Retailers relieved season wasn't worse

By Andrew Gomes and Katherine Nichols
Advertiser Staff Writers

Restaurants and stores overflowed and parking at malls was gridlocked yesterday as steep discounts drew crowds of bargain hunters the day after Christmas.

Ala Moana was busy with post-holiday shoppers yesterday as retailers offered deep discounts. Deborah Booker • The Honolulu Advertiser

For the most part, however, retailers said they had been pleasantly surprised — after expecting much worse in the wake of the Sept. 11 attacks — and held out hope that consumer spending yesterday showed the season might end on a more profitable note.

"We're buying whatever we see that's a good price," said Roger Reeves of Niu Valley. After scouring Ala Moana Center for three hours, Reeves and his wife, Diane, already had made a trip to the car to drop off purchases and lighten their load for a second round.

The Reeves, loaded with wrapping paper marked 75 percent off, were among about 20 people waiting in line yesterday in the Christmas section of Macy's at Ala Moana.

They were not alone. Every register at the store had a long line, and at mid-afternoon customers were still coming.

Leila Pangelina of Kane'ohe said she had every intention of going to Ala Moana simply to exchange gifts.

"But I'm ending up with more than I started," she said.

The buying frenzy and discounting was mirrored across the country. Macy's department stores put on a post-Christmas sales blitz that included half off on all furs, men's suits, sportswear and sweaters. Toys R Us offered markdowns as high as 80 percent. Hundreds of retailers fired up promotions designed to clear shelves of everything from sweaters and shoes to exercise equipment and jewelry.

Still, Carol Pregill, executive director of the trade group Retail Merchants of Hawai'i, said sales for most of the association's members will come in lower than last year, with expected declines from the single digits to more than 20 percent.

National forecasts by retail analysts had predicted holiday season sales would grow by about 2 percent on average, according to a survey by the International Council of Shopping Centers. After Sept. 11, the outlook narrowed to 0.5 percent growth.

The nonprofit trade group said sales were down 3 percent for the first three full weeks of the shopping season through Dec. 17, according to the latest available results of a survey of 4,000 nonanchor stores at 80 malls.

Preliminary numbers released yesterday by individual retailers and two widely watched surveys project a sales increase of about 2 percent for the period — in line with what many observers had expected. Although figures to be released in the next two weeks may vary, there is little doubt it will be the smallest gain since 1990, when sales growth was flat as shoppers were rattled by a lengthy recession and war.

The sales figures aren't necessarily gloomy, according to economists and analysts. They could have been worse, given that the U.S. economy has been in recession since March. Consumer spending — which accounts for two-thirds of the nation's economic activity — remains a source of economic strength.

Paul de Ville, chief executive officer of Hilo Hattie, said sales were off "slightly" from last year but 5 percent ahead of the budget developed Oct. 1.

"We're pretty pleased," he said.

De Ville said Hilo Hattie added two seasonal stores on Maui and the Big Island to its nine regular stores in Hawai'i, and tried to draw more kama'aina shoppers to offset lost tourist business.

The effort paid off, he said, as the share of local customers shot up from 7 percent in October and November to 22 percent this month.

"That's traditionally not a major segment for us, but it has become so since we made it part of our strategic plan," de Ville said. "We really went after it."

Bev Motz, Hawai'i district manager for Waldenbooks, said kama'aina business compensated for sales drops at more tourist-oriented locations.

"I'm pretty darn happy," Motz said, noting that about half of the company's 12 stores are in tourist areas.

Motz didn't have a good idea whether sales were higher or lower than last year overall, but she said strong customer traffic leads her to conclude it was a "great" Christmas.

At Waikele Premium Outlets, more kama'aina shoppers and merchant discounts helped boost sales, said Conchita Malaqui, assistant general manager of the center.

"This holiday season, shoppers have been seeking out value, and the outlets have delivered that value," she said.

Even full-price retailers who saw sales decline were relieved, saying it could have been worse.

"It matches my prediction," said Terry Wong, operator of three Hickory Farms stores, where sales declined roughly 10 percent over last season.

Jonathan Kim, general manager at Windward Mall, said store managers and owners had told him sales were "better than projections" in most cases, and in some cases better than last year. Only a couple of stores reported sales below projections, he said.

Yesterday retailers offered deeper-than-usual discounts to try to wring the last cash out of holiday shoppers as well as get rid of leftover inventory.

At Neiman Marcus, signs that read "take an additional 30 percent off" adorned racks of high-end designer clothing, much of it already significantly discounted.

At the Hawaiian Quilt Collection in Ala Moana, unadvertised sales attracted a steady stream of customers. "Today is pretty good," said store manager Leslie Clark, who was selling red and green items for half price.

Clark said she hoped the post-Christmas rush would make up for what had been a mediocre holiday season.

Although she had not yet added up her December receipts, "I know it's not going to be as good as last year," she said.

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065, and Katherine Nichols at knichols@honoluluadvertiser.com or 525-8093.