Richmond-area merchants make adjustments before holidays

After a very slow 2008 holiday shopping season and lackluster expectations for 2009, retailers are shifting their strategies to better attract shoppers.

Whether it's changing the way they stock stores, pricing strategies or the number of people they keep on staff, merchants are adjusting to a new reality.

"We want everyone to feel comfortable shopping with us no matter what their budget is," said Sally Ashby, director of marketing for Carreras Jewelers in the Libbie and Grove shopping district in Richmond's West End.

The holiday shopping season traditionally kicks off the day after Thanksgiving, this year Nov. 27.

Carreras and most retailers are bracing for another off year. Most merchants made preparations to better prepare for a slow season.

The National Retail Federation predicts sales during the last two months of this year will fall 1 percent to $437.6 billion from the same period in 2008. It would be the second straight year of holiday shopping slowdowns after a 10-year average growth rate of 3.39 percent. Last year, sales fell 3.4 percent, the first drop since the federation started tracking holiday sales in 1995.

The advocacy group predicts consumers plan to spend even less this year than last year's holiday season, which followed several months of economic uncertainty in the midst of bank failures, massive layoffs and the deepest recession in decades.

A federation survey released last week found that individually, the average consumer intends to spend $682.74 this holiday, a 3.2 percent drop from last year.

"This holiday will be a bit of a dance between retailers and shoppers, with each group feeling the other out to understand how things have changed and how they must adapt," said Tracy Mullin, president and CEO of the group.

Roland T. Rust, a professor of marketing at the University of Maryland's business school, said the question for shop owners is how much buying consumers will do.

"The shoppers will be there," he said. "The real question is: How much will they spend?"

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Ashby said Carreras is making sure it has inventory available to meet customer demands.

"We are aware of the needs, requests and desires of our customers and we have answered their wishes," Ashby said.

Elizabeth Howard, owner of The Cordial Cricket in Chester, began addressing the merchandise issue early this year.

The store did relatively well last year, but she attributes that to moving into a significantly larger location in August 2008.

The Cordial Cricket sells stationery, gifts, art, and children's toys and clothing. The store has been in business since 2005.

To prepare for this year, Howard has adjusted how she stocks the store, by buying less inventory and by offering merchandise that will sell better in the long term, she said.

For example, this year she is stocking less inventory that has an overtly holiday theme, choosing instead to carry items that feature fall colors. These are the kind of products that can work for Christmas and also carry over into the new year.

Because of the slow economy, vendors let her order later this year, she says. That gave her a chance to better gauge how business is doing before placing orders.

"November is typically when we see the most increase in sales of holiday merchandise, so that month will really tell the tale," she said.

Vendor flexibility also helps her if sales are better than anticipated and she needs to do some quick buying.

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Having that ability to adjust inventory helps Howard's bottom line in more ways than one.

While consumers could be more sensitive about pricing this year, having items that are a better value will make it "less necessary to cut prices," said the University of Maryland's Rust.

David Urban, interim Business School dean at Virginia Commonwealth University, said he doesn't believe there will be deep discounting this year.

"I expect there to be some widely advertised items that will be price leaders, in hopes that the leaders will cause people to head to the stores and buy other items that are not discounted much, if at all," he said.

Discounting is a major issue after last year when retailers, seeing that sales were down and consumers weren't shopping, began offering large discounts early in the season to lure shoppers. That practice wound up hurting retailers because it created an expectation of bigger discounts to come.

Carreras' Ashby said her store will hold two sales but won't go for wholesale price cuts or specials.

"Stores that discount every other week run the risk of seeming unreliable, and customers will start to expect a discount all the time," she said.

Mike Liebschwager, co-owner of Carytown furniture store Ruth & Ollie, said he has changed his thinking on discounts.

Liebschwager said that once the holiday shopping season begins, Ruth & Ollie will hold sale events or one-day sales.

"The one thing that is paramount is that you have a pricing model," he said. "If you constantly [drop] prices, it gets into people's psyche that there is going to be a discount."

To offset the price expectations, Liebschwager works to keep inventory fresh and offers better service, he said.

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Liebschwager also will not hire extra help for the holidays and instead give his two part-time employees more hours on Saturdays.

The Cordial Cricket and Carreras also will maintain staffing levels.

Historically, the holiday shopping season has been a time when employers added staff to deal with the increased traffic.

But according to a survey by Henrico County-based SnagAJob.com, companies that are hiring will add an average of 6.7 employees this holiday season. That's about 25 percent less than last year and 40 percent less than the 11.2 employees hired in 2007.

Making do without more workers will be hard on employees, Urban said.

"Retailers are stretched thinly when it comes to in-store personnel," he said. "This means more pressure on employees who are already working extremely hard."

Contact Louis Llovio at (804) 649-6348 or .