2006 Habits changing, online sales set record

Filed under: Retail |

Retail vacancy rates in downtown Colorado Springs increased during 2006, yet high gas prices kept people shopping locally. The malls gained a national chain and online sales reached a record high, making for a robust year.

Ins and outs of downtown and Old Colorado City

Paul Turner, president of Turner Commercial Research, said that Old Colorado City has more of a west-side mentality, providing a place for people who love to shop and play and spend the day, whereas downtown Colorado Springs is more business focused, a place where people might go out for a few hours to get supplies.

His research shows that the downtown area is comprised of 328 buildings — 114 office, 167 retail and 47 industrial. The office market conditions, according to Turner’s research, show that the central business district has 214,943 square feet of office space available, compared to only 1,000 in Old Colorado City.

The space adjacent to Terre Verde, formerly operated by Chinook Books has been vacant since 2004, when Terre Verde purchased it for $1.7 million.

“In all honesty, the two markets are very different,” he said.

Nancy Stovall, executive director for Old Colorado City Partners, said Old Colorado City has many similarities to downtown Colorado Springs: both have independent stores and small “ma and pa” shops. But, Old Colorado City has a greater variety of retailers, she said, and the advantage of being a tourist destination.

Soaring gas prices and housing slowdown

Although most people were displeased with the hike in gas prices, retailers saw consumers keeping shopping sprees local.

According to the National Retail Federation’s 2006 Gas Prices Consumer Intentions and Actions Survey, 76 percent of consumers said they believed fluctuating gas prices impacted their spending habits, up from 67.2 percent in 2005.

And, to cope with the higher gas prices most consumers (44 percent) said they planned to drive less. Thirty-six percent said they’d be dining out less; 37 percent cut vacation spending; and 27 percent trimmed their summer clothing budgets.

The housing slowdown also hit retailers — mainly businesses such as landscaping companies and lumber yards, and businesses that supply the materials to remodel existing homes.

Statistics from Harvard’s Joint Center for Housing Studies indicate that home improvement expenditures are falling as home sales decline. According to its Remodeling Activity Indicator, homeowners spent about $160.5 billion on improvements and repairs during the last year, only a 1.6 percent increase compared to the previous four quarters.

John Shouse, owner of Shouse Appliances, said he is seeing fewer people in his store, but that the cooling market could have been worse.

“It came later than we were anticipating,” he said. “We anticipated it back in August. We feel fortunate about that.”

Sales steady at malls

The Promenade Shops at Briargate and the local malls saw no decrease in spending for the year. Malls also remained the dominant format for retail sales.

According to Turner Commercial Research, the Springs is home to 288 shopping centers (excluding the two regional malls) and 50 anchored shopping centers, which are included in the overall total.

The Citadel, which is 34 years old, is at its “historical best” said Senior Marketing Manager Diane Loschen.

“Total mall sales are up double digits,” she said. The growth is being driven by the military and the addition of several new retail stores in 2005.

Foley’s was converted to a Macy’s department store this fall, adding to the diversity of the two malls in the Springs.

Online retail sales

According to the National Retail Federation’s online division, Shop.org, online sales are expected to surpass $200 billion this year, up 20 percent from 2005.

And once again, the holiday online shopping season started early.

According to results of the 2006 eHoliday Mood Study, conducted by BizRate Research for Shopzilla and Shop.org, one in five (19.8 percent) online shoppers said they planned to shop for holiday gifts earlier this year. And nearly 40 percent planned to start their shopping before Halloween. More than half (62.5 percent) of the multichannel retailers planned to begin promotions by Nov. 4.

Spending predictions also increased, with the average shopper expected to spend nearly $800 this year for holiday merchandise. The National Retail Federation’s 2006 Holiday Consumer Intentions and Actions Survey, conducted by BIGresearch, found that the average consumer planned to spend $791.10 this holiday season, up from $738.11 last year.

Change in consumer habits

Hotels such as Marriott and Westin were the first to go smoke-free and some in the Springs followed.

The Sheraton Colorado Springs General Manager David Givens thinks it’s just a matter of time before all hotels are non-smoking.

According to the Group to Alleviate Smoking Pollution of Colorado, the Springs has 32 smoke-free hotels, motels, inns, bed-and-breakfasts, ranches, cabins and lodges.

The Holiday Inn Express on Aeroplaza Drive has been smoke-free since May 2005. Two years ago, The Broadmoor Hotel went smoke-free and pet friendly.

Airports saw a change in security regulations, but consumers did not slow their purchases.

Limited gels and liquid products are allowed in carry-on luggage or purses, and a mandatory shoe screening took effect.

There are two restaurants and one gift shop in the pre-screening area in Colorado Springs and a food court and two gift shops in the post-screening, McGinley said. The shops still sell liquids, passengers simply must consume them before getting on their flights.

Nancy Gonzalez, general manager of the Paradies gift shops, said customers are adjusting well and that there hasn’t been an observable change in sales.

Target battled a lawsuit claiming only its physical stores are covered under The Americans with Disabilities Act and not its Web site.

Target issued as statement saying that “while disappointed the lawsuit was not entirely dismissed, Target is pleased with the court’s decision to deny the plaintiffs’ motion for a preliminary injunction. We believe our Web site complies with all applicable laws and are committed to vigorously defending this case. We will continue to implement technology that increases the usability of our Web site for all our guests, including those with disabilities.”

Trademark counterfeiting has transformed beyond luxury brands and now even small retailers have to watch all their products for knock-offs.

The U.S. Chamber of Commerce met with government and industry leaders to strengthen the fight against counterfeiting and piracy during its third annual anti-counterfeiting and piracy summit held in Washington D.C.

The chamber said that counterfeiting and piracy costs U.S. businesses more than $200 billion per year and an estimated 750,000 American jobs. Between 5 percent and 7 percent of global trade is in fake products, or more than $500 billion worth of merchandise.

Ten percent of all prescription drugs sold globally are counterfeit.

This year, the federal government passed the Stop Counterfeiting in Manufactured Goods Act.

The average convenience store moved up in the ranks to compete with the Wal-Marts and grocery stores adding fuel pumps.

Jeff Lenard, spokesman for the National Association of Convenience Stores, calls it a “20-year overnight success.”

7-Eleven spokeswoman Margaret Chabris agreed that mainstream convenience stores are going upscale.

Although it may be well-known for its Slurpee beverages, according to its Web site, a typical 7-Eleven store carries about 2,500 different items. Chabris said 7-Eleven focuses on the ever changing needs of consumers and their “eclectic taste.”

Joan Johnson covers retail for the Colorado Springs Business Journal.