Recession Research Paper

Recession hits local retail industry hard

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San Diego County retail sales
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Story Highlights
San Diego retail trade sales decreased 7.5 percent in 2008 when adjusted for inflation. Small and large retail businesses have made cuts to decrease losses. Economist says sales will remain stagnant in the near future because of debt, the collapse of the housing market and high unemployment

Recession hits local retail industry hard
By Elouie Gopez November 23, 2009

President Barack Obama’s “cash for clunkers” program provided a boost to overall retail sales in August, with an increase of 2.7 percent compared to sales in July, according to an article
The recession has had an enormous impact on retail, resulting in employee layoffs, store and mall closings, bankruptcy and in cases such as Mervyn’s and Circuit City, liquidations. Though the U.S. Census Bureau reported in August that overall retail sales increased, sales subsequently decreased 1.5 percent in September and 5.7 percent compared to September 2008. Overall, the Bureau estimates that retail trade sales are 6.4 percent below last year. According to Dr. George Belch, a professor and Chair of the Marketing Department at San Diego State University, weak sales can be contributed to conservative consumer behavior. The economic downturn has drained consumers of income, putting an emphasis on necessities and cutting back on discretionary purchases, or purchases for non-essential items that can be put off later. As a result, Belch says retail sales are then harder to grow because of a lack of demand. San Diego sales spiraling downward San Diegans are no exception. According to a September report
With lessened income comes a greater emphasis on necessities such as food and housing. According to the report, “retail sales of nearly $1 billion have disappeared across the County of San Diego the past two fiscal years ending [in] June 2008.” Local Economist Kelly Cunningham, a Senior Fellow for NUSIPR, says the decline in sales can be attributed to not only a decrease in personal income, but also to the psychological impact of seeing fellow citizens financially struggling as well. “When you see your neighbor laid off and struggling, it may lead you to spend less,” said Cunningham. “It makes you think ‘I could be next’ and decide to conserve what you have. In other words, consumer confidence is down.” Small businesses braving the storm However, the losses in sales add up to more than just dollars and lost sales. Small business owners and employees are feeling the pinch too. Jim Parenti, the owner of Artifex Entertainment, a comic book and gaming specialty store in Mira Mesa, has had to make many changes both personally and professionally in order to keep his store afloat. Parenti said his work hours have increased, with his average work week increasing to 60 to 70 hours a week. This estimate doesn’t include the time he spends out of the store researching and buying new products as well as selling higher-priced items to collectors. Parenti said he hasn’t had a day off work in approximately six months. With his income going down, Parenti said he has also had to