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Retail
Message from Jim Mcconoughey
The Peoria Area Chamber of Commerce, along with The Heartland Partnership continue our commitment to making sure you know what's happening with our national and local economy. As we have told you in weeks' past, The Peoria Area Chamber and The Heartland Partnership have teamed up with economists from Bradley University and leaders from seven different industries to keep our finger on the pulse of what's happening here at home. For the next few weeks we'll be taking an indepth look at each of the 'Big 7' industries. They are retail, financial, auto/durable goods, healthcare, housing/real estate, manufacturing and development. We will share with you what industry representatives have to say about their businesses.
In this week's Economic Climate E-Newsletter we are taking a look at retail. We hear the national numbers and it sounds like the sky is falling and stores should be closing up shop all over the country. But they're not! National sales were not as great this holiday season as years past but that doesn't mean people aren't shopping. Our local retail industry is surviving and in some cases it's thriving.
Many of our local businesses are successful because they planned ahead when they saw these economic troubles coming. The Midwest is known for having conservative business practices and this has tremendously helped our businesses to withstand the peaks and valleys of the economy. Local businesses also have an understanding of this regional market and customer base, that is one more reason why our retail sector hasn't been as negatively impacted as other regions.
Click here to listen to Jim McConoughey discuss the myths of the retail economic climate.
Click here to listen to Jim McConoughey on the Stimulus Package.
“The Economic Situation:
A National Overview and Local Update”
The National Retail Federation forecasted sales for the 2008 holiday season to rise just over two percent to $470 billion. This gain would fall well below the ten-year average of just over four percent holiday sales growth and would represent the slowest growth since 2002.
NRF Chief Economist Rosalind Wells said, "The current financial pressures and a lack of confidence in the economy will force shoppers to be very conservative with their holiday spending." He expected consumers to be frugal this season and less willing to splurge on discretionary items. Local retailers say their customers seem to have less disposable income and they are being more cautious about how they spend it, but while they may be putting off those big ticket items, they're still spending money.
Dr. Joshua Lewer, Bradley University economist, said if you look back to ‘Black Friday’ sales were up 3-5% compared to this time last year. There were lines at local stores on 'Black Friday' as people filled their shopping carts with holiday items.
Bob Woolsey from Jones Bros. Jewelers said things are different in Peoria and people are spending money. “Our business continues to be vibrant and we are excited about the growth possibilities for the upcoming year.”
Woolsey has several retail tenants and he said they seem to be in the same boat. “5 Senses Spa and Salon is ahead and busy. Peoria Satellite continues to have a full book of business and Shermans is expanding their local operation. In Peoria, things are different and people are spending money.” He used restaurants as an example of how things are better here saying "You can't go out on a Friday or Saturday night for dinner without a reservation. You have to wait in line to get a table. That's proof that people are going out and spending money."
Click here to listen to Bob Woolsey's take on the retail economic climate.
Tom Weigand, owner of UFS on Adams Street in Peoria, said “So far, so good” for his business. While he admits business is not something to shout from the mountain tops about, UFS is doing comparable to last year and with the downturn in the economy that’s good news. Wiegand and Woolsey said their 2008 customer count was about the same as 2007.
National economists say there is a shift in the way people shop. It’s believed that people are turning to more moderately priced or discount stores instead of higher end stores. Wiegand says he can’t necessarily say that’s the case, but he has noticed people are looking for deals now more than ever. “Customers are looking for deals and we have them. They want to stretch their dollars and they know they can do that here.” Also on the topic of finding deals, Wiegand says “This economic situation has created an opportunity for corporate buyers to find great deals which means more merchandise available for customers. Since we’re finding the merchandise at a deal we can sell it for a deal.”
Wiegand believes that this area has its peaks and valleys just like everywhere else. “We have been on a high for a while. Right now we are in a valley but we’ll come out of it.” He reminds his customers to remain optimistic and be patient. Both Wiegand and Woolsey said customers seemed to be in good spirits and upbeat this holiday season.
Click here to listen to Pierre Serafin, President, UFS speak about the retail economic climate.
A message from Dr. Joshua J. Lewer
"An Overview of the Retail Sector"
The retail and food services sector is an important segment in the overall economy. Retail sales provide economists with information about consumer confidence and overall health of the economy.
In 2008, national retail sales have lagged below normal trends. Several factors played a role in weak sales last year, including (1) the financial collapse, (2) the surge in commodity and energy prices, (3) the losses in jobs, and (4) the historical low consumer confidence.
Let's get to the numbers. The U.S. Census Bureau estimates retail and food services sales for November ($356 billion) to be roughly 1.8% lower than they were in October, and year-over-year sales to be down about 4.5 percent from the same period a year ago. For more details, click here.
Here in the Peoria tri-county region, we have started to see what other areas of the country have seen for some time now...a slowing in retail sales, primarily in the durable goods (furniture, etc.) category. Perhaps some good news is that the initial December consumer confidence levels for the region seem to be somewhat stationary.
Since the retail sector and overall economic activity are so closely related, it would seem reasonable to suggest that a rebound in the retail sector will not occur until sometime in the second half of 2009.
Click here to listen to Dr. Josh Lewer discuss the economic climate of the retail sector.
January 6, 2009