TIME: Almanac 1993/TIME Almanac 1993.iso/time/120991/1209200.000

Text File | 1992-08-28 | 7.1 KB | 170 lines

                                                                                BUSINESS, Page 54

RETAILING

Frugal to A Fault


With their confidence at a low ebb, consumers go shopping with a
relentless demand for bargains. The economy will pay the price.

By JOHN GREENWALD -- Reported by Mary Cronin/New York and Diana
Tollerson/Atlanta


    As U.S. retailers brace for a gloomy holiday season, business
is booming at one small Manhattan shop where Gucci bags and
Brooks Brothers suits are practically walking out the door. The
store's brisk business, which is up 33% over last year's, is a
sign of the times. The busy outlet is the Spence-Chapin Thrift
Shop, which sells classy secondhand merchandise for a fraction
of its original price to support an adoption agency. "A while
back, only people who never shopped in department stores came
here," says manager Janine Vosburgh. "Now we are seeing young
executives and the ladies who lunch. And more and more customers
are picking up Christmas presents like wallets and perfumes,
ties and jewelry -- good buys for $5 to $15 each."

    Welcome to Christmas 1991. At a time when the economy
badly needs some holiday cheer, Americans from all walks of life
are cutting back their spending on everything from gifts to
daily needs. Burdened by debt and fearful of losing their jobs,
consumers are even less confident about their prospects today
than they were during the painfully deep 1982 recession,
according to a study released last week by the Conference Board.
"Last Christmas was abysmal for many stores," says Gary
Gabelhouse, chief of the consulting firm Fairfield Research,
"and this Christmas will likely be worse." According to the
Appert Gift Wrap Indicator, an annual survey by economist Peter
Appert, store orders for holiday wrapping paper stand at their
lowest level in 10 years.

    Since consumer spending accounts for two-thirds of the
economy, the bleak mood has had the self-fulfilling effect of
prolonging the slump. "I feel cautious about Christmas," says
Eleanor Vincent, an employee-communications manager for Pacific
Bell, which has reduced its managerial work force 17% this year.
"It's mainly psychological," she adds. "I'm affected by the
dismal news we hear every day and also by the chance that I
could lose my job."

    Consumers haven't sworn off gift giving, but they are
turning back to old standbys. The 1940 orchestral-music video
Fantasia, which Disney released on home video last month, has
become this season's runaway best seller (price: as low as
$15.95). Popular too are Water Babies dolls ($17.99), which feel
lifelike when filled with water. Also in vogue are saws and
drills for thrifty do-it-yourselfers and flannel sheets for
energy-saving households. A $99 composter is the best-selling
item in Smith & Hawken's catalog of environmentally friendly
wares. And lovers of planet Earth have boosted revenues 25% this
year for Raven Maps & Images, a five-year-old Oregon firm that
makes detailed glossy wall maps of the U.S. and the world ($15
to $60).

    To bait the hook, even the toniest retailers have begun to
use gimmicks. Saks Fifth Avenue will give $50 off future
purchases to customers who charge at least $750 on its credit
card between Nov. 15 and Dec. 15. Shoppers who spend $1,500 can
get $150 off. Bloomingdale's is offering 10% discounts to
customers in Chicago who sign up for its credit card by Dec. 7.

    Value is the buzz word in today's retail marketing.
Expecting a pinchpenny Christmas, the Target discount chain
created a Great Gifts line of some 50 items ranging in price
from $5 to $50. Among them: a $5 sidewalk chalk set for
children, a $15 executive desk set and a $50 5-in. black-and-
white TV. Sears is luring holiday shoppers with loss leaders
like a 35-piece Christmas light set for 89 cents. "That is
strictly to get customers in our store," says Matt Howard,
senior vice president for marketing. "We bought a couple million
of those."

    Consumers are searching out items with family appeal. The
hottest seller in Williams-Sonoma's holiday catalog is a $20
gingerbread-house mold that customers and their children can use
to make gingerbread gifts. At the Whole Earth Access store in
Berkeley, co-owner Laura Katz has noticed brisk sales of a
relatively large-ticket item: a $199 five-piece, All-Clad
cookware set. The reason for its popularity, she speculates, is
that it can last a lifetime. Other popular gifts: wheels of
Stilton cheese and boxes of shiitake mushrooms.

    The bargain-hunting mood has deepened the battle lines
between different types of stores. "Sears and Penney customers
have moved down to Wal-Mart and K mart," says retailing
consultant Walter Levy. "So the discounters will do well. But
the top stores, like Bergdorf Goodman and Neiman-Marcus, have
been having a hard time. Consumers are shopping at sales or
looking for off-price merchandise, and nothing is changing that
trend."

    That attitude has sent Christmas shoppers flocking to the
Factory Merchants mall in Barstow, Calif., which houses 50
discount outlets ranging from Polo-Ralph Lauren to Book
Warehouse. Hot items at the Toys Unlimited store in the mall
include video games and Barbie dolls. "Last year people were
looking for the best-quality merchandise," says manager Tami
Sabblut. "This year they're looking for bargains." At Rawlings
Sporting Goods a big winner is clothing that bears major-league
logos. Says manager Demsey Sanchez: "It can be ugly, but if it
says L.A. Raiders on it, it sells."

    Corner cutting has been a boon to discount markets like
the Pace Membership Warehouse in Marietta, Ga., which charges
a $25 annual fee that lets members load up on bargains like 24
rolls of paper towels at pennies over the wholesale price.
House brands are popular as well. "I'll buy the store brands
rather than Del Monte vegetables or Dixie Crystal sugar," says
Mary Inman, president of the Junior League of Atlanta. "My kids
ask for Snickers frozen novelty bars, but I buy them
store-brand fudge pops." Beer drinkers too are trading down:
discount brands like Milwaukee's Best have been winning
enthusiastic converts.

    Even the well-heeled are joining the frugality. At
Atlanta's Invisible Fence by Peachtree, homeowners are spending
$895 for underground systems and then saving $300 by installing
the gear themselves. The systems give mild shocks to dogs with
special collars when they try to stray outside the area's
bounds. "As things get tighter, more people are doing their own
installation," says saleswoman Virginia Gafford. "And that's in
really hotsy-totsy neighborhoods, where upper-middle-class homes
sell in the $400,000 range."

    Other Americans are discovering that less can be more this
year. Elizabeth Bloom, who manages a Georgia dental office,
recently found it hard to fit into her clothes. "So I decided
to diet, thinking I could save money two ways," she recalls. "I
wouldn't have to buy new clothes, and I'd save on groceries. I
call it my Recession Diet." For Bloom and most others in the
U.S., it's looking like a slimmed-down Christmas.