In her tiny shop filled with books both new and used, Sheila Butterworth busies herself by pushing racks outside and moving novels around. In some ways, the preparation in her small space on Betteravia Road is all about catching sales on Black Friday—the historic shopping day after Thanksgiving—but in other ways, it’s just the average, everyday duty of a bookstore owner.
“I’m just trying to thin my shelves,” said Butterworth, owner of The Bookworm.
Every alcove in her shop is exploding with books. So is her back room. And her garage at home. In fact, the petite Butterworth is literally overshadowed by books from floor to ceiling. So holding a holiday sale makes sense. The Bookworm will host a sale on Nov. 28 and 29, offering up to 90 percent off on selected items. Butterworth didn’t order any special merchandise or doorbusters instead she’s offering up what she calls “just perfectly good stuff.”
“I don’t have a Black Friday,” she said. “I don’t get those highs and lows.”
But not every retailer can say that. The day after Thanksgiving has come to be known as Black Friday because it’s the day many retailers go out of the red, literally or figuratively, and into the black financially. In short, it’s often the biggest shopping day of the year. But for smaller business owners like Butterworth, who see steady sales throughout the year, it’s just a great day for shopping.
Butterworth explained that The Bookworm’s survival doesn’t depend on sales from Black Friday, but the day does play a major role in the local economy overall. Though society’s current economic state doesn’t fit the technical description of recession, consumers have been talking about feeling the effects of one. And spending patterns have reflected that perception this year.
The Department of Commerce recently released its Advanced Monthly Sales report for October, revealing a 2.8 percent decrease in sales from September and a 4.1 percent decrease in sales from October 2007. Total sales from August through October were down 1.3 percent from the same period a year ago.
The figures come at a time when retailers are hoping consumers are in a spending mood. Many shop owners depend on Black Friday to jumpstart their fourth quarter sales and put them in the black. So the day is a good indicator of what holiday sales will look like, prompting everyone to hold their collective breath in anticipation of how loosely or tightly consumers will hold onto their wallets.
But retailers aren’t the only ones who hope for—or even depend on—the sales surge led by Black Friday. Cities do, too.
Santa Maria is a retail hub, which should be obvious to anyone who drives down the freeway from the north or south. The signs are there at Broadway or Betteravia. Whether shoppers prefer Stowell Center Plaza, the Plum Plaza, the Target Shopping Center, or the Crossroads Shopping Center, retail is a huge part of Santa Maria’s existence.
Whenever a customer buys something in Santa Maria, that merchant pays a sales tax, which goes to the city and ends up in the General Fund, which ultimately pays for police and fire protection, roads, maintenance, and more.
In the end, the money technically comes back to the consumers and city residents.
These days, more consumers have tightened their belts, meaning less spending, less sales tax revenues, and ultimately, a city struggling to provide services to its residents.
Black Friday usually makes up for losses from slow sales early in the year, but this year may be different. Or it may not be, depending on customer attitudes this season.
Santa Maria’s assistant city manager, Rick Haydon, said the city’s not sure what revenue is going to come from Black Friday, but the last three months of the year are certainly the lifeblood of sales tax revenues, bringing to the city almost 60 percent of its annual take.
“We’re going to be keeping a close eye,” Haydon said. “If sales aren’t up there, that’s going to have a big impact.”
To brace itself against a possible decrease in sales tax revenues, the city has taken measures to ensure it can pay for services.
Sales tax reports for July through September show that sales tax revenues were down 4.6 percent citywide for that quarter.
“We received $200,000 less sales tax receipts during the first quarter than we did a year ago at this time,” Haydon said. “So we’re going in the negative as far as sales receipts.”
Coming into this fiscal year, the city has already budgeted for no increase in sales tax and has faced the reality that it will have to dip into reserves: “Our budget is unfortunately very economy driven,” Haydon said. “Knowing that, we put aside a one-time funding to help bridge the financial gap in a down economy.”
That funding is the Local Economy Augmentation Fund established several years ago, allowing the city to put aside money for a rainy day.
Haydon explained that the city had anticipated taking out approximately $300,000 in operating reserves to balance the budget, but with Santa Maria already seeing $200,000 less than anticipated, as it stands now, that amount will be closer to $500,000 in the red.
“People are spending less and we’re feeling that,” he said. “We knew that we were going to have some turbulent times.”
Hopefully, help will come from local retailers who have come up with good marketing strategies.
One Way Board Shop owners Dave and Dan Pankratz invested heavily in marketing and customer service, hoping for a payoff in the fourth quarter starting with Black Friday.
