By Athena Cao
Santa Claus is coming to town – and Lexington retailers hope shoppers will come, too.
National retail organizations forecast sales in the coming holiday season to rise about 4 percent, higher than last year’s 3.1 percent. But some local merchants aren’t as optimistic.
“You never know, [holiday sales] depend on how many people we can keep in town,” said Al Carter, owner of Alvin-Dennis Inc., a clothing store on West Washington Street.
Optimism on the national level is based on promising signals of the U.S. economy’s strength. The unemployment rate dropped to 5.8 percent this month from 7.2 percent last November, real GDP grew 3.5 percent in the third quarter and the Conference Board’s Consumer Confidence Index jumped to 94.5 from 89 in September.
On top of that, oil prices are below $80 a barrel, the lowest they have been for the past five Novembers. A gallon of gasoline costs 10 percent less than it did at this time last year.
Economists say falling fuel prices are like a tax cut for consumers because they leave more money for discretionary spending. Yet some local merchants worry that lower prices at the gas pump could just encourage consumers to drive out of town to shop.
Eddie Clowser, owner of Hess & Co. Jewelers on South Main Street, said his store achieved its biggest surge in sales when gas prices rose above $4 a gallon in 2006, which kept consumers in town.
“When it’s difficult, dangerous or expensive, people will stay closer to home – so it’s a financial security along with a physical security,” Clowser said of external factors that influence sales, including snow and gas prices.
With its population consisting mostly of college students, professors and college staff, Lexington doesn’t have its own shopping center. Even Wal-Mart is in Rockbridge County.
The online threat
Many retailers in small towns like Lexington are only brick-and-mortar stores, with little or no online presence. That might be worrisome, considering that the National Retail Federation says 56 percent of holiday shoppers this year expect to do at least part of their holiday shopping online.
David Eakin, a sales representative with Rockbridge Music on North Main Street, finds it hard to compete with Amazon’s low pricing.
“For us, it’s a little bit of a struggle to meet that price that [customers] get online,” Eakin said.
Ginny Parker, co-owner of Baby’s First Gifts on South Main Street, says she feels the same way.
“Amazon hurts us, period,” she said. “I’ve had people drive from West Virginia, or even North Carolina, and come look at [diaper bags], and turn around and tell me they’re going home so they can order them online.”
A sales associate at Books & Co. … Toys, too! on Nelson Street sees the online competition differently and doesn’t think it will hurt sales too much this Christmas.
“People tell us it’s maybe $3 more to buy here,” said Cindi Jacobs, a sales associate. “People come in, buy local and get their hands on the paper. … The whole town comes through here.”
Some local merchants are even able to take advantage of the Internet to widen their small-town footprints.
Marsh Frazer, a clerk at Cocoa Mill Chocolate on West Nelson Street, said the shop receives a significant amount of business from online orders for its high-quality holiday confections, such as chocolate turkeys and peppermint bark. October through December are definitely the store’s peak season, she said.
Local retailers say they are confident that this holiday season will produce strong sales, but outlooks vary.
Clowser said Hess & Co. expects to match its sales from last year. His forecast is based on the U.S. jewelry industry’s flat performance in the first three quarters and his store’s growth in the last five years.
The 45-day holiday period generally makes up 15-30 percent of the store’s annual revenue, Clowser said.
Allegra Steck, manager of Walkabout Outfitters on West Washington Street, said sales so far this quarter are up about 25 percent from last year.
“I’ve already sold through several size runs of some of the most popular stuff and had to refill it already, which I don’t usually have to do until right before Christmas,” Steck said. “And I’m doing it now half-way through November.”
The Friday after Thanksgiving is often called “Black Friday” because the post-Thanksgiving shopping frenzy helps stores’ ledgers move from red ink to black.
In the past five years, average sales tax collected in December have made up about 10 percent of Lexington’s annual sales tax revenue. December and November’s sales tax combined make up about 17.8 percent, slightly above one sixth, according to reports from the Weldon Cooper Center for Public Service with information provided by the Virginia Department of Taxation.
Lexington’s sales tax revenue for the first three quarters of 2014 grew 11.5 percent over last year’s.
New hotels and restaurants in Lexington contributed to that growth, and local merchants hope those new businesses will boost holiday sales as well.
Hockaday, of the Shenandoah Attic, and Steck, of Walkabout Outfitter, cited Small Business Saturday – a national promotional event the day after Black Friday — as a huge draw for local residents. Although the day is sponsored by American Express, merchants do not have to accept its credit card to participate.
And after Small Business Saturday comes Cyber Monday, the Monday after Thanksgiving, when the focus shifts to online sellers.
“It’s like a big wave,” said Hockaday about the holiday shopping season. “Everybody is being helped by these longer hours by the big-box stores. They’re contributing a lot and putting out a lot, but it’s helping the Main Street stores as well.”
Barbara Bent, Victoria Coates, Neil Haggerty, Raymond Monasterski, Sam Swatski, Tucker Thompson and Blair Tynes contributed to this story.