'Tis the season to spend, but maybe a little less

At the exclusive Arboretum shopping mall in north Austin, Texas, the parking lot is dotted with BMWs, Porsches, Land Rovers, and Mercedes Benzes as people getting off work step into shops like Restoration Hardware, Ann Taylor, and Saks Fifth Avenue. For the past three holidays, such well-heeled shoppers have given merchants cause for joy.

But the travails of the stock market, coupled with a downturn in the economy and high credit-card debt, are likely to take some of the luster off this Gilded Age of consumerism.

While retail sales will still be strong, economists expect a more modest holiday buying season, with consumers forgoing $2,000 down pillows and heated dog houses. In particular, dotcom entrepreneurs, no longer worth millions, may have to be content with tap water instead of Perrier to brush their teeth.

The watchword this season: cautious rather than conspicuous consumption. "We're looking for a hiatus, not an end" to robust buying, says Irwin Cohen of the accounting firm Deloitte & Touche.

Indeed, a survey done by Deloitte & Touche for the National Retail Federation shows the average consumer will spend $836 this holiday period, the same as last year.

If buyers are becoming more cautious, it hasn't yet hit Vaillancourt Folk Art, which makes high-end Christmas collectibles that retail from $25 to several hundred dollars. "We're an early barometer," says Gary Vaillancourt from his Sutton, Mass., studio. He says sales, so far, are well above last year's Christmas levels.

Another high-end retailer, Chicago-based Mark Shale, says its business has remained strong for its $700 men's suits and expensive skirts and blouses. "We're expecting a high single-digit to low double-digit kind of season," says Scott Baskin, co-president of the retailer.

A sampling of shoppers in Austin echo the retailers' confidence. Rebecca Thorburn, returning clothes at Banana Republic, says she hasn't started Christmas shopping yet. But she's not going to cut back. "I'm not worried. It seems like the economy is still very strong," says the consultant.

Maggie Kaatz and Ashley Lundgren, both seniors at a private high school, are stepping out of a BMW and into an Express store to "waste a little time." They smile widely when asked if they will cut back on their holiday spending. "No, not even a little bit," says Ashley, her braces shining in the sun. She estimates that last year she spent $800 on gifts. "I'll probably spend even more this year."

Maggie, in a pink Gap pullover, nods her head and says she spent about $30 each on her 10 friends.

Mall operators, in fact, see teenagers like Maggie and Ashley as an increasingly important buying group. That's certainly the case with Simon Malls, one of the nation's largest mall operators. "The mall is a social environment for them, and we embrace teen demographics," says Sally Hertz, regional marketing director.

The numbers are impressive. They show 49 million consumers between the ages of 12 and 24 with a combined income of $150 billion. And they like to buy music, clothes, and electronics. "They are expecting to spend $100 to $300 each this holiday period," says Colleen Woods, an expert on teen demographics.

Still, adults have some more pressing concerns. For example, one potential drag on holiday sales is the high level of debt. All year, consumers have been putting purchases on their credit cards.

That's the case with Liz Bradley, a publicist in Boston. "I went crazy charging things online. Now my cards are all maxed out," she says, explaining why her holiday season may be more modest.

The slumping stock market may curtail retail spending as well. Billions of dollars in value have disappeared as the market, particularly the NASDAQ, has backed off. Some economists are concerned about this so-called "reverse wealth effect."

Certainly the market is a concern for David Derbonne, a network engineer in Austin. "I'll probably hold back a little [on spending] just because I don't know what's going to happen," he says. "It really depends on the market."

In his line of work, he says, he follows the market closely. "I've seen it first hand. I've been watching the market tumble and tumble. There's got to be an ending point."

On Boston's trendy Newbury Street, Debbie Creel, on vacation from Las Vegas with her husband and daughter, expects this holiday period to be "more modest" because of the stock market. Her pessimism, she says, is related to the presidential election.

There are, however, plenty of shoppers who still plan on an expensive holiday season. Erin Flynn, visiting Boston from San Francisco, plans on spending big "because I just got a new job and a big raise, and all my family and friends know it."

Mr. Cohen says the calendar is favorable for shoppers such as Ms. Flynn. Since Christmas Eve falls on a Sunday night, there are two extra weekend days. "The calendar is important," he says.

* Reported by staff writers Ron Scherer in New York, Kris Axtman in Austin, Texas, and Liz Marlantes in Boston. Written by Mr. Scherer.

(c) Copyright 2000. The Christian Science Publishing Society