Retail sales figures reported by three leading Washington-area companies in the past week present a confusing picture of consumer spending in metropolitan Washington.
On one hand, sales figures reported a week ago by Woodward & Lothrop Inc. indicate continued weakness in consumer spending at department stores. On the other hand, consumers appear to be spending more freely in other areas of the retail sector.
Hechinger, for example, continues to buck the trend in sluggish retail sales. The Landover-based, do-it-yourself home-improvement chain reported a 16 percent increase in sales for the recent quarter and a hefty 37 percent gain in profits.
More recently, Giant Food Inc., the area's biggest food chain, said second-quarter sales increased 12.3 percent, giving it a profit-to-sales ratio of more than 2 percent, twice the industry's standard for profitability.
Leonard Kolodny, manager of the Greater Washington Board of Trade's retail bureau equates retail sales to a roller coaster. "As the economy falters, retail sales fall," he said.
But as the sales figures reported by Woodies, Hechinger and Giant show, that doesn't necessarily apply to all retail segments. Market factors unrelated to shifts in the economy have had as much impact on sales as the recession.
Unlike nonfood retailers, supermarket chains generally aren't affected by consumer resistance to nonessential purchases. "People have to eat," observed a food industry official. "They may make their dollars go further, but they are still spending dollars" in supermarkets, the official noted.
But Giant's sales and profits have climbed also because of less competition in the marketplace.
"You have to realize we've had a number of closings [by competitors] in the Baltimore-Washington area," a Giant official pointed out. "That means more customers for somebody."
Giant added to its lead in market share considerably after triggering a price war last spring as part of its aggressive merchandising program.
Hechinger traditionally bucks downward trends in the economy by reporting higher sales.
"We're not so cocky as to say we're recession-proof, but we're recession-resistant," says Hechinger Chairman Richard England.
Actually, when housing starts decline and sales of existing homes fall, Hechinger's sales tend to drop also. England says that is offset, however, "by a desire by people with families to fix up their old houses."
Nonetheless, England said he is hopeful that interest rates will continue to decline and that the real estate industry will soon rebound.
Although general merchandise retail sales have declined, several underlying factors have combined to exacerbate an economic downturn fueled by unemployment and high interest rates.
"A feeling of insecurity tied in with unusual high unemployment, and people just stopped buying," declared a retail executive.
Kolodny offered another theory that is shared by many retailers who expressed their concerns privately. The problem for department and specialty store retailers, Kolodny believes, is that metropolitan Washington is "temporarily 'overstored.'"
That term surfaced here in the late '70s when Washington's appeal as the nation's fourth largest retail market began to attract more national retail chains. As a result, rapid expansion of retail outlets significantly altered competition in the marketplace, several retailers have since acknowledged.
Now that the market is 'overstored,' Kolodny ventured, "the pie is being cut in smaller pieces and it's having its impact."
The modest sales gain by Woodies reflects what is happening throughout the general merchandise segment, Kolodny said. Although he is prevented from disclosing sales figures reported by Board of Trade members, Kolodny said his records "don't indicate sales were up 5 percent" in the recent quarter.
"I think we have a retail glut," he said, comparing the situation with that in the office rental market here.
"By and large, since the beginning of the year, we've seen nothing but spotty sales," Kolodny continued. "They're softer than I have ever seen."
Sales in downtown Washington "surprisingly have edged up a bit" in the past couple of weeks, according to Kolodny. On the other hand, there is little indication that back-to-school sales have been as strong as expected.
Meanwhile, retailers are optimistic that sales will pick up as economic indicators show improvement.
But it appears that their ability to deal with other factors that are likely to shape the marketplace in the '80s is equally as important as learning how to cope with recessions.