Many Washington area retailers are singing the election-year blues.
There isn't total harmony, however, because a number of major businesses are doing quite well. At worst, overall sales are flat and growth on a large scale has ended for most stores.
But you can understand what the blues singers are crying about at many of the smaller shopping centers and some larger malls in the area, where there are empty and boarded-up store sites recently vacated by failed businesses or still waiting for first tenants.
Huquette Sriqui, co-owner of the Plants Alive store-in-a-carousel at the Bethesda Square shopping center off Old Georgetown Road in Bethesda, sat with few customers to attend one day last week, after a quiet winter when business disappeared, (partly because of parking garage construction next door that eliminated a parking lot). Her "going out of business" sign riled some shop owners in the mall, where there are half a dozen vacant shops.
A health food store, restaurant, children's clothing and antiques stores all have closed there in the past year but remaining stores still reported strong business, including an ice-cream parlor, book store, the K-B Baronet theaters and a tennis teaching center. If anything, the Bethesda Square situation shows that individual stores can be magnets for their specific goods and services but that disposable income has been curtailed enough to limit impulse shopping.
There is evidence of retailers' concern in store advertising in the newspapers and on radio or television. The hard sell is in, with heavy promotions of sale merchandise.
Customers may note that the selling seasons have been changed dramatically, partly because of what one local retailer described as the "Mount St. Helens of the Carter administration" -- the March 14 package of credit restraints that was followed by a $21 billion drop in durable goods sales over three months.
Since then, with some substantial exceptions, retailers have been scrambling to keep sales volume up and to retain their share of the marketplace, even if it means a temporary reduction in profitability.
to move inventories, store managers have been slashiing prices. Women's shoes that department stores normally place on sale during the summer got reduced price tickets on May 1. Summer clothing and home furnishings sales already are in progress at such stores as Raleigh (25 percent to 33 percent off on women's fashion), Lewis & Thos. Saltz (one-third off), Woodward & Lothrop ($9.25 Fieldcrest bath towels for $8.29, for example), W. & J. Sloane (20 to 50 percent off on selected furniture and furnishings) and the Hecht Co. ($1,000 Fisher stereo system for $699.99).
Martha Henderson, of Bethesda, is typical of shoppers in today's tough market. At the uncrowded White Flint Mall on Rockville Pike last week, she was moving from store to store looking for sale merchandise. "I found some shirts for my husband on sale at Lord & Taylor, $12.99 compared with $20.00 usually, and Salvatore Ferragamo shoes at I.Magnin that were cut by a third. I really wanted them weeks ago but decided I couldn't afford them. This is a good buy," she said.
Three-year-old White Flint, one of the nation's most unusual retail malls with its affluent orientation, today is 94 percent occupied. Despite a turnover in stores, occupancy and business levels are two years ahead of projections.
but some smaller firms have not been able to survive at White Flint. Although major stores there do good business, "they've got a real problem in times like these," said one retailer. "Everything they sell represents the upper end of merchandise. There is no mix from the price point of view, such as at Tysons Corner Center which has everything."
Theodore Lerner, whose firm developed White Flint, Tysons Corner Center, Wheaton Plaza and Landover Mall, said last week that the malls generally are maintaining the solid business they have had. But with "people driving less, using less gas, we won't get the substantial growth factor this year.But we are doing better than I'd anticipated and better than many parts of the nation." Lerner also predicted strong fall and Christmas seasons for area retailers.
Lerner noted that "in all malls over the years we have lost a number (of small retailers) because of a lack of capital or inability to reach the market." What happened in recent months was that many smaller businesses could not afford to borrow money at 22 percent to buy merchandise.
Looking ahead, shoppers shouldn't be too surprised when they see winter wool goods placed on the shelves in a matter of weeks. Retailers are ordering a wide variety of all types of goods -- while applying great caution to the volume purchased -- to be ready for any occasion.
It's not that they are worried about the prospect of Ronald Reagan replacing Jimmy Carter among their more affluent customers. More important at the moment is a lack-luster selling environment clouded by the same economic uncertainties and credit control questions that are affecting retail sales across the country.
"It is more difficult now than it has been for a long period of time to predict the future," says Woodies Chairman Edwin Hoffman. "Prices have not increased sufficiently to offset rising operating expenses and discretionary spending levels continue to decline."
Partly because Woodies aims to maintain its market share here -- the company claims that its share actually increased last year by the largest amount in a decade, but has provided no data to support the asertion -- profits have taken a beating. In the first fiscal quarter this year, sales advanced to $65.4 million -- a 6.6 percent advance about in line with price increases.
But profits declined by 53 percent, the largest quarterly declines in Woodies' 100-year history, to $537,000 (21 cents a share) from $1.1 million (47 cents) last year, reflecting price cuts and sales to keep on selling with lower profit margins.
