Retailers enter a season of doubt

By Kathy McCabe, Globe Correspondent, 12/2/2001

AUGUS - Armed with discount coupons and sale fliers, consumers packed malls on the weekend after Thanksgiving, the traditional start of the all-important holiday shopping season.

The big questions: Will consumers empty their wallets? Or will retailers be left holding the bag?

It's anyone's guess, but with the nation's economy officially in recession, and consumer confidence on the wane, some economists predict a tough holiday season for retailers.

''Their bottom lines are certainly going to be hurt this year,'' said John Bitner, chief investment officer-chief economist at Eastern Bank in Lynn. ''Consumers in general, and this was the case even before the recession, have been shifting their patterns of shopping. They want discounts ... but retailers can only cut so far before they eat into profits.''

Elliot Winer, chief economist at the state Department of Employment and Training, said rising unemployment around the state, particularly in the Northeast region, will most certainly bring the Christmas blues to some retailers.

''It's not likely to be robust, particularly for high-end retailers. It seems like they may suffer more because people seem to be cutting back. All indications are that the discount stores, like Wal-Mart and Target, will do pretty well,'' Winer said.

Some consumers interviewed last weekend agreed, saying they found good value and plenty of merchandise at mass discounters. ''You have to learn how to find the deals,'' said Dolly Lavoie, 39, a single mother from Salem, who hit Wal-Mart in Salem bright and early the day after Thanksgiving.

Lavoie, whose children are ages 11 and 13, plans to cut her holiday spending by $300 this year, mostly because of the weakening economy. ''My rent is high. The older my kids get, the more expensive the things they want are. I have to watch my money this year,'' said Lavoie, a paraprofessional at a Salem public school.

Tammy Souliotis, 36, a mother of three from Peabody, also plans to tighten her purse strings this year. Her husband, who works in construction, recently was laid off for a month but has since been recalled.

She has seen her hours cut at the Radisson in Lowell, where she works as a banquet server, because of cancelled bookings. ''The economy is bad. A lot of people are getting laid off. Who knows when it will end?'' Souliotis said recently at Wal-Mart.

Some are worried about the long-term effect of the war in Afghanistan.''I've been very unsure of things since Sept. 11,'' said Renee Agri, 38, of Lynn, a mother of two. ''We can't even catch this man [Osama bin Laden]. That makes me very uneasy.''

Agri said she plans to cut her holiday spending to $400 this year, from $1,000 last year. ''The stock market is down, and people are getting laid off from their jobs. I have to hang on to a few dollars.''

But others said Sept. 11 could prompt them to spend more this Christmas. ''I won't fly,'' said Connie Johnson, 39, an information technology manager at Varian Semiconductor Equipment in Gloucester. ''I could end up spending a little more this year.''

Matt Lebrasseur, 18, of Lynn plans to break the bank this Christmas, his first with a full-time job. ''I'm patriotic,'' said Lebrasseur, who plans to spend at least $1,000 this Christmas. ''The president has told us to go out and spend money, and that's what I'm doing.''

Nationally, the economy is officially in recession, a leading group of economists said last week. Consumer confidence fell for the fifth straight month, according to the Conference Board, a New York-based firm.

Closer to home, sales of single-family homes in Massachusetts fell 4.1 percent in October, compared with October 2000. A spokesman for the Massachusetts Association of Realtors linked the decline to the state's troubled economy.

''It's a result, quite frankly, of the losses in the financial markets, particularly at the high end,'' said John Dulczewski, MAR spokesman. ''The issue of job security has discouraged first-time home buyers from the market.''

Locally, job cuts have been mounting since the spring and have only worsened since the Sept. 11 terrorist attacks.

Verizon in Middleton, long a steady local employer, cut 450 jobs when its yellow pages headquarters relocated to Dallas last May.

Varian Semiconductor Equipment Co., the largest private employer in Gloucester, cut 200 jobs in October because of a slowdown in the global computer chip market.

In Lynn, General Electric Co. plans to lay off at least 150 employees by the first of the year, because of declining orders for commercial jet engines since Sept. 11. Elsewhere, hundreds of airline personnel lost their jobs following the attacks, as did many Massport workers.

''What you see now is the northeastern part of the state not doing as well, compared to a year ago. I think part of that is because of the job losses in high-tech manufacturing. It has also been affected by the losses in travel and tourism and airline employment,'' Winer said.

Bitner agreed economic losses from Sept. 11 have hurt the economy. ''It really pushed the economy into contraction. All the data before that showed gradual improvement, in terms of new orders and consumer confidence. But 9-11 just wiped that out,'' he said.

The impact of the fallout on consumer spending this holiday season is uncertain.

''We have loyal customers,'' said Jerry Fleming, manager of Wal-Mart in Salem. ''This year we have more discounts than ever for them.''

Kathy McCabe can be reached by e-mail at kmccab@globe.com.

This story ran on page 1 of the Boston Globe's North Weekly section on 12/2/2001.
© Copyright 2001 Globe Newspaper Company.