With the holiday shopping season kickoff a week away, retailersnationwide were looking for any positive sign in the CommerceDepartment's October retail sales report, which was released Nov.15.
They got some when the report indicated retail sales rose 1.4percent, signaling that consumers might be trending toward looseningtheir purse strings during the ultra-important holiday time frame.
Wall Street investors reacted positively to the news, sending theDow Jones industrial average up 136 points Monday. Analystsnationwide, however, cautioned retailers not to read too much intothe report.
The 1.4 percent rise compared purchases only to September sales,which fell 2.3 percent compared to August, and much of the increaseduring October was attributed to a 7.4 percent jump in automobilesales.
Excluding autos, sales rose just 0.2 percent during October.
Building materials and garden equipment retailers were hithardest during the month, as sales dropped 2.4 percent. Furniturestores, electronics dealers and sporting goods registered a slightdecline. Bars and restaurants registered a 1 percent up-tick, whilegrocery and convenience sales rose slightly.
'Given the 3.4 percent decline in after-tax income during thethird quarter and the decline in consumer sentiment duringSeptember, it is unlikely consumers will be spending freely duringthe holidays,' said local economist Tucker Hart Adams, president ofthe Adams Group Inc. 'Spending increased during the third quarter,up 3.4 percent, despite the income decline, which meant the savingrate dropped substantially, another reason to expect, now that Cashfor Clunkers is finished, that consumers will cut back on spendingand begin once more rebuilding savings.'
Consumer spending accounts for 70 percent of U.S. economicactivity and the National Retail Federation contends that 25 percentto 40 percent of many retailers' annual sales occur during theholidays. During 2008, holiday sales represented 18.5 percent oftotal retail industry sales. Robust consumer spending this holidayseason could indicate a recovery is under way.
Still, unemployment nationwide is at a 26-year high (10.2percent) and businesses are facing a tight credit market, whichfoils any type of expansion plans, even in Colorado, which has seenunemployment drop during each of the past two months.
'The fall in the unemployment rate in Colorado has almost beenbecause people have dropped out of the labor force, not becausethey've found work,' Adams said. 'There is no reason to thinkanything in Colorado Springs will be different from what is going onstatewide or nationally.'
Merchants assist food drive
Beginning this week and lasting through Christmas Day, members ofthe Old Colorado City Association and local Safeway stores willpartner with the Springs Rescue Mission to provide food and clothingfor needy families.
In an effort labeled the '10 for 10 campaign,' participatingbusinesses will place collection bins in their establishments.
People who wish to participate can purchase and donate non-perishable food to the Springs Rescue Mission or donate $10 to themission directly. Money will be used to purchase food at steepdiscounts.
Springs Rescue Mission also will host a Thanksgiving banquet Nov.25 and a Christmas dinner Dec. 24 at City Auditorium for needyfamilies.
To donate perishable items such as turkeys or meats, contact theSprings Rescue Mission at www.springsrescuemission.org.
Waldenbooks close nationwide
Citing a strategy to right-size its Waldenbooks retail segment,Borders Group plans to close more than half its Waldenbooks storesnationwide by early January.
Housed primarily in shopping malls, 200 of the 330 Waldenbooksstores are scheduled for the chopping block.
The company was careful to say that none of its Borders stores orDay By Day mall kiosk operations would be included among the storeclosings.
Borders Group operates Borders stores at Broadmoor Towne Centerand Chapel Hills Mall.
Borders Group Chief Executive Officer Ron Marshall said thecompany believes opportunity remains for Waldenbooks to operate on amuch smaller scale and complement its Borders superstore business.
The book retailer plans to reduce the number of Waldenbook storesoperating at a loss, reduce its overall rent expense and generatecash flow through sales and working capital reductions. Stores thatremain open will be integrated into the Borders superstore computersystem, an investment Borders Group is making to merge all stores toa single platform.
The store closings will result in the elimination of 1,500 mostlypart-time jobs.
This latest round of cuts comes after Borders Group shuttered 112Waldenbooks stores during 2008 and an average of 66 stores per yearbetween 2001 and 2007. Waldenbooks at The Citadel mall closed itsdoors during January 2006.
Scott Prater covers retail for the Colorado Springs BusinessJournal.
