most holiday season employees hired by U.S. retailers in past decade: 684,850 in 1999
Sources: Maryland Retailers Association, National Retail Federation, International Council of Shopping Centers
