Retail: Central Mass. Retailers Prepare For The Worst
Local store owners report slow sales
If there's one thing that people cut back on when the economy gets turbulent, local retailers agree, it's shopping.
So as various markets have struggled to right themselves in this first decade of the new millennium, it's been harder and harder to get registers dinging, according to area merchants - and that will undoubtedly continue into 2008.
"Every year, (sales are) a little bit less than the year before," said Bruce Dyer, owner and manager of Walter Dyer Is Leather in Framingham. "I don't see much of a change. I don't see it getting better immediately."
Indeed, overall sales have remained relatively dormant: According to Swampscott-based market research company Retail Metrics LLC, average monthly same-store sales - i.e. retailers that have been open for more than one year - grew by just 2.7 percent in 2007, a decline of a full point from 3.7 percent in 2006.
To retain sales in the coming year, then, local retailers recognize that they have to be diligent with marketing, promotions, the Internet and - many stress this most - customer service.
"In the end, it always comes down to product offerings and service," said Ken Perkins, president of Retail Metrics.
And, most often, price. In 2008, the best sectors will continue to be price-value retailers, discount and dollar stores and wholesale clubs, according to Robert Sheehan, vice president of research at Keypoint Partners, a Burlington-based commercial real estate management and brokerage firm.
That's as long as housing prices don't improve and gas prices stay high and uncertain, he said. Home improvement and furniture stores will also remain under pressure in those circumstances.
"Consumers are going to be tightening their belts," said Sheehan. "They're not going to want to pay full price."
Still, because this year has been so soft, there might be a slight increase in sales in 2008, Sheehan noted. Next year being an election year might also add some stability to the economy, he added.
Jim Devereux, owner and operator of Oakwood Farm Christmas Barn in Spencer.Credit Crunch
Small retailers agreed that things won't be completely destitute.
"We still make a living," said Jim Devereux, owner and operator of Oakwood Farm Christmas Barn in Spencer. "But every year it just gets a little bit harder."
Devereux described retail as "wonderful" in the 1990s. But that ended with the century change - although he didn't necessarily attribute that to 9/11. "A lot of people are just strapped," he said. "They have a lot of expenses."
Besides the economy, some blame underwhelming sales on tightened credit standards resulting from the subprime mortgage meltdown. Perkins explained that banks are looking for people with "airtight" credit with "no blemishes."
"It's unlikely that credit standards are going to be loosened anytime soon," he said. "That's going to have a depressing affect on consumer spending."
As for apparel stores, the fashion industry has been uninspired recently, and simply hasn't provided any "must-have" lines. "There's just no fashion buzz right now," Perkins said.
For niche novelty outlets like the Christmas Barn, meanwhile, there's been a struggle to wrangle a new generation of knickknack collectors. Devereux described the older generation and the boomers as "maxed out" with things they don't need - some have even tried to sell items back to him. The younger generation, similarly, isn't as interested in novelty items.
"It's a completely different world," he said.
And an uncertain one, for some. "It's a big question mark," said George Boulgarian, co-owner of George's Fine Jewelers in Leominster, admitting that sales have especially been a challenge for jewelry because it's a luxury item.
"I don't know where it's going," he said of the industry. "I'm curious, I'm afraid."
But such ambiguity might be unclouded by a boost in the coming years from several retail development projects, according to Sheehan. That includes a 575,000-square-foot Loop Project now underway near the intersection of routes 9 and 20 in Northborough, which will encompass both big box and smaller shops; the Natick Collection, which opened its 550,000-square-foot expansion with a Nordstrom and a Neiman Marcus in September; and Bay State Commons in Westborough, which includes 350,000 square feet of restaurants, stores, a fitness center and 2.5 acre park and common.
For MetroWest retailers, the hope is that more high-tech companies will also settle in the area and bring in more jobs. Dyer noted that many previously occupied office buildings now sit vacant and there just aren't as many people around.
Filling Up
In Worcester, meanwhile, many merchants await the much-anticipated CitySquare project.
"Everyone's banking on that," said Andre Thibeault, president of Lujon Men's Clothes Inc., in Worcester. "We need more quality stores downtown to bring people down here."
Nevertheless, he's been able to thrive; his business is up 30 percent from last year. Still, he noted, experiences have been different for everyone. "Some people are doing OK now, and some are complaining," he said.
What will continue to differentiate the two in coming years is the Internet. Retailers, as well as industry experts, say embracing a web site and online sales will be crucial.
"The Internet will continue to grow for the foreseeable future for retail sales," he said.
Taryn Plumb is a freelance writer based in Worcester.
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