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RETAIL RECOVERY ON THE HORIZON, BUT SHOPPERS REMAIN CAUTIOUS Some regions look brighter than others; Canada slightly ahead of U.S.

 ATLANTA, Dec. 17 /PRNewswire/ -- While consumer attitudes are lifting from a three-year slump, a recent survey finds holiday shoppers may still be holding back.
 The 1992 Consumer Confidence Report, a poll of more than 6,800 U.S. and 1,000 Canadian consumers, finds 55 percent of U.S. shoppers planning to spend the same on gift purchases this holiday season as they did last year and 34 percent planning to spend less.
 Compared to Canada, the United States seems to be a bit behind in the retail recovery. In Canada 16 percent of consumers polled plan to spend more than in 1991, compared to only 11 percent in the United States.
 Not surprisingly, domestic consumer caution remains tied to the lingering effects of the recession. The top two reasons shoppers remain cautious this season are "drop in income" (11.7 percent) and "fear of recession" (11.5 percent).
 Even though these findings look dreary on the surface, they actually signal a turnaround from recent years. "For the past three years, retailers have had disappointing holiday seasons, with consumers cutting back on their spending," explained Larry Katzen, managing partner of Arthur Andersen's Worldwide Retail Industry Service, which conducted the study.
 "Considering the depressed results of the past, this season does not appear to be as robust as one would hope," he added. "However, it appears we are heading in the right direction, with the majority of shoppers spending the same and over 10 percent spending more. It could very well be the beginning of an upswing in retail saless?pecially when one considers the fact that consumers underestimate their actual spending and impulse buying is at a peak during the holiday season."
 Encouraging news comes from three markets where local surveys were conducted last year. In Atlanta, Boston and Philadelphia, this year's study found a drop in the number of people planning to spend less than the prior year and an increase in the number saying they will spend the same.
 While the nation as a whole seems to be experiencing a turnaround in consumer spending, some regions are fairing better than others.
 Central Region
 The Arthur Andersen survey finds markets in the Central United States having the most consistent growth. This region leads the nation in increased spending, with 15 percent of those polled planning to spend more than last year, compared with 11 percent nationwide.
 Here, recessionary concerns are cited by only 5 percent of consumers as a factor in their holiday spending. Nationwide, 12 percent are cutting back due to the recession.
 Department stores may experience some of their best sales figures in this part of the country. About half of all respondents in the central region name department stores as their primary place of holiday shopping, making the region second only to the Pacific Northwest in this regard.
 Consumers also indicated a willingness to spend more in the southeastern United States, with 13 percent of consumers planning to spend more this year than last.
 However, most of the increase will be in discount stores, which are expected to capture 28 percent of the spending, vs. 21 percent for the country as a whole. Much of this will be at the expense of specialty stores and mail order companies, where only 5 percent of consumers plan to shop in each category.
 The second-softest region is the northeastern United States, where about 34 percent of consumers plan to spend less than last year on holiday gifts. Only 9 percent plan to spend more. Here, "fear of recession" was the most common reason consumers gave for spending the same or less, cited by 15 percent of those polled -- higher than any other part of the country.
 According to the survey, department stores may have the weakest holiday sales in the northeast. While the most popular place to shop in the region, department stores are only named as a primary shopping place by 34 percent of the consumers, far less than any other region in the United States. Specialty stores and mail order companies seem to have the greatest benefit of this trend, with 13 percent and 12 percent of the consumers shopping in these formats, respectively, far greater than any other region.
 Credit card usage is highest in the northeast. Forty-four percent plan to use credit cards to pay for most of their holiday gift purchases, compared to 39 percent for the entire United States.
 On a positive note, 14 percent of those polled in the northeast plan to purchase at least one holiday gift item costing more than $500, more than anywhere else in the nation.
 Southern California
 The softest region in the United States is Southern California. More people here report cutting back on gift spending than anywhere else in the country. Forty percent of consumers here are spending less on gifts than in 1991.
 The recession seems to have retained a stronger hold on Southern California than any other region. This part of the country is 10 percentage points higher than any other region in the number of people reporting a drop in income over last year -- 30 percent, compared to 12 percent nationwide. Seven percent of consumers polled reported a job loss and more than 20 percent indicated the recession will cause them to spend less.
 Warehouse clubs are more popular here than other regions. This concept was founded here by the Price Club, and may be one of the reasons why many consumers shop at these locations, although the lingering recession may also have an impact.
