Small stores face big test this holiday season

“As soon as the markets started going and our financial system started breaking down, we felt it,” said Durst, who has run the store for 32 years.

The normally busy neighborhood, which is packed with shops, restaurants, businesses and upscale homes, also grew quieter and has stayed that way since.

“We definitely see less people on the sidewalks. It’s very noticeable,” she said.

The sudden drop in business left Durst fretting about the holiday season, when the store typically does 30 percent of its business. Moving quickly, she decided not to hire as many holiday staffers, cut back on little extras wherever she could and re-evaluated her product mix.

In jewelry, which accounts for 40 percent of the store’s sales, she opted to focus on less expensive pieces. In general, Durst and her staff decided to be more cautious about what inventory they took on.

“We didn’t take chances,” she said.

Over Thanksgiving weekend, the strategy seemed to work well. The store saw brisk sales of jewelry items in the $30 to $50 range, and discounted items continued to do well.

“We’ve met the goal every day, but the goal is 10 percent down,” she said in early December.

By Thursday, Dec. 11, Durst was even more relieved to see that business, while still down over the previous year, was doing better than she had hoped. The store was still seeing fewer shoppers than in previous years, she said, but many who came in were spending money — and expressing concern and sympathy for her small business.

The progress left Durst hopeful that the store would break even for the year and actually worrying that she would run out of inventory because she had been too cautious in her forecast.

But the following Sunday, another roadblock emerged when temperatures dipped into the single digits, keeping would-be shoppers at home.

By Monday, as the temperature hovered below zero and the forecast called for bitter cold and snow for the rest of the week, Durst was bracing for Mother Nature to deal a blow. So far, she said, business for the month was down between 11 and 13 percent, and she wasn’t expecting shoppers who stayed home on the cold days to come in later.

“They never come back, never,” she said. “If we have a snow day, it’s just lost.”

For some, a bad economy is good for business
When Sarah Meyers opened the doors of her Lexington, Ky., consignment shop in August 2007, the economy appeared to be doing fine and credit was easy to come by. For some businesses, the recession that the nation entered just a few months later might have been disastrous. But for Meyers, a bad economy may actually have been a boost to business.

Meyers said the consignment shop, Ladybug Landing, which focuses on reselling upscale maternity and children’s clothes, has benefited from an influx of people looking to earn some extra cash by selling the pricey outfits they — or their children — may have worn only a few times. In addition, she thinks the tough economic climate has prompted more people who might otherwise have bought new clothes to come to her store seeking a bargain.

She thinks the company also has benefited from its location, on a busy street across from a large obstetrics clinic instead of in a traditional shopping center.

Ladybug Landing reached profitability after about a year, Meyers said, and business has held up through the financial crisis this fall. Sales were up 120 percent for November, as compared to November 2007 and were tracking up 95 percent for December as of the middle of the month.

Unlike other retailers, Meyers said she doesn’t usually see a rush of holiday business, instead getting bumps in traffic when the weather changes. But as holiday shopping started ramping up in December, she did notice more people coming in to cash out on whatever they had earned selling their clothes at her store.

“Everybody’s trying to earn a little bit of extra money to go out and do their Christmas shopping,” Meyers said. “It just seems like everybody’s pinching pennies, and I can understand that. My husband and I are the same way.”

Meyers also had success with two weekend sales in December, in which she discounted some items by 40 percent to compete with more traditional retailers’ holiday sales. Like many other retailers, she’ll also hold another sale, starting the day after Christmas, so she can clear out winter inventory in anticipation of spring and summer items.

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