updated 9/21/2005 4:18:05 PM ET 2005-09-21T20:18:05

Since mid-July, new fall fashions like shrunken brown velvet jackets and Victorian style blouses have been gathering dust on racks at the nation’s retailers.

Major Market Indices

It’s now almost the end of September, and for many merchants a combination of hot weather, subdued fashions in dark colors, high gasoline prices, and the ripple effects of Hurricane Katrina — have made shoppers stay away from clothing stores.

If sales don’t pick up soon, retailers will be forced to cancel some future fall orders, fueling more concern about consumer spending for the holiday season.

“I am still in flip flops. I am just not there mentally,” said Lina Allocca, from Madison, N.J., who hasn’t been to a mall in more than a month. But when she does return, she will be more frugal given all the economic uncertainty.

“I don’t want to make any impulse buys,” she said. “I don’t want to do anything to put me over the top just because it is cute and trendy.”

Allocca’s concerns are echoed in a new AP-Ipsos poll that says consumers are worried about rising food and gasoline prices.

None of this bodes well for spending, which has been one of the engines driving the nation’s economy.

“I am worried that without some positive offset, what we will have is a continuation of an uneven performance by the retailers, one that is trending lower and lower,” said Michael P. Niemira, chief economist at the International Council of Shopping Centers. On Tuesday, he pared his September sales forecast to a 3.0 percent gain, from 3.5 percent, after a sharp decline last week from the prior week.

Niemira’s estimate is based on sales at stores opened at least a year, known as same-store sales, which are considered a good indicator of a retailer’s health.

Niemira is concerned that the weakness is becoming broad-based with the exception of high-end stores, whose well-heeled shoppers continue to splurge.

“Business has turned really sluggish. There is a lack of traffic in the stores,” said Roseanne Cumella, senior vice president of merchandising at the Doneger Group, a New York-based retail consultancy, which advises major stores on what fashions to buy. “There is overall uncertainty with the economy and gas prices.”

Cumella said that except for upscale stores, her clients, which include discounters and department stores, have struggled with a low single sales drop this month compared to a year ago.

Unenticing fashions
Shoppers are also unimpressed with fall fashions. The season’s lineup — which includes boxier jackets and Victorian style looks like high-collared lace blouses, all in dark colors like brown — are far more conservative than last year’s bright-colored body-conscious clothing. Even when the cold weather comes, some analysts are not sure how much shoppers will buy.

“Forest greens and browns just don’t jump out at you,” said Marshal Cohen, chief analyst at NPD Group, Inc., a market research company based in Port Washington, N.Y.

Julie Lin, from Manhattan, agrees, noting she’s just not into brown, and doesn’t like “retro” clothing like lace up boots.

“The aesthetic is more difficult to pull off,” said the 26-year-old, who says she will probably buy only a coat this fall. She added she prefers more “cleaned up, modern looks.”

Cumella is more bullish on fall’s trends, reporting solid sales of items like velvet jackets and flowy skirts. But she said those fashions only make up a small part of the overall business for many merchants and are not enough to significantly boost profits.

Cumella said sales of basic items like denim, suits, and sweaters have fallen below stores’ expectations, and she hopes that a cold snap will ignite business.

That may not happen. Even before Hurricane Katrina slammed into the Gulf Coast more than two weeks ago, consumers were struggling to fit higher gasoline prices into their budgets, hurting low-price stores like Wal-Mart Stores Inc. That strain was more evident in overall August sales figures, which were solid but below the pace for the first six months of the fiscal year.

Worries about consumer spending escalated after Katrina, whose costs are being played out in near-record energy prices, snarled shipping traffic, which threatens to push food prices higher, and lost jobs. Analysts are concerned that consumers’ financial pressures will worsen this winter when consumers get slammed with their home heating bills.

Allocca, a publicist, said she is already spending $160 more per month compared to last year to fill up the tank in her Volvo. In Katrina’s aftermath, she said she will be more on guard when she spends.

An AP-Ipsos poll, conducted between Sept. 16 through Sept. 18, revealed that 65 percent of the 1,000 people surveyed expected that gasoline price increases will cause financial hardship in the next six months, with 39 percent of that group describing it as “serious.” Only 34 percent said it would not cause financial hardship. One percent said they were not sure.

As for higher food prices, 44 percent of those polled said it would cause financial hardship in the next six months, compared with 55 percent, who said it would not. One percent of the respondents said they weren’t sure.

The survey also found that 58 percent polled expected the sharp increase in gasoline prices after Hurricane Katrina will be long-term, while 41 percent thought it would be short-term. One percent said they weren’t sure.

Amid such worries, two retail forecasts predicted slower growth in holiday sales from last year.

The National Retail Federation projected holiday sales, which encompass November and December, to increase 5 percent, less than the 6.7 percent gain in 2004.

Ernst & Young LLP estimated that total holiday retail sales will rise between 6 percent and 7 percent, compared to last year’s 8.3 percent increase.

The good news for consumers will be that the nation’s retailers are expected to be more aggressive about discounting from the start of the holiday season. But they better be very generous for shoppers like Allocca.

“I am looking for more than 40 percent off,” the 35-year-old said.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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