“We are definitely gearing up,” Dave said.
One Way Board Shop will open at 7 a.m. on Friday and offer 20 percent to 40 percent off the entire store until noon that day, and then 10 percent to 30 percent off the rest of the weekend. The sale is a little more aggressive than normal, Dave said, but it’s a move he hopes will inspire people to shop.
“Hopefully people are ready to start spending more money,” he said. He explained that he’s optimistic because the economy has seen some positives recently, the presidential election is finally over, and gas prices are going back down.
One Way Board Shop relies on the surge in business from Black Friday through Christmas.
“For most retail businesses, it’s kind of make-or-break-you to get through those lean times in the first quarter,” he explained.
For other retailers, Black Friday is just a reason to become more festive. Marty Willey of Company’s Coming in Orcutt said she’s made a bigger marketing push this year in general. In business for 30 years, she has a loyal clientele that’s helped her while some of the bigger stores are closing.
Willey said she’s doing respectable business even in this economy, but she won’t be doing a bigger than usual push for Black Friday—though she’ll have a no-sales-tax promotion on Friday and a few giveaways on specific purchases. She said she usually sees steady business all year.
Even so, she was surprised when she held an open house at the beginning of November and was overwhelmed by the results.
“It was amazing. The best one we ever had,” she said. “I didn’t sit down from 10 in the morning until I got home at 10 at night.”
That bright spot, she hopes, is an indication of things to come.
“I’m hoping for everybody—not just me—that people decide to shop locally,” she said.
But not everyone will. Some people simply want to avoid the mad rush the day after Thanksgiving and opt instead to buy online. Others are looking for brand names at bargain prices. Those people visit the outlet centers.
“I think people become conscious of their dollar. People want to maintain their lifestyle, but they’re getting smarter,” said Joseph Scott, regional manager of Prime Retail Outlets in Pismo Beach.
“Historically we have found that outlet centers do better in hard economic times because people are being smarter with their dollar. It’s about the brands and it’s about the savings,” he said.
To gain customers, the outlets will offer extended holiday hours and post sales at primeoutlets.com/holiday.
Though consumers may find deals elsewhere, the city of Santa Maria recognizes that reality and hopes residents will try to remember where their money ultimately goes.
To keep shoppers close to home, the chamber has promoted its shop local campaign by explaining its role in the community, the importance of shopping local, and how sales tax affects the local economy and businesses.
“A lot of times, people don’t realize that by spending their money here, that money goes to local taxes and helps out local businesses,” said Marcy Lariz, marketing and special events coordinator for the chamber.
Lariz said feelings among chamber members are mixed about how spending will go on Black Friday.
“The general feeling is it’s going to be the weakest one we’ve had,” she said. “My personal opinion is that it can go either way. Because of the economy, people are looking at the bargains, they’re going to be looking to maximize their dollar.”
In that vein, customers have been stretching their bucks lately by finding deals at going-out-of-business sales.
Several stores have closed or announced they’re closing this year in Santa Maria, including Steve and Barry’s, Baker’s Square Restaurant, Linens-N-Things, Circuit City, and Mervyns. Though it may mean less competition for remaining stores, the result has been a more ominous business climate, especially when retailers are themselves suffering from slower sales.
“You can tell that the sentiment is that it’s hard. Comments do go around,” Lariz said. “[Chamber] members with retail businesses say that they’re having trouble getting customers.”
Willey summed up what may be in the back of many retailers’ minds.
“I’m seeing stores go out of business and it just breaks my heart because it can happen to anybody,” she said. “It can happen to me.”
The closing of some of the major big box stores has resulted in more than just a feeling of foreboding to remaining retailers—it’s brought about a loss of a quarter of a million dollars in sales tax revenues to the city. But Haydon hopes that the loss won’t deal a sustained blow to the city’s economy.
“A lot of that is going to be a redistribution of the sales tax dollar,” he said. “You have to think, will people stop buying things because the store they shop at now isn’t there or will they go somewhere else?”
In a year that’s seen major economic fallout, predicting consumer spending habits may be futile. Whether this Black Friday is a boom or bust, in the end, may not matter as much as keeping doors open and holding out for better days. That’s one way Willey has been measuring her success, anyway.
“We’ve had more good days than bad days,” she said. “That’s what we’re thankful for.”
Contact Arts Editor Shelly Cone at scone@santamariasun.com.
This article appears in Nov 26 – Dec 3, 2008.