- The Washington Times - Wednesday, September 26, 2001

The automotive industry is pushing deals like zero-percent financing to lure shoppers back to their showrooms to spend money again.

But most retail sectors aren't offering much more than the regular promotions and incentives they usually do at this time of the year despite the impact the Sept. 11 terrorist attacks have had on consumer confidence.

"There's not a lot retailers can do," said Nariman Behravesh, chief economist at DRI-WEFA, an economic-forecasting group. "They will have to ride this one out."

General Motors Corp., Ford Motor Corp. and DaimlerChrysler are offering interest-free loans on cars and trucks in response to dwindling U.S. demand. GM's "Keep America Rolling" program allows buyers to purchase many of its 2001 and 2002 vehicles with interest-free loans. The program lasts through October.

"We know this is a difficult time to talk about an incentive program, but GM has a responsibility to help stimulate the economy by encouraging Americans to purchase vehicles, to support our dealers and suppliers and to keep our plants operating and our employees working," said Ron Zarrella, GM president for North American operations.

Monetary incentives such as discounts and rebates are the strongest motivator for shoppers, said Kurt Barnard of Barnard's Retail Trend Report, a forecasting firm in New Jersey.

Mr. Behravesh said incentives like those from the automakers will clearly work for the people who were planning to buy a car but had put it off. But he expects it will take two to three months before the effects of the terrorist attacks fully wear off and people go back to their "normal" spending behavior.

Other retail officials are more optimistic.

Discount retailers, such as Wal-Mart and Kmart, which haven't felt the blow of the softening economy as much as traditional department stores have, are seeing traffic and sales return to the way they were before Sept. 11, said Edie Clark, a spokeswoman for the International Mass Retail Association.

"The first two weeks [after the terrorist attacks] people were glued to their television sets and had this fascination with horror and terror," Mr. Barnard said. "That's not the mental [state] for a shopping spree. But that's gradually giving way to 'life still goes on.'"

"The only difference between now and before is that people will buy what they need, not on a whim or extravagantly," he said.

National Retail Federation officials agree.

"With a few notable exceptions, such as American flags, consumers are currently focusing on basics, buying out of necessity, not desire," said Tracy Mullin, NRF president and chief executive. "We expect consumer-spending patterns to begin to return to normal levels as the holiday season approaches."

There is no question that before the Sept. 11 terrorist attacks, the economy was slowing right along with retail spending. After Sept. 11, the NRF revised its forecast for fourth-quarter sales growth of general merchandise and apparel to 2.2 percent, compared to the previously forecasted 4.0 percent. NRF is also predicting 2001 holiday retail sales to increase 2.5 percent to 3.0 percent, compared to 5.3 percent sales growth in the 2000 holiday season.

Mr. Barnard, whose original forecast of a 2.5 percent increase in holiday sales remained unchanged after Sept. 11, says that by November "people will be desperately wanting to see cheer."

"We'll see a real backlash against all this, and people will flood to the stores," Mr. Barnard said.

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