Merchants in wait-and-see mode
Local retailers project small sales increases in 2003; war or increased state taxes could cut into profits

Michael Guilfoil
Staff writer

Click image to enlarge At a glance Interview with Barbara Cozza

Boat sales were great last year, according to Brent Christian, who owns Tobler Marina two miles north of Hayden, Idaho.

And 2003 is off to an even better start.

What could change his rosy outlook?

"War would definitely hurt sales," Christian said recently as he prepared for the busy boat-show season.

"And unemployment -- if any more area businesses close down."

Christian's comments were echoed by other area retailers. Some in Spokane added a third fear: rising taxes.

"Retail stores and the fast-food industry operate on very small profit margins," observed David's Pizza owner Mark Starr. "A B&O (business and occupation) tax can't happen right now. We need to go the opposite way on taxes -- instead of increasing taxes, we need to lower them."

Washington Retail Association President Jan Teague agreed that any more tax increases will hurt retailers finally recovering from 9/11. "Our Labor and Industries rates have already gone up," she said. "Our unemployment insurance rates went up. Now legislators are looking at the sales tax."

On the bright side, Teague said, retailers have done a good job of investing in technologies that improve efficiency. "When you do that," she said, "you can get the right product on the shelf quickly, and that results in better customer service."

Of course, technology can be a double-edged sword. While it helps retailers better manage inventory, it also allows customers to shop the Internet for products traditionally bought locally.

"You can't get boats over the Internet," said Christian, "but we're finding consumers are much more educated when they come in. It's easier for them to shop price, which forces dealers to be a little more aggressive with their pricing."

Christian sells boats costing from $399 to $220,000.

Nationally, 2002 retail sales varied significantly among merchants. For instance, electronics and appliance stores reported a 6.3 percent increase over 2001, and drugstore sales were up 8 percent. Yet, department store sales were down 1.9 percent.

Federated Department Stores, which owns area Bon Marche stores, predicts another tough retail year, with no improvement in earnings or sales.

Christian credits his own robust sales last year to lower interest rates, coupled with manufacturer rebates. "The boat industry had never seen rebates before. They allowed people to buy with smaller down payments," he said.

The Boise-based Idaho Retailers Association recently surveyed 36 North Idaho stores, which reported that their sales were up slightly last year.

"And every single person who responded from North Idaho is projecting sales increases from 2 percent to 5 percent for 2003," reported association President Pam Eaton.

The Washington Retail Association doesn't track statewide statistics, focusing instead on lobbying.

But Amy Coughlin, manager of Old Navy's Spokane Valley Mall store, said her business has been good the past six months, and summer clothes are moving briskly.

"If the war situation continues to escalate, though, I think it's going to be bad all around," she predicted.

Barbara Cozza, co-owner of two Spokane eyewear shops, is eager for a big new business to replace the hundreds of jobs lost to Kaiser Aluminum layoffs.

Cozza's North Side shop provided safety glasses for the Mead plant, and gained spin-off sales through that relationship. "We definitely saw a dip in business when they closed."

But Cozza is used to coping with change.

"That's the one constant in this business," she said.

Retail fact

Seattle-based Amazon.com predicts its Internet sales will grow 15 percent this year, to $4.52 billion.

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