That ugly 733-point nose dive by the Dow Jones industrial average on Wednesday? Blame Eva Metoyer.
And millions of consumers like her.
Inglewood resident Metoyer, 33, is a serious shopper. Last year she was up at 4 a.m. the day after Thanksgiving to get in line for holiday sales at Best Buy and Macy’s. This year, she said, she’ll be staying home.
“I’m very concerned about my mortgage, my children’s mutual funds,” Metoyer told me outside a Target in South Los Angeles. “I’m going to focus on that.”
The Dow tanked after the Commerce Department reported that retail sales fell 1.2% last month, the biggest drop in several years and the first time since 1992 that sales have declined three months in a row.
For economists, this was tantamount to the doorbell ringing and a husky voice saying, “Recession calling!”
To see how bad things have gotten, I visited the Target on La Cienega Boulevard, the Westside Pavilion mall on Pico Boulevard and Westwood Village, where, alarmingly, it seemed as if half the stores were vacant.
What I heard from shoppers and merchants is that this is going to be one of the gloomiest holiday seasons in many years.
“It’s never been this slow,” grumbled Sam Joma, manager of the Gallini menswear store in the Westside Pavilion, where he’s worked for about 15 years. “Sales are flat. Very flat.”
Like most merchants I spoke with, he said he was trying to counteract the bad economy by offering deep discounts -- at least 25% off for much of his inventory.
Joma gave me a once-over and decided I’d look much better in a nice suit. “I’ll give you a deal,” he said. “I’ll take any offer that’s serious.”
Upstairs at Village Jewelers, owner Levon Latchinian gazed upon his empty store and stated the obvious. “Things are very quiet,” he said.
Latchinian said he counts on the holiday season for about half his annual revenue. The way things are looking, though, he said he expects this year’s sales to be about 50% below last year’s.
“Jewelry is the last thing people are thinking about right now,” Latchinian said. “They’re thinking about necessities like food. They’re not thinking about jewelry.”
He and other Westside Pavilion merchants said they couldn’t remember seeing the mall this dead. Shoppers were few and far between. As I traversed the three levels of shops, the most common sight was bored-looking salespeople chatting on cellphones.
“The stock market hit a lot of people,” said Malibu resident Joan Craig, who expects to cut back this year for her three kids. “Everyone’s being more careful.”
The National Retail Federation says that for the first time since the trade group began surveying shoppers in 2002, people are expected to spend less on gifts for family members than the year before -- an average of $466.12 this year compared with $469.14 in 2007.
That difference might seem like pocket change, but multiply it by more than 180 million taxpayers and you can see we’re talking serious money.
Federation spokeswoman Ellen Davis said gifts for family members typically account for as much as 75% of people’s shopping budgets, so any cutback in this category represents a widespread tightening of purse strings.
“By and large, people feel like their families will understand the situation,” she said. “You may not be able to cut the $20 gift card for the baby sitter, but you’re hoping your family will sympathize with what you’re facing.”
Even so, the federation expects holiday sales to grow by 2.2% this year to $470.4 billion. Sounds like a lot, right?
“That would be the lowest increase since 2002,” said Davis, “and about half what we usually see in growth. We expect this to be the worst year in recent memory.”
That means some shoppers may want to rethink their game plans. Davis said most retailers have cut back on inventory in anticipation of lousy sales, and many are reducing the number of seasonal workers they bring on.
At the same time, merchants know that prices are everything this holiday season and will be discounting items accordingly. Those discounts will run deeper as Christmas approaches.
“It’s a game of chicken,” Davis said. “You may get better deals in December. But people need to be aware that retailers are shipping less merchandise to their stores. If you’re looking for something very specific, you may want to shop early.”
She also said that retailers are trying to keep people coming back for more by discounting different items at different times over the next three months. “The smart shoppers will pay attention throughout the season,” Davis advised.
Needless to say, merchants will once again offer big discounts on Black Friday, the day after Thanksgiving, in hopes of generating some excitement among die-hard shoppers. Anyone with the stomach for that sort of thing probably won’t be disappointed.
Eva Metoyer said she spent about $600 on Black Friday last year. This year she’ll sleep in and probably won’t spend more than $250 buying gifts for friends and family.
“I just don’t have it,” Metoyer said of her finances. “I can’t think about shopping.”
On Friday, a closely watched index of consumer confidence compiled by Reuters and the University of Michigan posted a record one-month drop to 57.5 from 70.3 in late September. The Dow reacted accordingly, falling 127.04 points.
There’s that doorbell again.
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