Monday, April 13, 2009

Retail sales declining as habits shift in a hard economy

By Mike Barajas

The Village Bakery & Café in Athens, OH, has seen sales decline as
customers start to spend less. Photo by Mike Barajas

In the past few months, Christine Hughes said she noticed fewer and fewer people buying brewed coffee at her restaurants. At first, Hughes thought maybe she was losing customers. In reality, she said, her customers’ habits were just starting to shift.

“We saw that people stopped buying as much brewed coffee, but then we noticed a lot more people buying beans in bulk,” said Hughes, 39, owner of The Village Bakery & Café and Della Zona Pizza & Gelato restaurants in Athens, OH. “I guess people are just brewing their own; it really does make sense,” she said.

Along with the economic downturn, Hughes said she’s seen her customers find ways to cut down on spending. “It’s not really so much whether or not they’re going to come in, but that when they do, they’re going to spend a little less than before,” Hughes said, estimating that sales at her restaurants from January through March of this year have dropped about five percent from the same period last year.

With a tough economy, massive job cuts and the threat of rising unemployment, shoppers all over the country seem to be cutting back. The most recent U.S. Census Bureau report estimates that sales for retail and food services in February of this year dropped 8.6 percent from last year.

The bureau also reported that the after-tax profits for major U.S. retail corporations in the fourth quarter of this year were the lowest of any quarter during the 2004 to 2008 period, down 26.8 percent from the same quarter last year. All numbers point to people shopping and spending less.

Andrew Lampela, 34, part owner of Haffa’s Records in Athens, OH, said he’s noticing a major upswing in people selling back their used records and movies, a sign that more people are becoming strapped for cash. Some, Lampela said, come in saying they need the extra money for rent, groceries or other necessities.

Lampela said he likes to think of music as one of those recession-proof items. “We’ve definitely noticed sales down a little bit, but luckily for us, I think people are willing to spend a little bit more on music than other things,” he said.

Automotive vehicle and parts dealers, however, took a big hit from last year, with February 2009 sales sliding 23.5 percent from the same month last year, according to the U.S. Census Bureau’s report.

Sandra Haggerty, 70, an associate professor of journalism at Ohio University, said that before the recession, she had wanted to buy a new Smart car to replace her 1998 Toyota, which racked up 300,000 miles over the years.

“Now I’m going to just let this car disintegrate before I buy a new one,” she said. “I just don’t want to be in debt right now.”

Buying a new car, Haggerty explained, just didn’t seem practical given the economic climate. “I think my habits have changed drastically, now I pay attention to every penny I spend,” she said.

“I know they tell people to spend to stimulate the economy, well, it’s not being stimulated with my money right now.”

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