 The region also reports the fewest number of people planning to make big-ticket gift purchases. And for those retailers hoping for a turnaround, they may be in for a disappointment. Consumers in this region were planning to shop earlier than they did last season.
 Pacific Northwest
 Recessionary concerns are at their nationwide lowest in the Pacific Northwest. Only 4 percent of respondents cite "fear of recession" as a factor impacting their 1992 holiday shopping plans. Consumers here reflect the national findings with 65 percent of respondents indicating they will spend the same or more as last year.
 Department stores are big winners in this part of the country. Over 60 percent of those surveyed plan to primarily shop department stores for their gift purchases, more than 20 percentage points higher than the national average of 40 percent.
 Cash purchases are at their nationwide peak in this region, with 76 percent of consumers paying for their gifts with cash instead of credit cards, compared to 60 percent overall.
 Election Not A Factor
 The election had little effect on this year's shopping, according to the survey. Only 1.2 percent cited last month's election outcome as a major factor affecting their holiday gift shopping plans. A strong exception to this is Jacksonville, Fla., where 16 percent of those polled cite discouragement over the election outcome as the reason they are watching their wallets.
 Department Stores a Favorite
 The survey also shows department stores holding their own against discounters, which have been stealing market share in recent years.
 Department stores are the retail outlets of choice not only to American consumers, but also to Canadians. Forty percent of U.S. shoppers surveyed said they will primarily shop department stores for gifts, compared to 21 percent favoring discounters. Fifty-eight percent of Canadians reported department stores as their favorite places to shop, while only 9 percent will frequent discounters this season.
 Mail order is much more popular among U.S. holiday shoppers than among their Canadian counterparts. Ten percent of those polled in the states name mail order as one of the ways they will primarily shop this season. Less than 1.5 percent of Canadians said they will use mail order as a key shopping method.
 Mail order's popularity, however, varies dramatically from city-to- city in the United States. In New York, 15 percent will shop through the mail this season, compared to only 4 percent in Atlanta.
 Price and Selection
 Of convenience, price, service and selection, price is by far the most important factor influencing where consumers shop for gifts, being cited by nearly half of all those polled. Selection is also significant, with 25 percent of all consumers in each section of the country and in Canada ranking it as important. Convenience and service were not viewed as nearly as important. Convenience was rated as least important by 39 percent, but service trailed closely, with 36 percent of respondents naming it as least important.
 "People want the right merchandise at an affordable price," explained Katzen. "But keep in mind that convenient locations and service are still important, though secondary to price and selection. Stores may not attract consumers because of their service, but if customer service is poor, they may not return."
 Shopping Earlier
 Almost nine-out-of-10 holiday shoppers are purchasing gifts at about the same time as last year or earlier, according to the poll. Only 12 percent say they will shop later than last year. "Those retailers who are expecting larger increases as the season ends may be in for a surprise," Katzen cautioned. "Fortunately, the calendar does allow two more shopping days than 1991 for this season. Those retailers who planned conservatively for the 1992 season will be in the best competitive positions for 1993."
 Other Findings
 Across the United States, cash purchases will account for about 60 percent for all holiday gift purchases this year, according to the study. Only New York City residents reported most of their purchases will be with credit cards; 58 percent said they will opt for credit over cash.
 Of shoppers using credit, three-out-of-four prefer major credit cards over store cards. And one out of every 10 consumers polled plan to make a major gift purchase, costing more than $500, this season.
 These findings are from the 1992 Consumer Confidence Report, which polled 6,869 consumers on their holiday shopping plans and their reactions to changes in the economy. Arthur Andersen offices polled random samples of consumers by telephone in the following U.S. regions: for the Central United States -- Cleveland, Columbus, Ohio, Dallas, Detroit and St. Louis; for the Northeast -- Boston, Hartford, New York, Philadelphia, Pittsburgh and Roseland, N.J., which polled the entire state; for the Southeast -- Atlanta and Jacksonville, Fla.; for Southern California -- Los Angeles, Orange County and San Diego; and for the Pacific Northwest -- Seattle.
 In Canada, Arthur Andersen polled a total of 1,093 consumers in Calgary, Montreal, Ottawa, Toronto, Vancouver and Winnipeg.
 The Consumer Confidence Report is one of several retail industry studies conducted by Arthur Andersen, a worldwide organization providing professional services in accounting audit, tax and management consulting services to clients through 307 offices in 67 countries.
 -0- 12/17/92
 /NOTE TO RADIO STATIONS: Sound bites related to this story are available at no charge by calling 404-978-8963, 11 a.m. through 6 p.m. EST today and 6 a.m. through 6 p.m. EST Friday./
 /CONTACT: Lawson Cox of Arthur Andersen/Atlanta, 404-223-7160/

CO: Arthur Andersen ST: Georgia IN: REA SU:

BR-RA -- AT001 -- 8027 12/17/92 08:07 EST
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Date:Dec 17, 1992

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