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Trying to keep up their holiday spirits

| Friday, Nov. 26, 2004

If ever there's an example of the reason most retailers have jolly expectations heading into today's kickoff of the holiday shopping season it would be Joe Baluch.

The 34-year-old Connellsville native is one of more than 600 glass company employees who suddenly lost their jobs this month in the region, yet when it comes to his Christmas shopping, he sees his glass as half full.

"It still hurts being out of a job," said Baluch, who was a 15-year veteran of Anchor Glass Container Corp. in Connellsville, Fayette County, which shut down Nov. 4. "But we probably live better than a lot of employees because of my wife's job at Sony Chemical (Corporation of America) in administration. We don't plan on doing anything different this Christmas because of the three months of pay and the severance package I will receive."

Baluch's optimism is shared by a number of retail industry watchers.

Most shopping surveys project this year will be solid, if not spectacular, with the National Retail Federation's estimate pegged at 4.5 percent, with revenues totaling just under $220 billion. The same survey estimates that per-consumer spending will climb to $702.03, vs. 2003's $671.88. The year-over-year growth in 2003 was 5.1 percent and well under 3 percent in 2002.

In recent years, holiday shopping has been dominated by the so-called big boxes, including Wal-Mart and Target and, to a lesser extent, Kmart. Wal-Mart's fiscal fourth quarter, ending Jan. 31 of this year, saw sales jump 12.2 percent to a record $74.5 billion, the company reported.

"Just 15 years ago, 75 percent of retail sales were recorded by department stores as a whole, and 25 percent was recorded by discounters," said Will Ander, a senior partner with the retail consulting firm McMillan/Doolittle, Chicago. "Today, those numbers are reversed."

However, this year could see the department stores fare somewhat better, some industry watchers believe. A number of department store chains had good sales years prior to the start of the holiday shopping season, and those results are expected to continue.

Lazarus-Macy's parent Federated Department Stores Inc. and Kaufmann's and Lord & Taylor's progenitor May Department Stores Co. were riding fairly significant year-over-year sales increases. Through Oct. 30, sales at all Federated units were up 3.4 percent and up 6.2 percent at all May Department Stores.

"Department stores do look stronger this year, particularly in high-end merchandise," said Jeff Stinson, retail analyst in Cleveland with FTN Midwest Research.

Stinson added that when sales at stores open at least one year are compared, Wal-Mart Stores Inc.'s percentage increase trailed department Federated and Nordstrom Inc.

Few retailers will be as merry this year as consumer electronics powerhouse Best Buy, said Steve Baumgarten, retail analyst at Parker/Hunter Inc. in Pittsburgh.

He said he expects dramatically higher sales of plasma and high-definition televisions as well as digital cameras and video game consoles and software -- including retro games like Pac-Man.

Overall, Baumgarten says sales should increase 3.5 percent over last year, due to the strengthening employment picture and rising wages.

A couple of extra shopping days this year compared to last won't hurt, in addition to an early start to Hanukkah on Dec. 7, which could provide retailers a buffer against last-minute shoppers.

Steve Spiwak, an economist at Retail Forward in Columbus, Ohio, said the retail sector is at its strongest since the early 1980s.

"Gas prices are moderating and people have money in their pockets," he said. "Household wealth has rebounded to record levels."

McMillan/Doolittle's Ander said holiday season sales growth over the Internet will continue, but that the percentage increase will drop significantly. "Four years ago, the growth of Internet shopping was 200 percent," Ander said. "In 2003, it was 33 percent, and this year it probably will be in the 20 percent to 25 percent rate."

Internet research firms Jupiter Research and Forrester Research forecast that online holiday sales growth over 2003 will be roughly 20 percent, to $13.2 billion from $11 billion.

But there are problems industry experts say will tend to keep a cap on holiday sales. "This will be an average year for holiday shopping," said George Whalen, president of Retail Management Consultants, San Marcos, Calif., who predicts 4 percent year-over-year growth. "There still are problems with the nation's economy, including the price of gas and in some areas, heating oil, the job situation for many and the overall state of the world."

The region's job situation deteriorated in recent weeks with the closure of Anchor Glass and its counterpart, Glenshaw Glass Co., in Shaler, on Monday, together with last month's 21 percent cut in pay for the region's 5,500 remaining US Airways employees.

Celine DeLuca of Clinton, Beaver County, a flight attendant at US Airways, said that she and her husband, Gregory, have agreed to a $50 cap on Christmas presents for each other after she took a 21 percent wage cut.

"We can't even afford to pay the bills now," she said.

In spite of her financial woes, DeLuca said she's trying to maintain her Christmas spirit.

Dianne Britton, of Imperial, a US Airways flight attendant for 18 years, has been on medical disability for the past month following a car accident.

"The holidays are just another stress," she said. "We go from week to week not knowing if we're going to be displaced or furloughed."

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