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Flat sales? Merchants will take ’em

All things considered, the holidays weren't so bad for area retailers

The national press called the 2002 holiday shopping season the worst in 30 years, but the news wasn't quite so cheerless in Portland.

Retailers surveyed this month by the Portland Business Alliance reported earnings that were 'flat to maybe up 2 percent versus last year,' said Ashley Heichelbech, retail manager for the alliance.

Some retailers said they didn't do as well as in 2001, but others, particularly higher-end specialty stores, had 'phenomenal' sales, she said.

Pedestrian counts Ñ the number of people on the streets in downtown Ñ actually showed an increase this holiday season over last year. Revenues from the six Smart Park garages the alliance operates jumped 29 percent in November, though they stayed flat in December.

Chris Finks, the alliance's vice president of marketing, said that 'while we're not in love with flat numbers by any stretch of the imagination,' it was reassuring that the figures stayed even with last year, which reflected an uptick because of a marketing campaign aimed at getting people downtown.

'Given what the big picture of the economy is, I have to say it's OK,' Finks said.

'Portland is really very well positioned,' he said, pointing to the city's mix of strong independent retailers and big names such as Tiffany and Saks Fifth Avenue. 'Couple that with wonderful pedestrian ambience, phenomenal transportation and tax-free Ñ it really makes for very compelling marketing.'

The city's Shop Portland effort also is getting an enthusiastic reception from German tour operators, Finks said, who are linking it to Lufthansa German Airlines' inauguration this spring of direct flights from Frankfurt, Germany, to Portland International Airport.

On other fronts, Portland retailing is looking up Ñ and down. Nordstrom, a major downtown anchor, reported that sales in the five-week period ending Jan. 4 were 9.2 percent above the same period a year ago. Same-store sales Ñ the volume of business done at stores open a year or more Ñ increased 3.4 percent.

That's viewed as good news for the Seattle-based specialty department store, which is still trying to recover from a disastrous marketing shift a couple of years ago that alienated Nordstrom's core customers and kept them away from the stores.

Nordstrom, which has 143 stores in 27 states, also is implementing a new inventory control system, something critics said the company needed badly.

Wells Fargo Van Kasper retail analyst Jennifer Black, speaking last week at a meeting sponsored by the local chapter of the International Council of Shopping Centers, said numerous retailers cut back on inventory when the economy faltered after the terrorist attacks of Sept. 11, 2001.

Tighter inventory levels have had a favorable effect on retailers' operating margins, she said, noting that same-store sales figures often aren't as bad as they look 'because they have so much less inventory.'

May Department Stores Co., owner of another downtown retailer, Meier & Frank Co., continues to struggle. The St. Louis firm, which is the country's biggest department store chain, reported a 4.7 percent drop in same-store sales in December from 2001 numbers.

May, which operates 445 department stores under 11 names, cited the economy this fall when it pulled away from plans to refurbish its downtown Portland Meier & Frank flagship store.

What's the cure?

Black doesn't follow either May or Federated Department Stores, the country's other leading department store chain. But, like other analysts, she sees a dim future for both.

'These companies don't have help, you can't find merchandise, they all look the same; there's no differentiation,' she said. 'I think they're killing one another.'

Developing a unique merchandise identity would help immensely, Black said, but at present, 'I just don't see how it's going to get fixed. I think it could take years.'

Gauging how retail business will respond in the first quarter of 2003 also is a challenge.

In December, retail trade added 1,400 jobs in Portland Ñ about 1,200 jobs fewer than the average for the five previous Decembers, according to the Oregon Employment Department.

And in the last several days, what MSNBC business writer Martin Wolk called 'a swamp of war fears,' coupled with an already shaky economy, has taken a toll on the stock market and the U.S. dollar.

Future fears

Heichelbech shied away from making predictions about what's to come. 'It will be interesting, I think, in the next month or so in terms of the national news,' she said. 'Everyone, I think, is being very cautious.'

Several spring events, from Valentine's Day to school proms to Mother's Day, can be expected to punch up retail results, she said.

'It might be interesting to see whether jewelry does well, or whether people go to flowers and chocolates as more affordable,' Heichelbech said.

Consumers aren't alone in being cautious. Efforts to recruit more retailers to locate in downtown Portland have been dampened by the same 'wait and see' attitude.

Last year, city and business leaders returned from a first-ever marketing trip to the International Council of Shopping Centers' annual convention in Las Vegas exulting over the level of interest they'd found for the Rose City.

The interest remains, Heichelbech said, and Portland will send a delegation to the retail convention this May. But for a lot of developers and retailers, she said, 'expansion is not in their plans right now.'