Uncertainty clouds retailers' outlook

Photo by The Arizona Star
| Saturday, Nov. 24, 2012, 9:04 p.m.

Kathy Grannis is the senior director of media relations for the Washington, D.C.- based National Retail Federation, the world's largest retail trade association. She spoke to the Trib regarding consumer concerns over the prospect of sequestration in Washington and other factors that might impact Christmas shopping.

Q: Is the impending fiscal cliff causing retailers much trepidation as the Christmas shopping season moves into full swing?

A: There's no question that American consumers are paying attention to what's happening in Washington, as they always do. If it's not the fiscal cliff, it's always something else. When these kind of things happen during the holiday season, of course it's a bit more important for retailers. One of our recent surveys found that 64 percent of consumers said that political and economic uncertainty were impacting their spending plans.

Q: Is it an indication of how much your organization is concerned about the fiscal cliff that your CEO (Matthew Shay) recently wrote to President Obama, asking him to conclude those negotiations with Congress well before Dec. 31?

A: Yes. I think the bottom line is that we are looking for a temporary policy that would give consumers the confidence they need to at least get through the holiday season. One of the major concerns, of course, is that we could be entering a new year where consumers will be possibly at risk of losing a lot of money from their paychecks. That obviously could spell disaster, not just for the retail industry but also the economic recovery. As we saw in 2008, when consumers cut back and stop spending, (the impacts) also mean layoffs and business closures. There just are so many different (problems) that could come about if a solution isn't reached soon.

Q: Are you expecting any lingering effects on retail purchasing in the areas that were hardest hit by Hurricane Sandy?

A: The storm, of course, was a very unfortunate incident that could wipe out many small-business owners. It was a regional event, even though (it occurred) in a part of the United States that typically does have a large portion of the U.S. consumption rate. We're still waiting to see if this is going to have an impact on the holiday season. We don't know at this point.

Q: Christmas shopping seasons have occurred in challenging economic times for the past four years now. Has that resulted in any new seasonal shopping norms?

A: It's not just holiday shopping. Consumers have changed the way they go about managing their budgets entirely — from shopping earlier so they can spread out their payments, to using the Internet and mobile devices to compare prices and seek out the best deal. There's no question we are looking at a new normal now. The average family has had to cut corners for four years now. After a couple of years of playing it safe with their discretionary spending, it's really just a way of life for them now.

Q: But given that Black Friday now begins on Thursday and Cyber Monday has grown from a gimmick into a gargantuan shopping day, don't retailers have some cause for optimism this holiday season?

A: Yes, we are actually forecasting holiday sales to grow this year about 4.1 percent. That is down from last year's actual growth of 5.6 percent. But given the political and economic uncertainty, 4.1 percent is by no means a negative expectation.

Eric Heyl is a staff writer for Trib Total Media (412-320-7857 or eheyl@tribweb.com).

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