Abundance of caution

Pete Adona won't be spending a lot on Christmas this year.

The Goose Creek resident lost his job five months ago at Gates Rubber Co. in Moncks Corner and hasn't been able to find employment.

"I don't have much money this year," Adona said while shopping for a pair of sneakers at Sears in Northwoods Mall.

Ingrid Santos of Mount Pleasant plans to buy less as well.

The child care worker just doesn't have as much to spend as last year.

Neither does Madeline Powers of Macedonia, a government worker who experienced furloughs and took care of an ill husband over the past year.

Greta Brown of Ravenel, a stay-at-home mom whose husband is a contractor, and Glenda Owens, a pharmacist from Mount Pleasant, say they will spend about the same.

They are among 70 percent of Americans who plan to spend the same or less than last year, when holiday retail sales plummeted 3.4 percent after financial markets melted down in the fall, according to the National Retail Federation.

The 10-year average is 3.39 percent growth in retail sales, but don't expect this year to be too jolly.

Frosty outlook

The trade organization predicts a 1 percent drop in sales for the holiday shopping season during November and December to $437.6 billion.

"We think the holiday season will be down ... but better than last year," said Ellen Davis, vice president of the National Retail Federation. "This should not come as a surprise to retailers."

Britt Beemer, founder and chairman of Charleston-based America's Research Group, believes the National Retail Federation's outlook is overly optimistic.

Beemer, whose official holiday forecast will come out in early November, believes sales will be down 3.5 percent to 5 percent this holiday season.

"I don't think it's going to be much better than that," Beemer said. "The consumers are in tough straits, and it will be quite a while before they dig themselves out of this hole. We have a ways to go yet. Everybody wants the recession to end, but nobody has told the consumer that yet."

Last year, he said 38 percent of adults said they would not exchange gifts with each other. This year, that figure has climbed to 61 percent, based on Beemer's research.

"It's pretty hard to have very favorable sales if that many parents forgo gifts to each other in order to give gifts to their children," Beemer said.

Trimmer shelves

Merchants, many who ordered merchandise in the spring for holiday shopping, planned for the pullback in spending by cutting inventories, workers and hours.

"If you aren't expecting as much in sales, you don't have as much merchandise on the shelves," said Davis of the NRF. "They have looked at every way to cut back on costs."

For consumers, this means they should not expect the steep markdowns from last year. The mantra is to shop early and take advantage of sales or you might not find what you are looking for.

"As the global economy continues to recover from the worst economic crisis most retailers have ever seen, Americans will focus primarily on practical gifts and shop on a budget this holiday season," said Rosalind Wells, chief economist of the retail federation. "Retailers will likely continue aggressive promotions and discounts to bring people back into stores."

The perfect gift

"Value" seems to be the key word this year.

"Consumers will be price-conscious and frugal," Davis said.

Major local mall merchants say consumers will focus on practical gifts.

"They have gone away from novelty items," said Susan McWatters, Belk regional vice president and store manager at Citadel Mall. "It will be essentials for gift-giving this year where they can get a lot of value."

In cosmetics, for instance, suppliers are not pushing the large sizes of perfumes or lotions, she said. Rather, they are packaging a spray, lotion and bath and shower gel together to entice shoppers on a budget.

"We are starting to see people with a little more confidence," McWatters said. "But they are still looking for that almighty value."

Retailers will not be in a panic this year with lots of leftover merchandise, she added.

"It's very well-planned-out retailing and markdowns," she said.

Dillard's store manager Shawn Ulrich at Northwoods Mall agrees.

"People are looking for the everyday value price," he said. "I would be shocked to see the steep markdowns of last year. The buyers have not bought as much and are smarter on how they disburse it to the stores."

He's confident the fall quarter will prove profitable.

"For the most part, people try to find a way to make it happen," Ulrich said. "You cut back on other things to make sure your family has a good Christmas. People have been holding back, and the media paints the worst picture."

At Citadel Mall, JCPenney workers spent much of last week putting up Christmas displays just like other retailers, even though Halloween sales, which are predicted to be scary this year, haven't ended.

"I think it's going to be a good holiday season," JCPenney store manager Ron Worley said. "I think the customer is tired of not spending. Inventories will be leaner and more focused, but we are planning on an increase in fine jewelry of 4 percent."

He also expects home furnishings to be strong because they are gifts that last while apparel sales will be soft.

"We will be more aggressive on the big sales with deeper price points," Worley said. "The day after Thanksgiving will be more promotional than last year. Every weekend is a big weekend after Halloween."

Reach Warren Wise at 937-5524 or wwise@postandcourier.com.