Turbulent economy testing retailers' foresight
Ben Huber, one of the co-owners of a new pet food store, Petagogy, on Ellsworth Avenue in Shadyside.
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If any year has put retailers' prediction skills to the test, it would be this one.
Merchandise orders must be placed anywhere from weeks to months to a year before the goods appear on shelves for a shot at being someone's Christmas present.
NPD Group's chief industry analyst Marshal Cohen last week described the environment this year so far: "From the higher gas prices to the jobless rate to the NFL lockout to the debt ceiling debate and then the S&P downgrade, the consumer has endured a lot. And now we add in the stock market roller coaster ride, and we have a consumer who has forged ahead despite all of that for the first six months of 2011.
"But, how much more can they endure?"
Cole Wolfson doesn't know the answer, and he doesn't have a lot of historic sales data to rely on when he figures out how many holiday toys and treats to invest in at trade shows. He and three co-owners opened a new pet food store, Petagogy, only a few months ago on Ellsworth Avenue in Shadyside.
They're hoping that a natural foods focus in the pet category will be a draw no matter the economic climate, but the continuing financial storms may influence how deeply they'll dabble in the kind of seasonal goods that can stuff a dog's stocking or make for a cute cat treat.
Janie Long, buyer for Pool City's regional chain, doesn't have that luxury. She was placing orders as far back as December and January for this holiday season.
There were signs even then that it wasn't going to be a rip-roaring year. The raw cost of materials were rising, and it was apparent that consumers were going to be coping with rising prices for groceries, clothes and other basics.
"You have to take your best shot," Ms. Long said. "You go with your information. And you've got to have a little bit of gut."
The Pool City chain took a reserved approach even as it went for new goodies to tempt customers into the stores, which sell hot tubs and billiard tables year-round but go heavily holiday seasonal with displays of artificial trees and Christmas lights.
"We bought a lot of new product going forward," Ms. Long said. "Did I buy a lot of it? No.
"When it's gone, it's gone."
The National Retail Federation hasn't made its official 2011 holiday sales prediction yet, but Jonathan Gold, the Washington, D.C., trade group's vice president for supply chain and customs policy, is keeping a close eye on the shiploads of containers coming in through the nation's ports.
The boxes are packed with goods and then stacked on ships to get across the ocean, finally moving onto trains or trucks for transport to their destinations. The retail federation estimates more than half of imported retail goods come into the U.S. in containers.
Mr. Gold said the container traffic numbers are heading in the right direction, even though they're down so far this summer. He said the comparison is skewed because last year retailers bought goods earlier because of concerns about transportation problems as shippers reduced capacity through the recession.
"I still think we're looking at a good holiday season," he said in an interview last week.
Pittsburgh-area retailers would appreciate that, but they do see shoppers as having being changed by the financial trials they've lived through.
Jack Cohen, owner at S.W. Randall Toyes & Gifts, said his customers have been more cost-conscious, looking closely at what they spend. In the face of that, the S.W. Randall stores this year managed to expand the customer base by starting to sell online just after last year's holiday season.
That business now accounts for about 20 percent of total sales, said Mr. Cohen, and buyers online are a good fit with his merchandise mix.
"People on the street want new stuff," he said. "People on the Internet want old stuff."
By old stuff, he means unusual dolls or toys that might not be easily available at the general retail store. Collectors are willing to go online to track down what they want.
Mr. Cohen, who was planning to head to another trade show this week, is applying his own dose of caution to buying. He predicted the holiday shopping season is "going to be fair."
Financially wary customers are also being seen in Castle Toys and Games in Beaver, where shoppers are already putting items on layaway for the holidays, owner Linda Lyden said.
"Customers don't want to run up the credit cards at Christmastime," she said.
She's stocking up for fourth-quarter sales and anticipates some growth over last year, based on results from catalogs and new customers who have been in the store.
Back-to-school sales -- traditionally seen as an early indicator for the holidays -- are doing well so far for Altmeyer's Bed, Bath & Home, a Delmont-based home goods chain, said president Rod Altmeyer Sr. College kids are stocking up on their extra long sheets, for one thing.
Reached on a day when the stock market was plummeting, Mr. Altmeyer said the company couldn't do much about such external factors.
The more immediate concern was the price of cotton, which had rocketed several months earlier and has since dropped. The swings were affecting prices from the suppliers of his soft goods, such as bedding and towels.
At this point, he said Altmeyer's is fully committed for fall and holiday merchandise. Those orders were signed off on months ago.
"We're going along planning for business as usual."
First Published August 16, 2011 12:00 am