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

"All progress is based upon a universal innate desire on the partof every organism to live beyond its income" -- Samuel Butler, 1835-1902

Retail

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 heprepared 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 inSpokane added a third fear: rising taxes.

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

Washington Retail Association President Jan Teague agreed thatany 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 arelooking at the sales tax."

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

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

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

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

Nationally, 2002 retail sales varied significantly amongmerchants. For instance, electronics and appliance stores reported a6.3 percent increase over 2001, and drugstore sales were up 8percent. 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 earningsor sales.

Christian credits his own robust sales last year to lowerinterest rates, coupled with manufacturer rebates. "The boatindustry had never seen rebates before. They allowed people to buywith smaller down payments," he said.

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

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

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

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

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

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

Cozza's North Side shop provided safety glasses for the Meadplant, and gained spin-off sales through that relationship. "Wedefinitely 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.

Two sidebars appeared with the story:

1. Competing with big business

Interview with Barbara Cozza, co-owner, Cozza Optical

Can small, independent eyewear shops compete with chain storesand Internet sites?

"Contact customers tended to do mail-order anyway, so theInternet is just another option for them. And there's definitely aplace for the chains, because some people only look at price. But alot of the customers we lost to chains are coming back because theylike someone remembering their name when they come through the door.We have a very loyal following that wouldn't go anywhere else."

What would help business in 2003?

"Basic eyewear is often a requirement, but some people look at asecond pair as a luxury. So if people were a little more confidentthat they aren't going to be downsized, that would help our sales."

What frames are most popular today?

"It's a tossup between heavy plastic -- sort of the Buddy Hollylook, only a little more streamlined -- and frames that almostcompletely disappear. They're called drilled rimless."

2. Retail fact

* Seattle-based Amazon.com predicts its Internet sales will grow15 percent this year, to $4.52 billion.