Retailers keep their fingers crossed for upcoming holiday

For Fred Bramante, it’s the most nerve-wracking time of the year.

“By nature, I am nervous at this time of year,” said the founder and owner of Daddy’s Junky Music Stores. With 20 stores in New York and New England, including four in New Hampshire, Bramante is concerned about the effect current economic conditions will have on consumer purchases during the biggest shopping season of the year.

“I don’t drink, but I consider it during the holiday season,” said Bramante, who worries that with home heating oil prices rising and consumers paying $3 or more per gallon at the gas pump, people may be spending less on their holiday giving.

Bramante is by no means alone.

“I think it will be an interesting and challenging season,” said Tom Messingham, president of Garrison Hill Florists in Dover. “I think we have yet to see the impact of the change in energy prices, and that tends to affect things across the board.” Higher gasoline prices affect his own overhead as well as consumer spending, Messingham said.

“One component of our business is local delivery,” he said. “We have seen an impact in higher delivery costs.”

As a florist, Messingham is less dependent on Christmas sales than most retailers, since Valentine’s Day and Mother’s Day are even bigger holidays for floral sales. He counts on sales around those holidays to make up for the slow seasons in between. “I think the spikes are being fairly consistent, but the valleys in between are becoming deeper,” he says.

Consumer spending during the critical holiday season may be affected by more than the rising gas and oil prices, said Peter Bartlett, an economist with the state Department of Employment Security.

The much-publicized recall of toys of Chinese-made toys could have a negative effect on overall toy sales, he said, and the ongoing slump in the housing market may be contributing to a tightening of shoppers’ purse strings.

“Real estate in recent years has had a lot to do with people’s spending,” Bartlett says. “As they see the value of their houses go up and their net worth go up, they take out equity loans to make big purchases. As the value of real estate declines or doesn’t keep up with inflation, they don’t have the confidence to take out loans on home equity. They feel their net worth is stagnant or shrinking, and they’re not going to spend as much as they might otherwise.”

Staffing concerns

“Cautiously optimistic,” is how Nancy Kyle, president of the New Hampshire Retail Merchants Association described the attitude of retailers she quizzed in a recent survey in which 71 percent of the respondents said this season will be as good as or better than last year’s holiday buying.

For one thing, Thanksgiving comes early this year, giving people five weekends for holiday shopping. And with no sales tax, New Hampshire will continue to draw shoppers from neighboring states. Still, members are concerned about rising fuel costs and how that affects people’s disposable income she said.

“Every time you turn on TV or radio, you hear about how horrible the economy is,” she said. “It’s almost a self-fulfilling prophecy.”

But one piece of continuing good economic news in New Hampshire — the state’s low unemployment rate — is another problem for retailers, says Kyle.

“Most were concerned about staffing, getting qualified help.” With an unemployment rate at 3.2 percent in October, there is little seasonal help available. Retailers also said they are concerned about how the rise in gasoline prices will affect the cost of having goods shipped to their stores. And the price of gas may drive many consumers to do their shopping on line rather than visiting their local retail outlets, Kyle said.

But in the more remote regions of the North Country, some merchants are hoping that those higher gas prices will keep local shoppers closer to home.

“Our competition here is North Conway and the outlet stores,” said Maureen Patry at Maureen’s Boutique in Berlin. “With the price of gas being what it is, people may not want to spend twenty bucks to go to North Conway and back.”

The recent closing of the Wausau paper mill in nearby Groveton has added to the difficulties of an economically troubled part of the state, but North Country residents have been through that before, Patry noted, adding: “We’re used to an economic slump here in Berlin.”

Smaller margins

But if fewer people travel to North Conway from Berlin, more are coming from Canada, said Linda MacLean, assistant manager at the Geoffrey Beene store in North Conway.

Canadian tourists have helped get the holiday shopping season started early at the outlet clothing store, said MacLean, who estimated that about a third of the store’s business comes from our northern neighbors.

“It has a great deal to do with the Canadian dollar being stronger than ours,” she said. “They’re continuing the fall foliage season right into winter.”

Both U.S. and Canadian shoppers have been in the buying mood said MacLean, who does not expect higher gas prices to cut into sales as the season wears on. “Prices are so good that people are buying a lot of Christmas gifts and holiday goods and stocking up now.”

Gary Levy, president of State Street Discount in Portsmouth, said he expects more cautious consumer spending this season will force price reductions through much of the retail industry.

“I expect there to be deep price cuts. I expect margins to be contracted to drive business,” he said.

Levy, who sells household appliances and audio and video electronic equipment, said a strong third quarter this year made up for a slow first half. With about 15 percent of his annual sales coming at year’s end, he is less dependent than most retailers on the holiday shopping season, he said.

Still, he said he finds rising fuel prices and their impact on consumers troubling. And the slump in the housing market affects his business directly. “We furnish new homes, and new home sales have been down.”

Some retailers said they believe they may actually benefit from tough economic conditions, as shoppers look for lower-cost alternatives to “big ticket” purchases.

“If they can’t afford a vacation, they can still get a book,” says Michael Herrmann, owner of Gibson’s Bookstore in Concord. “If they can’t give a $300 piece of stereo equipment to a relative, they can still give a nice coffee table book.”

“When money is a little more scarce, people get a little more practical,” said Tom Hubert of Hubert’s Family Outfitters, which has stores in Newport, New London, Claremont, Lebanon and Woodsville. “Instead of the latest electronic video game, they’re more apt to buy a sweater or fleece, something along that line.”

And as people turn their thermostats down to cope with those rising fuel prices, “that may necessitate a new pair of slippers or something to keep them warm inside,” he suggested.

High-end hopes

Those selling luxury items, on the other hand, are counting on buyers at the upper end of the market to continue their free-spending ways.

David Fineblit, owner of Pearson’s Inc. in downtown Manchester, said the number of sales may be down slightly form a year ago, but profits are up due to increased sales of higher-priced jewelry.

“It’s not unusual for me to sell a watch for $20,000, even $50,000,” said Fineblit. “I sell at least two or three of those a month.”

An obviously well-heeled customer in California recently ordered a $300,000 watch, Fineblit said. “A person who pays $300,000 for a watch is not going to be affected by $3.50 for gasoline.”

“I don’t think it’s going to be as bleak as people make it out to be,” said Jay Campion of Campion’s Women’s Shop, an upscale clothing store in Hanover. “The numbers seem to be skewed, based on what happens to Wal-Mart. That doesn’t mean diddley to me. Boutique shopping is a little different. We’re not hooked as strongly to unit sales.”

Still, he noted, bad economic news can affect the habits of even high-end shoppers.

“You could be a multimillionaire, but if your portfolio drops by 25 percent, that has a psychological impact, so you pull in your horns,” he said.

But Campion is more concerned with the vagaries of the weather than with either the spike in gasoline prices or the fluctuations of the stock market. “If we have three days of freezing rain just before Christmas we could get hurt,” he said. “But that would be the same any year.”

Weather is concern of George Angelopulos of George’s Apparel in Manchester as well. A warmer-than-usual October dampened early sales of winter clothing, he said, but he expects a “fair” holiday season if the weather is right.

“I want cold,” he said. “I’ve got a lot of topcoats.”