Business as usual despite low consumer confidence levels

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Published: April 23,2001

Though not all businesses in the area may reflect a low consumer confidence level, there is no denying that this year is the lowest level in index history.

To say that may worry businesses, but it just means consumer expectations are low, said Christian Pruett, economist with the Center for Policy Research and Planning, Mississippi Institutions of Higher Learning.

“That just means we’re in fact slowing down, and it is the first time we’ve slowed down since the early 1990s,” Pruett said.

Mississippi began tracking consumer confidence in 1994 in order to forecast the state’s tax revenue, and it has proved to be a good indicator. Based on the index level, revenues are expected to slow.

“I’m interested to see if consumer confidence will rebound a little as it has on the national level,” Pruett said.

Also down last quarter was executive confidence. Pruett said business executives understand that with economic slowdowns come rocky times in business. But understanding that has not made times any easier. And times are not going to get better any time soon.

“We’re going to continue to slow down,” Pruett said. “We’re going to slow down and level off. I think we’ll start to level off in the next year and a half. When you come off a period like that (the ‘90s) it’s hard not to without having a period of economic slowdown.”

Susan Marquez, marketing director at Northpark Mall in Ridgeland, does not let the low consumer confidence levels worry her.

“We just try to be the very best we can be,” she said. “We try to meet our customers’ needs and try to provide that in the best environment possible. They’ve got money to spend and they’re going to spend it somewhere.”

Marquez said with the Majesty of Spain exhibition and other things offered in Jackson, the economy of the metro area and the state is boosted.

“One day we had 21 buses on the parking lot,” Marquez said.

Northpark Mall offers merchandise and services at various price ranges and that is something Marquez said has helped customers continue to

shop there.

“The gloom and doom hasn’t bothered us over here,” she continued. “I’ve been here eight years and I learned if you start reading those reports your time and energy is focused in the wrong direction. We try to provide a good merchandise mix, a good selection of stores; when you focus on that it’ll all work out in the end. We’re knocking on wood and just going to stay on the course. There are still weddings and graduations and gifts to be bought and hopefully they’ll like what we’ve got and come here.”

Bret Baxter, president of Wholly Smokes Inc., of which Habana Smoke Shoppe is the DBA, said people are still smoking cigars regardless of the low consumer confidence levels. It just so happens that customers are buying less expensive cigars than they were throughout the ‘90s.

“Through the ‘90s cigars went wild and I think that was reflective of the good times people were experiencing,” Baxter said. “Now people still enjoy a fine cigar, but we’re seeing that people are smoking less expensive ones.”

Baxter said cigar manufacturers have caught on, producing cigars for $3 and $5, and Habana Smoke Shoppe has consciously tried to carry more low- and mid-priced premium cigars.

“Our percentage margin is similar whether it’s expensive or an inexpensive cigars we’re selling, so we just have to look at our margin” Baxter said.

Like other business people, Baxter hopes he is prepared for the slowdown. He recalled being in the retail business in the early 1980s.

“It seemed like the recession hit us later than it hit some of the rest of the country,” he said. “We had more businesses that propped up our economy and it seemed it took a while before it filtered down to the south.

“I think everyone expected to hit the skids long before now.”

Habana Smoke Shoppe has been open since 1997, and Baxter said the entire business has changed over the past four years, noting the selectivity he is able to have now that he did not have then.

“We can get the quality cigars instead of just the ones that are available.”

Baxter said people in the industry are “finally getting realistic,” selling cigars ranging anywhere from $39 to $59 a box.

“It definitely is a sign of the times,” he said. “When people get worried about their jobs they don’t spend money on cigars.”

Baxter does not wait for customers to come to his shop to buy cigars anymore, though. He goes places where people will buy them — restaurants, golf courses and casinos to name a few.

“We’d rather increase our volume and take whatever profit is available,” he said.

Ken Szilasi, president of Maison Weiss Woman’s Specialty Shop, is seeing slight increases in sales, and said his luxury items are selling as well.

“I have no complaints at this point,” he said. “I can’t really tell the future, but we planned for an increase and we plan on getting an increase. We’re spending more on advertising and people are coming to our party.”

Szilasi does not believe price is the name of the game at his level.

“We have an intelligent customer base,” he said. “We want to buy the best products we can and offer them at the best price we can, and when it’s time to mark them down, mark them down. With our business we’ve had the same reputation for years and years of being just an affluent store.”

Szilasi added that he is attending more markets than ever before, buying in not only New York but also in Los Angeles, and the variety of merchandise has helped him to draw customers as well.

But what has increased the business in the store more than anything, Szilasi believes, are the advertising efforts he has put forth.

“For our increase we’re going to a different segment without cheapening the store,” he said.

Szilasi said the location of Maison Weiss has also helped the store to continue to do well.

“We have drive-up parking, we’re right near Northside Drive. It’s easy to get in and out of. It’s just a nice shopping experience and I think people like that.”

According to the March 2001 issue of Mississippi’s Business, a publication released by the Center for Policy Research and Planning, consumer confidence fell in the northeast, the Delta and the southwest, while increasing in the east-central and southern portions of the state from the third quarter of 2000 to the fourth quarter of 2000. Pruett conducted the consumer confidence survey.

Contact MBJ staff writer Elizabeth Kirkland at ekirkland@msbusiness.com or (601) 364-1042.

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