LV holiday shopping outlook cautious after terrorism

Grace Leong

Wednesday, Nov. 21, 2001 | 10:49 a.m.

Amid industry predictions of slower retail sales growth this holiday season, some Las Vegas retailers and analysts are cautiously optimistic.

While they concur this year won't likely be the best retail season ever as the economic slowdown dampens consumer spending, they cite recent stock market gains and recoveries in foot traffic numbers and hotel occupancy rates as signs of rebounding consumer confidence since the Sept. 11 terrorist attacks.

John Knott, managing director in Las Vegas of real estate brokerage CB Richard Ellis, said the apparent successes in America's war against terrorism and stock market gains "reflect some of the optimism permeating America and should (hopefully) translate into a good holiday season."

"Yes, consumer confidence this holiday season is fragile. If something should happen again, it could knock us out. ... Two months ago people were scared and stopped buying. But people are getting over the emotional destruction of Sept. 11," he said.

Indeed, Friday's day-after-Thanksgiving sales, together with those from the next weekend, will be a key barometer of how much consumer confidence has recovered and what retailers can expect for the rest of the retail season, said Rodney Thanepohn, marketing director of the 1.2 million-square-foot Boulevard Mall on Maryland Parkway in Las Vegas.

"We're still extremely optimistic because foot traffic has returned as of mid-October and tourism numbers and occupancies are recovering," he said. "Holiday buying typically accounts for 25 percent of the mall's total annual sales. For the year, we're up 2 percent in sales so far. Annually, we get 3-5 percent sales growth."

He said the mall receives 15 percent to 20 percent of its business from tourists, but said a decline in tourism-driven sales is mitigated by steady buying from local residents.

George Weckstein, a retail supervisor with Paddock Pools Patios and Spas, a pool furniture and Christmas tree dealer, said he sees 5 to 7 percent growth in sales this holiday season, compared with 11 to12 percent growth in sales last year.

"We really didn't know what to expect after Sept. 11. We only got hurt during the second and third week of September when people stayed home and were glued to the TV sets. But we've recovered since then," he said. "From our conversations with customers, we get the feeling more of them will be staying home this Christmas rather than travelling, and will therefore be making more efforts to make their homes festive."

Michael Baker, a research director with New York-based International Council of Shopping Centers, is less optimistic.

"Foot traffic and sales have definitely returned since Sept. 11 but the question is, 'How far has it recovered?' " he said. "Will it recover to such an extent that it will be above last year's levels? We suspect it's still a little below last year."

"We're expecting a more challenging season than usual. There's still a wariness on the consumers' part to spend," Baker said. "People have the ability to spend but they haven't had the willingness to do so in past few months because of uncertainty in the job market and anxiety about what's going on with the world."

A shopper at Paddock Pools, who declined to be named, said he's spending less on holiday shopping this year because his company, a Las Vegas convention producer, cut salaries 10 percent after the attacks.

"Instead of buying consumer-type goods and shipping them to our relatives out of state this Christmas, we're probably just getting gift certificates," he said. "We usually spend $150 a year on shipping. Now we're just going to spend 34 cents on postage."

Baker sees a marginal 1 to 2 percent increase in retail sales nationwide this season with "some possibility for upside," compared with retail growth of close to 10 percent in 1999 and 5 percent last year.

"The consumer is getting much more focused on value rather than outright indulgence," Baker said.

"The retailers that are likely to do well are discount or specialty retailers like Wal-Mart, Kmart and Target. Consumers are more likely to be discretionary spenders, meaning, they can't not go to the supermarket but they can do without the extra car or the 10th skirt in the closet," he said.

But Baker acknowledged several factors supporting consumer spending like energy prices declining and more homeowners refinancing their mortgages because of the record low interest rates.