"Business as usual" is becoming a nostalgic memory for Washington merchants this year, as the normally stable District of Columbia marketplace turns topsy-turvy.
Going into the most critical season on the shopping calendar, local retailers are operating in what is, for Washington, almost a foreign environment.
The D.C. market has long been described as recession resistant and coolly competitive, an affluent and affable place to do business. For years incomes have been increasing as steadily as the federal budget, and the biggest threat to retail profits has been overstoring -- too many stores trying to cash in on a good thing.
Not any more. Not only has overstoring struck with a vengeance, flooding both suburban malls and the Georgetown retail district with vacant storefronts, but at the same time the federal budget has been cut and the growth in government payrolls curtailed.
On top of that, Washington retailers have their own difficulties to deal with:
Usually among the most profitable supermarkets in the country, Washington's food stores are struggling to recover from a four-month price war that wiped out their earnings.
Blue jeans are still the preeminant pants, but a pair of the biggest jeans chains in Washington hung it up recently.
The usual dominance of hometown Washington retailers is threatened not by competition from out of town, but by the acquisition of local firms by national companies. Drug Fair Inc. already has been taken over; Garfinckel, Brooks Brothers, Miller & Rhoads Inc. is about to be; Woodward & Lothrop is a likely target.
The impact of those takeovers on the Washington market is not yet clear, but food and clothing are likely to cost more as a result of what's happened recently in the supermarket and jeans businesses.
In both cases, consumers have been able to find bargains because of competition so intense that it could not continue.
Best-selling Levi's jeans have been advertised for as little as 50 cents a pair above their wholesale price in the four-way "jeans war" among Zippers, Pants Corral, The General Store and the Gap.
Now Zippers and The General Store are out of the fray.
Sidney Lewis Jr., owner of the 13 General Stores, abruptly closed 10 of them last weekend and moved all the merchandise into the three remaining locations for a mammoth liquidation sale.
Whether The General Store will remain in business after the closing-out sale, Lewis won't say.
The locally owned Zippers chain was sold earlier this year, and the Texas company that bought it quickly deemphasized the blue jean business in favor of higher priced, less competitive clothing.
Zippers' decision to trade its jeans for jumpers and chinos temporarily made the denim competition even tougher as that chain marked down much of its jeans inventory to move it out. The General Store's liquidation sale is expected to have a similar temporary effect.
What happens after that is unpredictable. Will the closing of The General Stores' 10 units lure Zippers back into jeans? With the most aggressive price cutters gone, will prices rise at local stores of the national Gap chain or Pants Corral, a subsidiary of Giant Food Inc.? Will Giant order Pants Corral into the same kind of aggressive price competition that decimated its grocery profits this summer?
Food prices dropped steadily for four months while Giant and Safeway stores tried to undercut not only each other but a batch of new discount food outlets.
Without declaring a truce in the food fight, the two chains have begun raising prices. How much grocery prices are going up will probably be evident when the local consumer price index is reported later this month.
After losing money in the latest quarterly period, Giant says it hopes to return to its "traditional profit level" of between 1 and 1.5 percent of sales. Locally, food profits have usually been on the high side in the industry, but earnings for the entire supermarket business have been depressed this year.
But if the competition between stores is slackening, the competition for stores by shopping center developers is getting tougher, particularly in Georgetown.
Georgetown's biggest shopping project -- and the largest enclosed center in the District of Columbia -- will open later this month at the intersection of Wisconsin Avenue and M Street NW. Called Georgetown Park, the three-level "shopping park" and attached residential community is a joint venture of Western Development Corp. and the Donohue Companies, two big Washingtion firms.
All but a handful of the nearly 100 shops will be filled when Georgetown Park opens, but there are almost that many other stores vacant in Georgetown.
Two blocks away, blank windows stare from the Prospect Place project that opened last summer. Developers claimed the Prospect shop complex would be filled up by Christmas, but that was last year.
Just as conspicuously lacking tenants is Fair Oaks, the multimillion-dollar mall opened in Fairfax County more than a year ago by the Taubman Company of Detroit. Fewer than half the small shops that link Fair Oaks' five anchor stores are occupied. Taubman's Lake Forest Mall in upper Montgomery County is slowly filling up after two years of operation, and merchants there say sales have improved.
But those two suburban projects, Georgetown and a host of strip centers with available storefronts contain enough vacancies to absorb a year or two of normal store growth.
Normal growth, however, may be more than merchants can count on. Reflecting the sluggish economy, retail sales have been very weak all over the country. August sales were up just 0.6 percent nationally.
Merchants are hoping to get some benefit from the federal income tax cuts that go into effect Oct. 1, but the reduction in withholding taxes will put only a few extra dollars a week into the hands of most wage earners. Even a $100,000-a-year family will get only $25 a week in added take-home pay.
More important to Washington retailers will be the raises given the 300,000 federal workers here. A 15.1 percent pay hike was recommended initially, but the administration wants to chop that to 4.8 percent.
That dramatic cut in the size of the raise would mean the difference between a spurt in local retail spending and a barely noticible blip on the cash register tape. Merchants say a 15 percent raise might have helped sales, but 4.8 percent is too little to matter.