Oct 6, 2008

Holidays will be a big test for storesBy John KeenanOmaha.com

Marie Clifford, owner of a gift shop at Westroads Mall, has heard the dire financial projections for retailers. But people so far still are buying, she said.

Maybe it’s an act of rebellion by consumers who feel swamped by negative news, said Clifford, who owns The Afternoon.

As retailers like Clifford enter the critical fourth quarter, the national economic situation casts uncertainty over whether holiday sales will provide the kind of bump that businesses need for a profitable year.

Stores could be affected in at least two ways.

Although last week’s passage of the $700 billion bailout bill ultimately may ease the credit crunch, current reluctance by banks to issue loans could prevent retailers from boosting inventories, meeting payroll or conducting ordinary day-to-day business functions.

Secondly, consumers uneasy about declining home values and the volatile stock market, and heeding economists’ exhortations to save more and spend less, could opt for leaner gift-giving.

The merchants’ trade group, the National Retail Federation, is offering subdued spending projections.

Retailers are getting hit from all sides, said Phil Rist, vice president of strategy at BIGresearch, an Ohio company that predicted holiday sales would increase only 2.2 percent this year.

That’s only half the average increase for the last 10 years.

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