By Dennis Quick
Senior Staff Writer

For retailers, the 2003 holiday shopping season turned out merrier than expected.

Consumer spending between Thanksgiving and Christmas grew 6.5% compared with 3% the previous year, according to the Wall Street Journal. It was a last-minute spending surge that in the end filled retailers’ stockings with goodies rather than coal—a nerve-racking holiday-season finish some experts say. Retailers, particularly department stores, have only themselves to blame. 

“Consumers were excited about shopping, but retailers got stingy on discounts,” explains Britt Beemer, chairman of Charleston-based America’s Research Group, a consumer research and analysis firm. “Retailers were focused on Wall Street rather than Main Street. They cared more about earnings than market share.”

Beemer predicts strong consumer spending will highlight 2004 and says this year will mark the end of the nation’s jobless recovery.

“We’ll see jobs and more pay raises,” he claims.

That translates into ringing cash registers. 

A rise in the stock market in addition to low inflation and interest rates also will propel consumer spending, suggests Beemer.

However, another terrorist attack could darken the retail outlook, he notes. “But the Bush administration is doing everything possible to make sure that doesn’t happen.”

Specifically, Beemer sees an increase in luxury retail sales—high-end cars, clothes, jewelry and other expensive pleasure items. He attributes the upscale spending surge to more corporate and Christmas bonuses and an increase in corporate entertaining.

“If a corporate cocktail party is going to be held, you or your spouse might buy a new suit or dress for that party,” Beemer says.

Upscale retailers such as Saks Fifth Avenue, Nordstrom and Neiman Marcus posted strong sales during the past holiday season, reports Forbes. Such luxury buying is part of a trend that annually has been growing 10% to 15%, according to Boston Consulting Group analysts Michael Silverstein and Neil Fiske.

In their book, Trading Up: The New American Luxury, Silverstein and Fiske claim 96% of American consumers, most of them with household incomes at least $50,000 a year, regularly splurge on at least one luxury item, be it a $28 bottle of Belvedere vodka or a set of $3,000 Callaway golf clubs. Driving the new luxury trend, say the authors, is a better educated, more sophisticated and more adventurous consumer class, plus a larger discretionary income.

As for retail outlets, Beemer points out that town centers like the one in Mount Pleasant will continue to be the retail rage. “They’ll pop up all over the country. They’re mixed use, with retail, apartments and condominiums, and office space. They appeal to younger people— the under-35 crowd—and they give communities an identity.”

Malls, on the other hand, are in trouble. Beemer cites their sameness as the root of their problem. “Malls have to re-invent themselves in next five years or become retail museums.”

Identity is crucial to the health of retail locales, says Beemer. That’s why he advises Charleston’s King Street shopping corridor to be careful about attracting too many nationally known stores.

“King Street won’t survive if it’s a collection of national chains,” he warns. “It must retain its identity.”

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