A dim outlook for holiday sales

Southwest retailers finding creative ways to lure shoppers 

Debra Tekle has spent much of the holiday season gazing out the huge front windows of Urban Traveler’s new Hennepin Avenue & Lake Street store, watching people pass by.

On a recent Wednesday afternoon, signs boasting "super savings" stood next to miniature Christmas trees outside the door and hung everywhere inside, where hot tea and baked treats awaited customers, should any arrive.

"I can see the people and I always watch their reactions," said the 11-year employee of Urban Traveler, which specializes in luggage and other travel gear. "I try so hard to get people in here, especially at night."

The business is doing better than last year, but owner Willy VanDooijeweert said "that doesn’t mean we’re thrilled with the numbers. It just means we’re not in the same down trend as everyone else."

Some area businesses are performing well this season despite recession woes, but slow traffic is a reality at many, and the near future doesn’t look bright — retail spending this holiday shopping season is projected to be the bleakest it’s been in two decades.

A survey conducted by staff at the University of St. Thomas determined that the average household would spend $663 on holiday shopping, down from $751 forecasted last year. More than half of the survey respondents said they would spend less on gifts this year, and just 4 percent said they would spend more.

It doesn’t help that there are only four spending weekends this year between Thanksgiving and Christmas, but Southwest and Downtown retailers are working to draw people to the area. Gaviidae Common has free valet parking every Saturday and Sunday through Christmas (enter on 5th Street across from the light rail, or on 6th Street a half block east of Nicollet Mall). Macy’s opened at 5 a.m. on Black Friday, and promises to donate a dollar to the Make-A-Wish Foundation in exchange for every letter to Santa that the store receives. Downtown hotels like the Foshay are offering "shop ’till you drop" packages with gift cards and complimentary cocktails.

In Uptown, businesses are participating in a storefront-decorating contest, meant to make the area more festive and inviting for shoppers. The area’s most known shopping destination — Calhoun Square — is undergoing a major renovation and few stores are left there besides anchors and longtime tenants Kitchen Window, Bay Street Shoes and several restaurants. But the mall’s management is advertising that it is still open for business.

Further south, members of the Nicollet-East Harriet Business Association recently met to brainstorm strategies for getting through rough times, which included putting a greater emphasis on customer service.

Erica Marsden, co-owner of stationery and custom-print shop Paper Rock Scissor at 821 W. 43rd St., said business improved after dropping much of the retail operation about a year ago, when retail was already struggling for many businesses.

"It was January of this year that we decided to phase out most of our retail, and we’re glad we made that decision," she said.

Denny Magers, owner of Magers & Quinn Booksellers in Uptown, said his business is a bit stronger this year because of continually-improved inventory, hosting events such as book signings and the loss of neighborhood competition from Borders Books and Orr Books in recent years.

No Southwest-specific shopping predictions were available through the St Thomas survey, but nearly 7 percent of respondents said they planned to shop Downtown — the lowest percentage since 2003. Downtown shoppers peaked in 2004 at 12.7 percent, and the percentage has declined since then.

As for the Twin Cities as a whole, Dave Brennan, co-director of the University’s Institute for Retailing Excellence, said this is shaping up to be a tough season, particularly for smaller retailers and the region’s major malls.

"Going back and reviewing data, as far as total retail sales, they haven’t been as bleak as they were in October until going back to October 1986," Brennan said. "So we’re probably looking at the worst situation that we have had for at least two decades."

Instead of buying gifts in stores, more shoppers are heading online. Last year, shoppers planned to spend 19.3 percent of their money through catalogs or the Internet, and this year’s estimate climbed to 35.6 percent.

For shoppers who do brave the crowds and cold, the Mall of America is projected to be the most popular shopping center this year, followed by Rosedale, Southdale and Ridgedale.

Books are the most popular gift idea at the moment, followed by gift certificates, clothing and cash. Consumers are looking more favorably on video games this year, and they seem to be trending away from luxury gifts like jewelry and furniture.

Brennan said upscale retailers like Nordstrom, Neiman Marcus and Saks Fifth Avenue began to have trouble in September, and saw a very steep slide in October.

"Much of that is probably related to the stock market and financial meltdown that was going on during that month," Brennan said. "Don’t look for that to rebound to the same levels that it had enjoyed before."

The researchers anticipate that shoppers in the Twin Cities will collectively spend $832 million, down from spending predictions of $934 million last year.

Uptown to be a little darker this holiday season

Decorative lights that have become an expected part of Uptown’s holiday look won’t go up this season because of a budget shortfall within the city’s Uptown Special Service District (USSD) that provides them.

The cost of hanging and maintaining the lights combined with energy costs can total tens of thousands of dollars each year. The district had been over budget for several years before deciding to cut the lights entirely.

Area business owners — some who are having a hard time given the sluggish economy, construction of Calhoun Square and other factors — have had mixed reactions to the lack of lighting.

"I’m very upset about that, said VanDooijeweert. "It’s insane because what it does is it’s only adding to the doom and gloom in Uptown because it’s so dark."

Robert Sorenson, owner of Bobby Bead at 2831 hennepin Ave., said he didn’t think an Uptown without festive lights would keep holiday shoppers from the area.

"The lights have no real influence," he said.

The Uptown Association, which has organized window decorating contests in the past, did so again this year and made an extra push to get storeowners thinking festive because of the lighting issue.