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The Honolulu Advertiser
Posted on: Tuesday, March 25, 2003

War may be driving retail sales down again

Advertiser Staff and Wire Services

With the nation's malls under tighter security since the U.S.-led war against Iraq began, shoppers still headed to stores over the weekend, but some merchants reported spending was weaker than usual.

Stores, already bruised this spring season by stormy weather and consumer worries about the prospect of war and the economy, were bracing for slow sales over the weekend as many shoppers stayed at home to watch televised coverage on developments in Iraq.

"People still need to go on with their lives," said Carol Van Camp, general manager of Prince Kuhio Plaza in Hilo, the Big Island's largest mall, where retail sales were up 2.5 percent Thursday through Sunday compared with the same days a year ago.

"We had a good weekend," Van Camp said. "The theater business was good, too."

But outside the Kahala Barnes & Noble Booksellers on O'ahu, the parking lot looked more empty than usual over the weekend, department manager Jared Shimamoto said.

"There was a lot less traffic," he said. "It seemed to start right when the war began. It was immediate."

What remains to be seen is to what degree shoppers will be fixed to their TV sets, or how much they'll use shopping as a diversion.

"It kind of gives you a sense of normalcy, doing something you would do on a normal weekend anyway," said Jim Klein, 40, a high-tech project manager from Columbus, Ohio. He was shopping at a Saks Fifth Avenue outlet at the Polaris Fashion Place in Columbus.

His wife, Hope, 36, said, "(Shopping is) a little bit of relief, a little bit of escapism."

Phyllis Reims, 68, from Dover, Del., said she was shopping for "whatever catches my eye."

"I bought a pair of shoes," she said, sitting on a bench outside Strawbridge's department store on Saturday at the Dover Mall.

Reims has been watching the news coverage on the war but called it "a little excessive."

These past few months haven't brought much cheer for the nation's retailers, who have suffered from disappointing sales. Analysts expected March sales to remain slow given the weak economy and shaky consumer confidence, but analysts are worried that the war could prolong such a trend.

Kazuto Uchida, chief economist at The Bank of Tokyo-Mitsubishi Index, which tracks same-store sales for about 80 retailers, now believes there is "a possibility" that March same-store sales will be down 1 percent from a year ago, worse than the unchanged growth it estimated earlier.

Same-store sales are those at stores opened at least a year, and are considered the best indicator of a retailer's health. Several of the nation's largest retailers were to report their weekly sales yesterday.

Spokesmen at Sears, Roebuck and Co. and J.C. Penney Co. Inc. said Friday they started seeing sales start to slow last week. But Wal-Mart spokesman Tom Williams said same-store sales through last week and the weekend were normal.

Analysts anticipate that as with the 1991 Gulf War, discounters will fare better than department stores, with consumers stocking up on food and emergency items. Analysts also expect that sales of big-ticket items, such as cars, will suffer.