- The Washington Times - Monday, November 18, 2002

NEW YORK
This holiday season, retailers might have to take a crash course in psychology to analyze shoppers like Barbara Kalunian. The 47-year-old Manhattan resident, nervous about her finances after taking a big pay cut, has pulled back on her spending. But she's not hibernating she'll shop when she feels inspired.
"I'll go on a shopping spree, and then I will become a miser for a couple of weeks," said Miss Kalunian, a public relations executive, who recently spent a total of $250 on discounted sweaters at the Gap for holiday presents, saving about $750.
Such spending behavior among consumers like Miss Kalunian is making it hard for merchants to figure out which merchandise and trends will turn shoppers on this season. Job jitters, the prospect of war in Iraq and declining 401(k) accounts are all weighing on consumers, whose confidence has dropped to nine-year lows. And yet, they're not completely depressed.
That has meant erratic sales for many retailers this year and made the outlook for the Christmas season a little murky. Apparel sales for the most part have been sluggish, but merchants report DVD players and digital cameras remain popular with consumers, and are expected to be big hits again this season.
While $8,000 plasma flat-screen TVs might be considered too pricey in an uncertain economy, Sears, Roebuck and Co. reports sales are beating expectations. At the same time, Sears is struggling with other big-ticket items like home appliances and jewelry, and Circuit City Stores Inc. recently warned of a larger-than-expected third-quarter loss because of disappointing sales of digital satellite systems and wireless communications.
"Consumers are in a changed state at the moment," said Ed Keller, chief executive officer of RoperASW, a New York-based market-research firm, who believes corporate-accounting scandals in particular have really spooked consumers.
"They're figuring out what is really important and getting rid of fringe items. They will continue to buy certain new technology products and instead of buying three or four expensive items, it may go down to one or two this year."
In fact, Miss Kalunian, who plans to spend $1,000 on holiday gifts half of what she spent last year concedes she's pickier. While big discounts appeal to her, she isn't interested in a bunch of marked-down fashions that look passe. She also wants the latest technology, but is willing to wait until prices drop.
"I want a good deal, though it doesn't have to be the best deal since I don't have a lot of time to shop," she added. "I have become more practical, too. I don't want anything that is too decadent."
Retailers have watched their sales rise and fall throughout this year. October's results were much better than expected, but were proof that retailers just don't know what to expect from consumers at this point.
Even within a particular month, sales are inconsistent from one week to another, said Michael P. Niemira, vice president of Bank of Tokyo-Mitsubishi Ltd. He was heartened that some retailers reported that a good part of October's business particularly in apparel came at regular prices.
Britt Beemer, chairman of America's Research Group, said, "Consumers are throwing more curveballs than ever before because there is some behavior that doesn't make sense, and you have to stand back."
To spur sales, retailers are experimenting with new strategies in response to consumers' shopping patterns over the past couple of months.
Upscale retailer Bergdorf Goodman, which found that its customers were buying fewer luxury basics and more novelty items, is focusing more on merchandise like $46,000 Franck Mueller watches.
"When people are spending, they are buying unique items," said Robert Burke, vice president of fashion.
But more stores are placing inexpensive impulse items near the cash register, borrowing a strategy from discounters. Saks Inc.'s traditional department store divisions are adding accessories near the registers in apparel departments, while Brookstone Inc. features items like $30 clocks.
"We felt this was an opportunity to add more stocking stuffers," said Michael Anthony, president, chairman and CEO of Brookstone.
"We know that people are fighting hard to hang on to their bucks."


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