Retailing, the economy, and the energy crisis;

              Retailing, the Economy, and the Energy Crisis
By SAMUEL FEINBERG/Women's Wear Daily and DAVID V. BURCHFIELD/Partner
This has been a winter of discontent for the nation's retailers. Fuel shortages have
compounded the worst inflation in a quarter century.
Faced with an uncertain economy and an energy crunch, what are retailers
thinking and doing? They are steering a course between Scylla and Charybdis. This
round-up of opinion, drawn from all sectors of the industry, reveals the scope of
their dilemma.
Arthur F. Burns, Federal Reserve Board chairman, offers one benchmark. As
he sees i t , the current slowdown "does not appear to have the characteristics of a
typical business recession." Industrial production may fall and unemployment may
r i s e , he suggests, but neither will be "pervasive or of extended duration. "
Retailers themselves are not pessimistic. Their attitude may be summed up by
Thomas M. Macioce, president, Allied Stores Corporation: "We cannot accept the
pessimistic point of view that sales and earnings must decline during the spring
season. The so-called energy crisis will provide greater opportunities for increased
sales in downtown locations and greater sales in concentrated periods as people
move toward one-stop shopping.
"The crucial question is not what effect the consumer will have on the economy,
but, rather, what will people like ourselves, who manage and direct s a l e s , do to
insure that the consumer utilizes the purchasing power that is available to keep our
economy on a sound b a s i s . "
Or, in the words of Philip M. Hawley, president, Broadway-Hale Stores:
"We want no part of pessimism, which can become a self-fulfilling prophecy unless
we ward it off. "
The consensus is that an unstable business climate will continue for the first
half of the year and, considering the inflation bite, result in at best flat sales for that
period. However, assuming (1) an improvement in the energy problem, (2) an upturn
in business conditions, and (3) a growth in the rate of employment, the industry
expects increases in retail volume for the year as a whole. Conceivably, retailers
may do as well in 1974 as they did in 1973.
Conditions in retailing differ substantially, of course, depending on the type
of retailer and the particular merchandise and services offered. As William M. Batten,
chairman, J.C. Penney C o . , says, "If consumers spend less for cars and new homes,
i t is entirely possible general merchandise retailing will do well even if people have
no greater purchasing power. "
On February 1, the Cost of Living Council brightened the picture somewhat,
when it exempted the general merchandise retail industry from economic stabilization
controls, although still keeping a string on the industry through profit margin reporting
and promises by large chains to limit profit increases. This action was hailed by
retailers previously under the restrictions of Phase IV.
It remains to be seen, however, whether consumers will accept the inevitable
sharp price increases in the necessities of life. Apparel, for example, may exceed