Shoppers Seize Bargains as Retail Sales Slump

October 31, 2008 by · Comments Off 

By Estela Nunez
enunez@smu.edu

“Sale!” That was the sign that elementary school teacher Jennifer Mireles, 23, frequently saw on window displays during a recent shopping trip to the Galleria Mall in Dallas.

“I purchased a pair of shoes at Nordstrom that I would think twice about buying for myself, but the price was great,” Mireles said.

As she walked around J. Crew at Northpark Mall during a recent shopping trip, junior Katherine Helms also noticed the effects of the failing economy on the retail industry.

“I got a coat from J. Crew the other day that was almost half off, and it’s not even cold yet,” Helms, a journalism major, said.

Gucci, Prada, Louis Vuitton, Tory Burch: these are some of the brands you may expect to see as you walk around the SMU campus. But as the economy worsens, will you still see students toting around their $3,000 handbags or book bags and dressing to impress?

‘It’s going to be bad’

Retailers’ summer started off with a bang but ended with a whimper. According to the National Retail Federation (NRF), retail industry sales for August decreased 0.3 percent. This is typically a good time of the year for retailers because of back-to-school spending.

Now, the holiday season is right around the corner–a joyous experience for most. But maybe not this year. The NRF recently released its forecast for the upcoming 2008 holiday season; an estimated, dismal 2.2 percent year-to-year increase is predicted compared to the typical 4 to 5 percent increase. This is considered to be the slowest increase since 2002.

“It’s going to be bad,” SMU Marketing Professor Ed Fox said.

Students Feel Effects

With the economy in such a rut and jobs disappearing, people have less disposable income. As prices such as gas and the cost of living go up, people spend less on luxury goods and more on the things they need.

“I am a student who commutes to school daily, and the high price of gas is what has affected me because I work for my own money,” sophomore Orlando Rojas said. “In fact, I think I only have about 30 bucks in my account right now.”

Students who work are also noticing the impact the economy is having on their jobs and the amount of money they earn. Budget cuts that companies are forced to make during hard economic times have a significant impact on salaries. So spending money on the things students want becomes less and less of an option.

Senior Yuritza Vargas is a tutor at North Dallas High School. The tutoring program typically runs through the week and on Saturdays. Not for long, though. Budget cuts are being made, and there isn’t enough money to continue the program on Saturdays.

“I now have to be careful with my money and how I spend it,” Vargas, a psychology major, said. “The budget cuts have definitely decreased the amount of income I earn.”

This isn’t the only problem the 22-year-old is facing, as she is in the process of buying a new home. With banks closing and being more cautious than ever to whom they loan money, it hasn’t been an easy task for Vargas.

“I feel like I have been hit twice as hard, with the budget cuts and the strenuous process of buying a new home,” she said. “Shopping hasn’t really been an option for me.”

Holidays Hit Hard

So iPods, iPhones, and little turquoise boxes from Tiffany’s as gifts might be out of the question for some during the holidays this year. Many shoppers will be looking for more practical gifts to give to their friends and family.

The use of gift cards is expected to rise due to the slump in the economy. How does this hurt the retail industry? Well, while consumers pay for the gift cards at the time of purchase, the money isn’t redeemed until the person who receives the gift card decides to spend it. At a time when people aren’t too amped about going to the mall, it’s not looking good for the retail industry.

“People shop depending on how wealthy they feel, and no one is feeling very wealthy right now,” Fox said.

This may be good news for bargain hunters, because retail stores will be having major sales.

Typically, when the economy hits a low point, discount and high-end stores aren’t too badly affected. This time around, that doesn’t seem to be the case.

“I went to Neiman Marcus the other day, and they had been doing well until recently,” Fox said.

The Associated Press reported that during the month of September, Neiman Marcus saw a 12.9 percent same-store-sales decrease.

Nordstrom, another popular high-end retailer, has seen brighter days. Year-to-date same-store-sales have decreased 6.4 percent, according to analysts at Istockyanalyst.com.

“It’s been a tough year, especially now, and with the holiday shopping season we are hoping to see a little bit of an increase in sales compared to the previous months,” NorthPark Nordstrom manager Adrienne Hixon said.

While many students have noticed the change the economy has had on the retail industry, some said it hasn’t had a major effect on them.

“The issues with the economy haven’t affected me as far as retail spending,” junior T.J. Faust said, “but, personally, I don’t really care how I dress whenever I go to class.”