Local retailers hope to see boost from holiday sales
Local retailers hope to see boost from holiday sales
Written by Terry Hanley Friday, 05 December 2008
Merchants remain positive despite economic downturn.
With the holiday shopping season in full swing, area retailers are optimistic that consumers will continue to spend money and shop locally. Many said they are not expecting a major dip in holiday revenue trends, but if products do not fly off their shelves as fast as they hope between Thanksgiving and Christmas, most small-business owners plan to adjust their inventories.
ResearchWhether retailers will see an increase or decrease in sales this year is yet to be determined. The National Retail Federation predicts that consumer holiday spending will increase 2.2 percent this year. However, the U.S. Commerce Department recently reported that retail sales were down 2.8 percent in October — the sharpest one-month decline in history.
Holiday sales make up a large part of local retailers’ annual revenues. Tammy Grad, co-owner of Apricot Lane, a locally owned franchise in the Round Rock Premium Outlets, said that holiday sales typically account for about 60 percent of the store’s annual sales. So far this year, the boutique’s sales are tracking to be down about 60 percent.
“Being the only locally owned retail store in the mall here, it is extremely hard to compete against the corporately owned chains,” Grad said. “We are having a really hard time, unfortunately. Our store is a ‘want store,’ not a ‘need store,’ so we are definitely feeling the effects.”
Apricot Lane was having a rough year before the national financial market began to slump — they were coming close to breaking even — but it has had a steep drop in sales since September. Grad said she hopes a boost in sales at the holidays will help her business recover.
Terry Myers, owner of Kaleidoscope Toys in Round Rock, was having one of her best years until September, when sales slacked off. From September to the beginning of November, she had to make adjustments to her orders based on sales projections. Myers said that the period was tough, but that she has seen a resurgence in November.
“The good thing about being a small business is that I can make decisions and make changes on a dime,” Myers said. “[I can] adjust inventories, adjust or move orders, cancel or get them later, and that’s what I did.”
Julia Broadway, owner of Sweet Love & Sugar Britches in Round Rock, said that she and her staff are also adjusting their orders and backing off of higher-end inventory to meet current consumer demand for lower-ticket items.
“A lot of people are backing off this holiday season, so we are trying to accommodate that,” said Beverly Wilson, general manager of Sweet Love & Sugar Britches.
Big box outlook
Attempts by wholesalers to cut back on excess inventory because of the national economic slowdown could result in more revenue for discount merchants like Big Lots, TJ Maxx and Wal-Mart.
“This holiday season, if there is a sector that meets expectations, it will be discount stores, as well as supermarkets and grocery stores,” said Ronnie Volkening, president of the Texas Retailers Association.
He thinks this year people will spend money on practical gifts with long-term appeal.
“People will be buying tube socks instead of televisions,” Volkening said.
Wal-Mart recently released sales and earnings statistics for the third quarter of 2008 that ended Oct. 31, with net sales at $97.6 billion, an increase of 7.5 percent from $90.8 billion in the third quarter of 2007.
Pflugerville Economic Development Director Charles Simon said that the Wal-Mart in the Pfluger Crossing Center at FM 685 and Pflugerville Parkway has “been a big chunk” of the city’s sales tax revenue since opening in March 2007. The Round Rock Premium Outlets, IKEA, REI and La Frontera shopping center are all big retail draws for Round Rock.
Stores like Starbucks and Circuit City that are closing certain locations remain strong in Round Rock and Pflugerville. REI, Inc. recently opened at the University Oaks shopping center in Round Rock. General Manager Todd Callaway said holiday sales are important, but so is surrounding development. He expects foot traffic to increase when construction is complete on surrounding stores and they are all open for business.
“It is the last part of the year, so you are gauging your entire year on what you think you are going to do during the holidays,” Callaway said.
Local sales tax revenues
Steady growth in sales tax revenue in Pflugerville is relatively new. The Home Depot at Stone Hill Town Center and Wal-Mart at Pfluger Crossing both opened within the past two years. These retailers have significantly increased retail sales tax revenues in the city. The city has seen a 22.3 percent sales tax revenue increase in October and November over the same period the previous year, said Beth Davis, Pflugerville finance director. The city’s 2009 budget projects an increase of 21 percent in sales tax revenue in anticipation of additional retail projects such as SuperTarget and Best Buy, which are expected to open by March.
“Retail, as it relates to sales tax revenue, is very important to the city because it is something that we’ve never had before,” Simon said. “We are really counting on it because it is an addition to the city’s source of revenue. The holiday season is a big part of the year, so we are counting on that.”
Charley Ayres, senior vice president of business retention and expansion at the Round Rock Chamber of Commerce, said the local economy will remain stable this holiday season.
“The economy doesn’t seem to have quite the effect on us as it does in other parts of the country, but I think most people are still expecting a little bit of a slowdown,” Ayres said. “That’s a very relative term in Central Texas. What we consider a slowdown, a lot of communities would be paying good money for.”
Bucking another trend
The retail sector accounts for one in 10 jobs in Texas, making it a significant contributor to the local economy. Volkening said it could be harder for people to find part-time holiday jobs this year.
“It’s a tough time, but the Texas economy is still standing out as a much stronger marketplace than the rest of the country, ” Volkening said. “There will be a Christmas for everyone this year. It just may be a little more Spartan than others.”
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December 08, 2008
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