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A mixed bag for retailers underscores a fragmented recovery
by Laura McCallum, Minnesota Public Radio
December 24, 2004

Lines were long at many retailers on the final shopping day of the holiday season. (MPR Photo/Laura McCallum)

Retail analysts say holiday sales nationwide have been sluggish. Barring a last-minute shopping boost, the 2004 season will likely be worse than last year. But there are some bright spots such as electronics and luxury items. Minnesota retailers are reporting a mixed bag, ranging from brisk sales to a less than stellar season.

St. Paul, Minn. — The bitter cold didn't keep shoppers from flocking to the Mall of America on the final shopping day before Christmas. Larry from Woodbury says he's spending about twice as much as he spent last year.

"I'm helping the economy more than I wanted to. More people to buy for, and I started actually earlier than I usually do, which was a mistake. I usually come out the last day, do it very fast," he said.

	Slower than last year

Shoppers like Larry contributed to strong sales at the Mall of America, according to the mall's vice president of business development, Maureen Bausch. Right after the September 11 terrorist attacks, many retailers saw their sales plunge. Now Bausch says some retailers believe it will be the best holiday season in three years.

"We get people coming here from much further away to do their shopping, and with the dollar being such a good value for Europeans, we're seeing a lot of international traffic," she said.

Not all retailers are thrilled about this holiday season. At Rose Mille, a boutique that opened at the Mall of America right before Thanksgiving, traffic was fairly light on Christmas Eve. The store also has a Stillwater location. Rose Mille's clothing buyer, Kari Anderson, says business was good last year, but this year is slower.

"Anywhere you look, in Stillwater especially, sales are very down compared to last year. And here I've been hearing rumbles of that within the shops. Retail's a funny business. It's fickle; it depends on gas prices, weather probably has a lot to do with it," she said.

Retail analysts believe high energy prices, including gasoline, are a factor in sluggish sales nationwide. Kurt Barnard, president of New Jersey-based Retail Forecasting, says upscale stores are doing well, but lower-end retailers are reporting slower sales.

"If you earn $100,000 a year, a nickel more at the gas pump isn't going to kill you. But if you earn $35,000 or $40,000 a year, then a nickel more at the gas pump can mean the difference between whether Johnny does or doesn't get a new pair of shoes," according to Barnard.

	The hit

Barnard says online sales are up this year, which affects retailers. But he notes that the vast majority of all transactions -- about 98-percent -- take place in brick-and-mortar stores, not online. Barnard thinks another factor in what he describes as a lackluster season is a dearth of "must-have" items, something like the Tickle-me-Elmo toy, which sparked a buying frenzy eight years ago.

Still, some products are flying off the shelves this year, most notably all things digital. At Best Buy in Roseville, sales representative Jennifer Shelly motions to a display case of iPod digital music players.

"First of all, there's the four gigabyte iPod, which holds typically around a thousand songs. Then there's the 20 gig, and that holds around 5,000."

The 20-gigabyte iPods cost around $300, and they're all sold out. Shelly says the store has been busy since before Thanksgiving.

"It hasn't been slow at all, actually. We had lines and lines and lines of people. There was a little old lady here very, very early this morning, all ready to go do her last-minute shopping. It was really cute," she said.

Last year, a late spending surge gave retailers a better-than-expected holiday season. If that doesn't happen this year, expect big discounts when stores reopen after Christmas.

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