The cash registers of America's merchants are ringing up more than the usual back-to-school blue jeans and early Christmas presents these days. The computerized sales tickets all too often read: recession.
Except at those businesses that tend to prosper perversly in hard times -- like do-it-yourself home centers -- retail sales are soft, profits are down and prospects for the critical final quarter of the year are as bleak as they've been in four or five years.
"Many retailers have already begun to prepare themselves for a soft Christmas season," Merrill Lynch, Pierce Fenner & Smith retail maven Jeffrey Feiner observed in his latest look at retail prospects.
When you factor out the false growth attributable to 11-percent-a-year inflation, retail sales of general merchandise, apparel and furniture -- the merchandise sold by department stores and their competitors -- are down this year and the drop "was as sharp as the worst five-month drop in real retail sales in the 1973-75 recession," the Merrill Lynch analyst noted.
Sears, Roebuck & Co., which still is struggling with a change in market strategy that has depressed its sales for months, reported volume was off about 0.5 percent in the latest monthly report. Even the fastest-growing retailers, K mart Corp. and F. W. Woolworth showed gains of only 12.8 percent and 13.2 percent, barely more than the inflationary increase despite the opening of several more stores.
The national trend mirrors the local picture. Sales of Woodward & Lothrop -- Washington's biggest department store chain -- were up 9.4 percent in the latest quarter, but profits fell from $2 million to $928.000.
Woodies is probably the best single indicator of the Washington retail market, although Merril Lynch notes that the chain's sales -- $271 million last year -- are not increasing as fast as the market is growing and Woodies is losing part of its market share to Hecht's. As a subsidiary of the May Department Stores Co. of St. Louis, Hecht's sales are not made public, but analysts estimate the total at $240 million, not counting the stores in Baltimore.
Retail competition in the Washington area is a little less fierce this year than last because no new major malls are opening. Last year, the newly opened Lake Forest Mall in Gaithersburg lured shoppers away from Montgomery Mall and other Rockville-area stores, and I. Magnin's first season at White Flint hurt established high-end retailers, including Bloomingdales and Neiman-Marcus.
The saturation level, which some merchants feared last fall was approaching the point of "over-storing," will remain where it is until 1980, when the Georgetown Park complex is to be completed at the intersection of Wisconsin and M Streets NW, and the Fair Oaks Mall opens in Fairfax near the intersection of I-66 and Route 50.
The absence of new malls doesn't mean there will be no new stores, and the newest entrants to the Washington market illustrate the strengths of the local retail climate.
At Tyson's Corner, Lewis & Thos. Saltz recently opened its fifth store, catering mostly to men who don't worry about how much clothes cost, while downtown Dash's Designer is preparing to open a fourth shop based on a price promotion strategy.
Since he switched from selling jeans and polyester shirts to designer men's wear at discount prices, John Dashtara has built a chain that he says will do close to $5 million in business this year. The F Street, Georgetown and Tyson's Corner Dash's will be joined next month by a store at 1111 19th St. NW.
The new Dash's is across the street from T. H. Mandy, the flourishing women's sportswear discount outlet that is local entrepreneur Tave Kaufman's answer to Loehmans.
With a waterfall, warm wood paneling and glistening chrome fixtures, Dash's is a long way from pipe racks, but the customer who prowls Dash's for a hot price on a Pierre Cardin suit is not the same buyer who stops into Saltz's to try on an Oxxford.
The Saltz stores are the nation's largest sellers of Oxxford suits, which are the most expensive men's line made in America. Since Saltz President Stanley Rosensweig and his partners bought the 43-year-old chain last year, they have opened new stores at White Flint and Tysons, selling the same subtle style the Saltz brothers sold downtown.
While Dash's Designer and the Saltz stores are prospering by targeting specialized segments of the market, broader-range retailers face more difficult times in the next few months.
Because their customers are somewhat more affluent than those who shop in discount stores, department stores generally weather recessions better than merchants whose goods are lower-priced. Discounters usually benefit a little from shoppers "trading down" to cheaper items to save money, but that tends to be more than offset by the loss of purchasing power among traditional discount customers.
General merchandise sales across the board are expected to be hurt seriously during this recession, perhaps worse than in 1974 and 1975 because of the brutal impact of inflation on energy costs.
Soaring gasoline prices and long lines at the service stations not only cancelled vacations this summer, they also cut into the bathing suit business and curtailed leisure-time spending in general.
Families facing a 50 percent or 100 percent increase in their home heating oil bills this fall are holding back on other expenses. Sales of appliances and furniture are being hampered by the decline in housing starts and high mortgage rates, both of which mean fewer familes are moving into new households.
The only obvious beneficiary or the recession in the Washington area is the Hechinger home center chain. Slowing home construction usually means people will be spending more to fix up their old place. When a recession tightens belts, homeowners who ordinarily would call a plumber or a painter turn into do-it-yourselfers. As a result, Hechinger's sales were up 29 percent in the latest quarter as profits increased 69 percent.