In addition, Washington retailers have to cope with a particular malaise that recurs with painful regularity every time this nation faces the prospect of a change in national administrations, which Hoffman said "invariably adds to the uncertainty of the consumer in the nation's capital."
Leonard Kolodny, manager of the Greater Washington Board of Trade's retail bureau and the man who keeps the best (and only) set of books in this town on sales volume at the area's general merchandise retailers, said presidential elections are "a liability every four years."
"Retail sales in the greater D.C. area always are off, with uncertainty about who will be the leader, changes in government, that lasts until just before the inauguration," he said last week, studying recent sales figures here.
But Washington retail activity has not been as bad as might be expected. There is evidence of sluggishness, of a sales growth so slow that it barely keeps even with inflation in prices, of reduced retail employment, of reduced profits. But there is no evidence of recession, or a substantial decline in sales.
During the first three months of the year, for example, sales at department stores throughout metropolitan Washington were up 8 percent over the same period last year to $227 million. Large downtown Washington department store retailers fared even better, apparently from increased subway traffic, as sales in the first three months jumped by 14 percent.
And all area retailers (including the depressed auto dealers, grocery stores and restaurants) posted sales in January and February of $2.28 billion, a healthy gain of more than 10 percent from the same months in 1979.
"Sales were fairly good from Jan. 1 through March 14," said the Board of Trade's Kolodny. "There was no serious snow like in 1979, and it was a good comeback."
At the lower end of merchandise pricing, where typical customers have less disposable income, sales continue to be down. The "people are doing less buying," Kolodny added.
But the government's credit restraints did have an impact. Easter also came on the first Sunday in April, and after Easter selling was over, retailers were looking at empty stores. Although little information of a specific nature is available yet, area retailers say April was one of the worst months on record. Area retail employment -- the third-largest job sector after government and services -- had declined by April to 229,200 from 234,000 a year ago, after several years of steady growth.
In May there were some slight gains and business people said last week that, in the past two weeks, they saw the first signs that consumer buying interest has been born again.
"Walk-in traffic has been down, but builders, decorators and mail-order business has been good, and there has been a pickup in traffic in the past two weeks," said Charles Danner, owner of the Blair Lighting fixtures store in Georgetown.
"I've really got no complaints," said Rich's Shoe President Frank Rich, whose store on the F Street Mall in downtown Washington has been booming.
In a report last week, the Metropolitan Washington Council of Governments noted that area retail sales declined by $9 million or 0.8 percent from last October through February, but sales normally are down in the early months of the year after the Christmas selling period ends. COG reported that a large part of the decrease was for general merchandise, apparel and furniture sales that account for a quarter of all area retail volume.
Some retail sectors have experienced no setback, however. The Hechinger Co. chain of retail home goods, hardware and garden stores, for example, said sales rose 23 percent in the quarter ended May 3 while profits climbed 42 percent to $1.2 million (30 cents a share) from $864,000 (21 cents).
President John Hechinger said in an interview that there has been a "little bit of recognition of softness" at stores in central Pennsylvania, but that business continues strong in the Washington area. The Pennsylvania situation may reflect a later gardening season there, he added.
At Britches, where the men's fashion and outdoor merchandise on sale is supposed to be of a postponable nature, President Rick Hindin has a similar success story. Sales rose 30 percent in the year ended Feb. 28 and currently are running 32 percent ahead of last year, comparing to stores this year that were open in 1979. (A new outdoor store opens in August at Columbia Mall).
For example, Peoples Drug Stores President Sheldon Fantle says that the "last half of 1980 does not appear to be a time in which we will be experiencing economic growth. While lower interest rates may improve the situation temporarily, it is difficult to see the light at the end of the tunnel," he said in response to a survey conducted by Ehrlich, Manes & Associates, a Bethesda advertising agency.
Still, Fantle said last week that Peoples expects to report higher sales and profits in the year ending Sept. 27 by emphasizing home and self-use products. "Peoples is well positioned through control of inventory, diligent and continuous expense controls and expansion of our financial base," he said.
Washington economist Michael Evans says the recent decline in overall retail sales activity indicates that consumers "are finally backing away from their collective brush with bankruptcy and returning to more normal behavior." With the back of inflation broken, at least temporarily, "the phenomenon of 'buy now because it will cost more later' is also absent from today's consumer decisions," he added.
Evans has forecast that consumer spending in real terms will be higher in May than in April and will continue to move up in June. All components of consumer spending, even autos, will post increases in each of the last two quarters of the year, despite an unemployment rate which will average 8.2 percent in the third quarter and 8.5 percent in the fourth quarter nationwide, Evans predicted.