The recession and high unemployment continued to take their toll of retail sales this Christmas, the most important period for merchandisers.
Chains such as Sears, Roebuck & Co., K mart Corp. and J.C. Penney that traditionally serve blue-collar workers--where unemployment is concentrated--reported small year-to-year sales increases in December.
By contrast, chains appealing to wealthier customers fared substantially better, according to reports released yesterday by many of the nation's giant retailers.
Sears, for example, said its December sales were only 2.9 percent higher than in December 1981, and K mart Corp. sales rose only 0.8 percent. Federated Department Stores, which owns trendy Bloomingdale's, reported a 13.4 percent sales increase last month, and Carter Hawley Hale Stores, which owns Neiman-Marcus, had a 9.3 percent sales gain.
Walter Loeb, who follows the retail industry for the big investment banking house Morgan Stanley & Co., said there was a "two-tier kind of shopping going on." He said that upper-middle-income and high-income individuals began shopping early and steadily during the Christmas season, but that "lower-income individuals used their last paycheck" before Christmas to buy presents.
Jeffrey Feiner--who follows the industry for Merrill Lynch Pierce Fenner & Smith Inc.--told the Associated Press that "December sales showed some minor improvement from the pace of the prior several months but still reflected the difficult economic conditions and the high level of unemployment."
Retailers, well aware of the unemployment rate of nearly 11 percent and the continuing severe recession, heavily discounted many products to lure consumers to their establishments. At many major stores, the 1982 pre-Christmas sales were as wide as the inventory-clearing promotions that retailers used to have immediately following the holiday.
Because of the heavy discounting, unit sales probably grew more than dollar sales.
But Loeb said that retailers' profits are likely to grow more than their sales. Despite heavy promotions, retailers were better positioned financially and with leaner inventories than in past years, he said.
Loeb, like other analysts, said he expects 1983 to be better for retailers as customers will increase their purchases because of lower inflation and an end to the recession. However, Loeb said buyers will continue to be price-conscious--and retailers will continue to offer discounts--for the first six months of the year. After that, customer confidence and, as a result, retail sales, will improve.