Monday, Jan. 10, 1977

Christmas Sales: Not Bad

Video games were hot, and so was a miniature deep-fat fryer called a Fry Baby. After wrappings from these and millions of other gifts had made messes of American living rooms on Christmas morn, U.S. retailers could look back on record sales that topped last year's Christmas totals by 11%, according to a preliminary Department of Commerce report. Allowing for an inflation rate of 5%, that still meant sales were up an average of 6%.

Many individual retailers were less ebullient. Their reactions approximated that of the kid who expected a walkie-talkie but got an encyclopedia: Uh, O.K. But even they agreed that sales were up at least slightly more than inflation.

Some reasons: unseasonably warm weather in many parts of the country, Sunday selling by major department stores in New York City and elsewhere in the East, and two extra shopping weekdays (29, v. 27 last year). The extended hours and a heady final sales surge combined to turn what could have been a disappointing Christmas into at least a moderately merry one, from Sears to Saks.

The Christmas results constituted fresh evidence that consumers are starting to spend again and the sluggish economy is perking up. Other bits of news have pointed the same way. Reflecting a rise in investor confidence, the Dow Jones average of 30 industrial stocks pierced the 1000 mark last week for the first time in three months and closed out the year at 1004.65. The Government's index of ten leading indicators posted a 1% gain in November, its best showing since June. Detroit reported new-car sales up 32.5% from a year earlier in the middle third of December.

Short-Term Concern. A few liberal economists are worried that there may be slightly too much good news. More smidgens of improvement between now and Inauguration Day may cause Jimmy Carter to trim the program of tax cuts and Government spending increases, possibly resulting in a smaller boost for the economy than they think it needs. Carter told reporters last week that the economy looks better to him than it did a month ago, but left his plans vague.

Early in December, storekeepers in some parts of the U.S. were overjoyed as customers flocked to counters. But the pace slackened during the middle eight or nine days of the month. A few retailers became downright despairing, predicting sales below the previous year's. The speedup in the final week, however, pulled them through to at least modest increases.

Going into the last week, sales were expected to be up 3% to 5% at Boston's Paperback Booksmith (58 stores); after the final surge, the rise was projected at 8%. Sears in Atlanta reported sharp increases during the last three days, allowing modest gains over last year. Ralph Kaplan, president of Boston's Kappy's Liquors, was ecstatic: "We had a superweek. I can't believe it." At Rike's in Dayton, an official said: "We expected a last-minute flurry. In the last two or three days an overwhelming increase came in. The crest was terrific."

Not even the final surge could help Pittsburgh shopkeepers, whose business was curtailed 30% by a transit strike in early December. Downtown sales there finished the season 6% below last year. At the other extreme was New York's Tiffany & Co., which did not stay open Sundays and bucked the pattern of Gimbels, Macy's, Korvette's and other retailing giants. Sales were up 16% over last Christmas. Gloated Chairman Walter Moving: "Obviously Sunday sales have not been very successful because they have taken away from sales during the week."

There was, however, one undeniable advantage to Sunday openings this year: accommodating returns. In Atlanta and a number of other places, parking lots looked fuller on Sunday, Dec. 26, than they did before Christmas. Post-Christ-mas sales went well for many retailers, with shoppers lining up at 9 a.m. Sunday to take advantage of bargains.

Cut-Rate Action. Shoppers shied away from items of total uselessness, such as the "Pet Rock" of last year, and spent their money on gifts of genuine utility or entertainment. Korvette's in New York sold 30,000 video-game consoles, which turn home TV screens into playing "fields" for tennis, hockey, Ping Pong (average price: $70). Sales of Citizens Band transceivers were boosted dramatically by gutted prices on current 23-channel gear, which becomes less desirable this week when the Government increases the number of CB channels to 40 (see story page 51). King's Department Stores, a Boston-based chain, cut the price of one popular CB rig from $159 to $59; one store sold 20 in two hours. Despite movement of such items, retailers are generally conservative as they enter 1977. There is no rush to build inventories, and about all most sellers hope for is a carryover of at least some Christmas momentum into this year.

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