Economists might look at unemployment numbers or other detailed data to forecast the business climate, but for restaurateur Damien Cavicchi, iced tea told the story.
In August 2007, Cavicchi and his wife, Lindsay, opened their dream restaurant, a downtown euro-Italian eatery called Sugo that specialized in homemade pastas, sausages and other delectables. The two had already opened and sold a successful café in the River Arts District and were drawing a dedicated clientele to their new place with award-winning food.
But by the next year, Cavicchi noticed disturbing trends. More people were coming in with coupons, previously “no-holds-barred” corporate parties had spending limits, and diners passed on wine for cheaper options, such as tea. Friends at other restaurants reported similar problems.
“Their sales were down 30, 40, 50 percent. It was just serious, serious scary week-to-week business that has been prolonged for this uncomfortable amount of time,” Cavicchi said.
In October, 14 months after opening, the Cavicchis closed Sugo rather than risk going into deep debt.
Sugo’s problems illustrate how Asheville and the surrounding area are not immune to national economic problems, including a significant clampdown on consumer spending.
Local financial numbers for the fall are not yet available, but summer data show retail sales down for the year 4.6 percent compared to 2007. For business owners and employees, that has meant the loss of spending power and in some cases, the loss of jobs. For others, it has meant an uptick in business as shoppers economize.
“I myself as the owner of the restaurant was in the same boat,” Cavicchi said. “I wasn’t going out to eat in fancy restaurants.”
National, some local sales ailing
Nationally, this fall has been a dismal period for retailers, with consumers staying away in record numbers. Retail sales fell by 2.8 percent in October, the biggest drop on record, eclipsing the 2.65 percent plunge following the Sept. 11, 2001, terrorist attacks. Total taxable sales in Buncombe County are down $91 million over last year, according to state economic data.
October’s decline in sales was the fourth month in a row of decreases, the longest stretch of retail weakness on record.
Shop owners are braced for what could be the worst holiday shopping season in decades with economists forecasting a recession that could turn out to be the steepest since the 1981-82 downturn.
A survey of the nation’s big chain retail stores found that retailers suffered through the weakest October in at least 39 years even though they tried to gin up more sales by a frenzied round of price cutting.
In Asheville and Buncombe County, stores saw a 5.9 percent increase in buying in July. But that wasn’t enough to offset bleak spring sales that saw nose dives of 26.1 percent and 17.7 percent in March and May.
Unemployment, meanwhile, had crept up about a percentage point since last year.
Tom Tveidt, research director with the Asheville Area Chamber of Commerce, said he’s still waiting for the local fall numbers, but has a sense they won’t be good.
“Anybody that walks in the door, I ask them how they are doing in their business,” Tveidt said. “I don’t hear any horror stories yet, but across the board, everybody has said things have slowed down.”
Among those hit hardest are sellers providing services consumers see as luxuries.
Tattoo artist Rick Brown, of Asheville, gets paid when people feel they can afford his services. And for the past several weeks, that hasn’t been very often.
“If people don’t have money to spend, they don’t come spend money with me,” Brown said as he loaded his car with paper towels and other household goods in a Wal-Mart parking lot.
“I made money so I’m out here buying stuff that I needed for weeks now, but couldn’t come out and let myself buy.”
Mixed picture for some
Some say it might be too early to paint a gloomy local picture. Popular downtown gathering spot Scully’s bar is the kind of place where customers don’t mind wading into a crowd to get a drink. During a recent midmonth stretch, however, many of its tables were empty.
Co-owner Paige Scully said the week was one of the slower she’s seen, but it wasn’t necessarily the harbinger of disaster.
Food and beverage transactions are among the top ticket items when it comes to overall sales in Buncombe County, and they can be up or down, depending on season, she said.
“It’s hard to judge because every year you get these dips like between school starting and before the holidays. Other than this week, I wouldn’t say we’ve been that slow,” Scully said.
In fact, some retailers reported a small surge in sales last weekend.
Others have seen good gains as shoppers hunt for bargains. That includes Wal-Mart, which nationally grew 7.5 percent in the third quarter.
Local businesses falling in a similar category include Asheville discount grocery retailer Amazing Savings. Consumers might be slamming shut their wallets for some purchases, but this year has remained steady at the store that specializes in slightly damaged or expired goods, said manager Joseph Abousaid.
“Things have been steady. About the same as they were last year,” Abousaid said during a busy Monday morning.
Outside the store, Brenda Brown, of Dana, had driven from Henderson County to stock up on cut-rate groceries. Brown makes a living renting homes she owns and uses the cash to raise her granddaughters.
Spiking prices on goods, like food, caused her to recently to raise her tenants’ rents.
“I had to increase the rental prices. I had no choice. I can’t buy groceries,” she said. “You can wear your old clothes, but you have to eat.”
Source: Asheville Citizen Times
