Steep drop in Chicago area retail sales

March 19, 2010 3:27:00 PM PDT
Retail sales have taken a dive in the Chicago metropolitan area. According to a study, area merchants suffered their steepest drop in sales last year since 1985.What does this mean for the economy?

Retailers felt the pinch across the board. From restaurants and bars, to furniture and electronics -- and even clothing and accessories -- consumers have been slow to buy.

The new report indicates that the past two years have been tough for local merchants, who hope the worst is almost over.

From the city's great State Street to its posh North Michigan Avenue, shoppers still have a tight grip on their buying.

"I'm looking for a bargain. I'm looking to be able to splurge, but am not going to do it continually," said shopper Mary Hubbard.

Some industry analysts say the attitude reflects a new practical consumerism and is -- along with the economy -- to blame for the biggest annual decline in Chicago's retail sales in 25 years.

"The consumer doesn't have the equity in their home to use as a piggy bank, and so with rising unemployment, neighbors being out of work, the new chic is to be frugal," said John Melaniphy, a retail analyst.

According to the report , which is due out next week, retail sales in the Chicago metropolitan area, including Cook, Lake, Will, DuPage, Kane, and McHenry counties, fell 8.7 percent in 2009 to $92.9 billion from the year before.

That marks the largest yearly drop since the publisher of the report began tracking the figures in 1985.

Data also shows a 4.8 percent decrease in 2008, a record at the time. Back-to-back years of declines have hurt local merchants already contending with the nation's highest sales tax.

"No one wins. Employees lose commissions, the city and county don't get revenue and people go on the Internet and try to do something else," said John Chikow of the Greater North Michigan Avenue Association.

Chicago's dining scene waned as more people stayed home and tourism slowed. Sales at restaurants and bars declined by 5.4 percent, as well.

"Basically on a budget. Only allow certain things that we can allow ourselves to play with," said shopper Paul Jones.

The report is based on sales tax data from the Illinois Dept. of Revenue also showed for the first time declines in all 10 categories measured.

But with declines slowing and pent up consumer demand building, some hope retail growth is just around the corner.

"I'm a great looker, but yesterday I saw the sale signs, [and] I thought maybe I can do some purchasing," tourist Bridget Kesner said.

Experts say it appears the declines have gone as low as they are going to go. So, a bit of a recovery could start to be seen in 2012.