Small stores face big test this holiday season

Allison Linn Senior writer • Profile • E-mail

For bookstore owner Henry Burton, the difference between a good holiday season and a bad one is the difference between whether he gets a paycheck for the year or not.

This may be one of those years he goes without.

Burton, who has owned Fremont Place Book Co. in Seattle for four and a half years, is among the thousands of independent retailers who rely on the holiday season to keep the doors open and lights on.

With the economy in recession and consumers in cost-cutting mode, this year is expected to be especially tough for smaller shops like his, as customers rein in overall spending and seek out bargains from big chain stores or online discounters.

To get a sense of how small businesses are dealing with the recession, msnbc.com has been following the fortunes of three small stores around the country:  a bookstore, a gift shop and a consignment store. Today we’ll report on how the businesses have fared so far this year. In January we’ll check back in with them again to find out how they did.

One day at a time
Even though the headlines seemed to be blaring more dire economic warnings by the day, Burton, the Seattle bookstore owner, went into November feeling OK about the coming holiday season.

Burton’s bookstore, located in a quirky neighborhood of gift shops, restaurants and bars that  dubs itself “the center of the universe,” saw business improve slightly in August, September and October, compared with 2007.

But in November, as the election passed and interest in political books waned, the reality of a severe economic downturn began to set in. Burton started to hear from some of his regular customers — many also self-employed or independent business owners — that the weak economy was taking its toll on their finances.

That month, business fell by 10 percent.

“I think November is when it finally hit for regular folks,” he said.

On the day before Thanksgiving, Burton had revised his opinion about the holidays, saying he was feeling only “mildly hopeful” the season would be halfway decent.

John Brecher / msnbc.com Henry Burton, owner of Fremont Place Book Company in Seattle

Like a lot of retailers, Burton counts on the holiday season for a good chunk of his profits — in his case, so he can pay off bills and perhaps even give himself a paycheck. While he doesn’t think a dour 2008 holiday season would be enough to run him out of business, it would mean that he starts out the new year behind on his bills and trying to decide which of the books in his inventory will need to be sent back to distributors and publishers.

As is typical for small business owners, he also has little wiggle room to deal with a downturn in business. Even in the best of times, he said, the bookstore is supporting itself more than it’s supporting him.

“Quite frankly, I don’t make a lot of money on this deal. It’s more a labor of love, and fortunately I have other sources of income that support me so I don’t need to pay myself,” he said. “If I had to live on this business, I wouldn’t be able to do it.”

To make ends meet, he relies on investments and helps run a business teaching dance.

Burton bought the 20-year-old store after having done some consulting work for its previous owners. (He previously had run a bookstore elsewhere in Seattle but closed it after a Barnes & Noble opened nearby and business fell off.)

Burton gets business from tourists and loyal neighborhood residents, and he tries to stay competitive against bigger chains and online stores by offering same-day special orders and individualized service.

To get through this holiday season, he planned to stock fewer pricey coffee table books and concentrate more on less expensive calendars and other gift items.

By Thursday, Dec. 11, business for the month was tracking down about 8 percent from last year. But that weekend, Burton was pleasantly surprised when business was about even with the comparable weekend in 2007, despite a cold snap and light snowfall.

“As long as we don’t get any major snowstorms or anything like that, I’m thinking we might do as well as last year,” he said Monday.

Still, with so much uncertainty, he admitted his mood was changing by the day.

“If we have a good weekend, like this, it’s like, ‘OK, good, I think we’ll be OK,’” he said. “If we have a couple down days it’s like, ‘Oh, man, the world’s gonna end tomorrow.’”

‘We didn’t take chances’
For Ellen Seale Durst, owner of the Artisan Center in Denver’s tony Cherry Creek neighborhood, the ominous signs began in September.

The gift shop, which specializes in jewelry, scarves, bags and children’s items, saw business fall 10 percent that month as the financial crisis began to hit in full force.

MORE FROM SMALL BUSINESS

Small business Section Front

Small Business Health: Swine Flu   Small Business Inspiration: 'Ten9Eight'   Business Answers: To cut or not to cut   Elevator Pitch: Nomie Baby You’re fired! How to get rid of bad customers Ready to hire? Consider your options   Local lenders   Newsmakers: The credit crunch   Open Dialogue: Community banks   Business answers: Employee morale Small business Section Front   Add Small business headlines to your news reader: