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After big gains statewide and across the nation on Black Friday, small retailers in Maine are anticipating both a steady flow of customers and greater profits as a result of the holiday season.
But economic uncertainty remains stubborn after a discouraging jobs report from the U.S. Department of Labor last Friday. Yet, as the season progresses, the mood is cautiously optimistic in Maine and across the country.
“Consumers are approaching the holiday season in a somewhat cautious mood,” said Lynn Franco, director of Conference Board, a national consumer research center. “But with retailers already enticing consumers with markdowns and bargains, this season could very well match, perhaps even surpass, last year’s.”
After five straight months of nationwide unemployment holding at 9.6 percent and the economy steadily adding jobs, consumer confidence was at its highest level heading into November at 54.1 percent. This is up from 49.9 percent in October, according to a press release from Conference Board.
Despite the upward trend, last Friday’s report showed November’s unemployment rate at 9.8 percent. Furthermore, the national economy added only 39,000 jobs in November, falling 140,000 short of the department’s expectations.
The report may prove to be a temporary setback as numbers tend to fluctuate each month, but some economists maintain that such news could negatively impact the holiday spirit, thus affecting retailers’ bottom lines.
Conversely, according to Internet research firm, comScore, early indicators show that consumers are not holding back. The firm deemed this year’s Cyber Monday as “record breaking,” with online retailers netting $1 billion in profits and showing e-commerce spending in the first 29 days of November at nearly $14 billion.
With these measures and strong gains from Black Friday, ample evidence shows that retailers stand to gain this season, and consumers can count on an abundance of promotional deals until the day after Christmas.
Whether or not the success will transfer to Maine’s smaller retailers, such as those in downtown Orono, is uncertain for now, but economists and analysts maintain that the ball is in their court. In Maine and across New England, the outlook appears to be brighter and the fiscal climate is in far better shape to accommodate the whimsy of eager holiday shoppers.
Currently, Maine’s unemployment rate stands at 7.4 percent, well below the 8.1 percent it was at this time last year, according to the Maine Department of Labor (MDOL). In its holiday projections, Conference Board said that the average New England household is expected to spend $473 on gifts, compared to the $384 national average.
In the meantime, uncertainty continues to show itself in the Pine Tree state, as figures from the MDOL warn that 9,000 residents could lose unemployment benefits by the end of the month if Congress does not act soon to approve an extension.
Despite the recent jobs report, combined with an unexpected hike in national unemployment rates and in-state concerns that could threaten bottom lines, many economists are predicting a better year for retail, especially for small businesses.
Jim McConnon, Cooperative Extension specialist and economics professor at UMaine, expects sales to increase, particularly in Maine.
The growth, according to economists like McConnon, can be attributed to 2008’s stagnant market, where retail sales fell 3.9 percent, and only slightly increased in 2009 by 1 percent. McConnon said analysts are projecting a 2 to 3 percent increase in retail purchases during this year’s holiday, based on early indicators like those from Cyber Monday and Black Friday.
“At home in Maine personal income, along with wages and salaries, have both coincidentally picked up at around 2.6 percent,” McConnon said. “So based on these numbers and early returns around Thanksgiving, we should see a slow improvement — definitely a positive sign.”
However, McConnon cautioned that many in Maine, as well as across the country, are still out of work, or not working as much as they would like, a trend he says could have a negative affect on big department stores and mom-and-pop operations alike.
“Unemployment puts a damper on things even though unemployment is comparatively low in Maine, it doesn’t mean it isn’t high,” he said. “It has the ability to really affect consumer confidence.”
McConnon also said smaller businesses have an upper hand because recent efforts to promote local economies have led to shoppers focusing more on quality and value, rather than on price.
“Consumers are still willing to loosen their purse strings, even during tough times, and certainly during the holidays — they’re looking for very specific types of gifts,” he said. “Smaller retailers have taken notice of the trend, and they’re competing with big department stores by offering shoppers tremendous promotions early on, as well as specialty products. It’s good news for consumers and they’re supporting local business as a result.”
Kathy Walton, owner of Fire Sign, a small shop smelling of incense and adorned with books and novelty trinkets in downtown Orono, said such promotions work really well over the holidays. She said business has not picked up yet, but she expects an influx as Christmas draws near. In addition to her regular frequent buyer cards, which offer a host of special perks, she is running coupon deals allowing the customer to accumulate dollar-off coupons with every purchase. In this way, she said if customers buy ten items, no matter what the cost, they will receive a $10-off discount on their next purchase. Walton expressed a need for more advertising, but said promotions spur sales and generate extra business around the holidays.
At The Store Ampersand, a specialty gourmet foods store in downtown Orono, owner Roberta Bradson also expects more seasonal business. She said the district serves as a buffer from the hustle of overcrowded areas like the Bangor Mall.
“We’re not running any specials,” she said. “Customers are attracted to our holiday foods, we typically do good business at Christmas — it’s a relief for our shoppers. We provide things other stores don’t have and a quiet place to shop for those things.”
One customer, Anita Benson from Greenbush, agreed.
“They have things here I just can’t get at other stores. Not only that but they have excellent coffee,” she said. “I’ll probably do a lot of my shopping right here in Orono, the retailers have most of what I need and a friendly atmosphere to get it in — it’s just more Christmas-y.”
In addition to retailers, certain restaurant owners in Orono said they want to see more retail in the district, as business does not tend to pick up like it does in Bangor. Abe Furth, owner of Woodman’s Bar and Grille and Verve, said that gift card sales increase, something he feels to be one benefit of the season.
Others said even though business does not improve noticeably, area restaurants still see cycles of strong business resulting from additional holiday shoppers in the area.
“By all indications, things are modestly improving from where they were last year. It’s not gangbusters, but it should turn out to be a good season if promotions and sales numbers stay steady,” McConnon said.
