Holiday sales: survival of the fittest

Seeing entire chains go bankrupt, small-business owners try price cuts, sales and specials

If any retailer should feel confident heading into the holidays, it should be someone who sells toys.

But Dave Perrone isn't resting easy this year.

"For me to say I'm not nervous, I'd be lying," he said. "People are being very cautious right now."

The proprietor of WJ's Toy Stop in the Wakefield Commons shopping center is in his fifth year in business.

He is watching major retail chains such as Circuit City close stores by the dozen. And he's seeing major competitors like Wal-Mart and Target slash prices to drum up sales.

"Little by little, they're taking a bite out of our daily sales," he said. "It's got to correct itself."

Time is running out.

Black Friday, the day after Thanksgiving and the official start of the holiday shopping season, comes at the end of this week. After that, retailers have just four short weeks to sell, sell, sell. For some of them, the holiday season accounts for as much as 40 percent of their annual sales.

To combat the slumping economy and the added competition, Perrone is doing what a lot of small business owners are doing -- cutting prices more than most years, extending sales, e-mailing frequent shoppers and dreaming up special events.

And like others, he's wondering if it will be enough.

Small retailers, unlike big chains, don't have deep pockets. They have less cash flow. And they are often financed with the owner's personal credit or assets as collateral.

Businesses with only one location make up 96 percent of U.S. retail companies, and this year could be a make-or-break holiday season for many of them.

The International Council of Shopping Centers estimated last month that 2008 will see 148,000 store closures, the largest number since 2001. The council also said 73,000 stores will close in the first half of 2009.

As large national chains file for bankruptcy around them, small merchants are more likely to hang on to the bitter end because their dreams, aspirations and personal credit are often tied up in the business.

Many of them are maxed out.

"I don't know what I can possibly do," said Melissa Russell, who opened a children's clothing store called Glee Kids in Chapel Hill's University Square in February.

Sales in August, September and October were good because of back-to-school shoppers, Russell said. But in November, she made only half of what she did during those summer months.

That scuttled her plans for stocking Christmas inventory.

"I expected to have an extra amount of money based on November sales to bring in a bunch of toys for Christmas," she said. "But I didn't make it, so I couldn't do it."

Russell said she didn't want to take out personal lines of credit or add to her personal debt to finance her shop.

"I can't invest any more money in the inventory of this store," she said. "Who knows? This is my first year. I may be closed in January."

That's really a double loss, Russell said, because her inability to sell what she has and bring in new inventory is causing her to disappoint the few customers who do come in regularly:

"Customers say, 'What's new?' and then I have to say, 'I don't have anything new for you because no one else is shopping.' "

Conjuring deals, cutting costs

The Triangle's smaller retailers are doing what they can to limit their expenses.

At Charlotte's Jewelry & Gifts, which has locations in Cameron Village and North Hills, sales are down about 10 percent from last year, owner Charlotte Harris said.

"The people coming in are buying about what an average shopper would buy," she said. "But there's just fewer coming in."