THIS STORY HAS BEEN FORMATTED FOR EASY PRINTING

Looking for a holiday break

Shoppers being watched closely for clues about economy over tax-free weekend

By Robert Weisman and Taryn Luna
Globe Staff | Globe Correspondent / August 14, 2011

E-mail this article

Invalid E-mail address
Invalid E-mail address

Sending your article

Your article has been sent.

Text size +

This is the sales tax holiday that puts consumers to the test.

Yesterday they were not simply bargain hunters on the prowl or window shoppers hanging back on the first day of a tax-free summer weekend in Massachusetts. After one of the most turbulent weeks in stock market history, marked by triple-digit swings of the Dow amid wrenching economic uncertainty, they were arbiters of consumer sentiment.

The big question, for economists and politicians, as well as merchants and shopkeepers, was: Will the state’s shoppers open their wallets and spend some money?

At the Thos. Moser warehouse in North Billerica, the answer came early. Deb Dellacona, a 49-year-old Wenham resident, pulled into the parking lot more an hour before the 9 a.m. opening. Within minutes of entering the store, she had purchased a recliner and an ottoman.

“We’ve been in a financial crisis for so long, I can’t let it drag me down any more,’’ said Dellacona, plunking down $3,000 to buy the high-end furniture and taking advantage not only of the 6.25 percent sales tax holiday for items under $2,500 but also of the warehouse’s own reduced rates aimed at attracting customers. “You have to live.’’

The mood was more restrained at the South Bay shopping center in Dorchester, with some shoppers saying they have become more frugal and were limiting purchases to a single item, such as a computer or television.

“I want to stay cautious in case anything happens in this economy,’’ said Roxana Hidalgo, 55, of South Boston, a clerical worker at two Boston hospitals. Hidaldo was looking for a refrigerator yesterday. She compared the prices at Best Buy with those at Sears and Home Depot, but ultimately decided not to make a purchase.

No statewide retail sales figures were tabulated yesterday, but some shop owners said traffic appeared slower than in past years, and the whipsawing markets and slowing economy had caused them to lower their expectations. Others said they were experiencing brisk traffic and anticipated record-breaking sales over the weekend.

“My enthusiasm has been tempered by economic reality,’’ said David Moser, owner of the North Billerica furniture warehouse, noting that he and many other retailers have had to cut prices to get people in the door even with the tax holiday. “It’s not a sales strategy, it’s a survival strategy,’’ he said.

But Barry Joseph, owner of bar stool and dining set retailer Chair Fair, said his worries about how consumers might react to volatile market subsided yesterday. “We’re having a phenomenal day,’’ said Joseph, who has stores in Braintree and Everett.

Last August’s tax holiday fell short of the state’s projections, with shoppers saving $19.9 million in taxes rather than the $20 million to $23 million in savings that had been forecast. Figures for this year won’t be reported until December, though the state Department of Revenue has estimated Massachusetts will forgo $20.5 million in sales tax revenue.

Because consumers account for more than two-thirds of all economic activity, this year’s sales tax holiday was being watched as an economic indicator.

“Given the softness in the economy, it plays a bigger role,’’ said retail analyst Madison Riley, managing director for the Kurt Salmon consulting firm in Boston. “People have been extremely cautious. They buy when they are getting value because every dollar counts.’’

Riley said the news about the US budget deficit and the wrangling in Washington over raising the debt ceiling had dampened consumers’ spirits. “You can get whiplash watching the market,’’ he said. “And the news is all about cutting, about pulling back and not spending. It’s just negative, and it affects the consumer mindset.’’

Mike Tesler, a partner at advisory firm Retail Concepts in Norwell who teaches retailing at Bentley University in Waltham, agreed the roller-coaster financial markets have left people fearful. “Maybe because the market ended the week on an up note, that will make people more relieved and bring them into the stores,’’ he said.

Many shoppers, as in past years, were capitalizing on the sales tax holiday to buy big-ticket items they had planned to purchase anyway.

Justin Baker 26, drove from Andover to Long’s Jewelers in Burlington on Friday to pick up his wife’s $1,500 diamond wedding ring. When he was told of the weekend’s tax-free break, he reversed directions. Yesterday, Baker returned for the ring, saving nearly $100. “It’s worth it,’’ said the scientist, who works at Hanscom Air Force Base in Bedford. “I can put that money toward our anniversary wedding getaway.’’

At Framingham-based office supplier Staples Inc., which typically enjoys a brisk back-to-school business in August, it was hard to tell how much of this weekend’s traffic was made up of shoppers who would be coming in before Labor Day anyway, said spokeswoman Karen Pevenstein.

“We see the tax-free holiday as icing on the cake,’’ Pevenstein said, noting that Staples is offering sales and promotions on laptop computers and office supplies as incentives. “With this economy, we know that customers are looking for deals.’’

Some consumers were refusing to participate in the tax holiday, citing jitters over the economy or objections to a move that deprives the state of much-needed revenue.

“It’s a silly holiday,’’ said 37-year-old Dan Sheldon of Arlington, who sat in a Starbucks in Burlington but was staying clear of the mall, “a small discount that’s taking away from our schools and roads and everything government pays for.’’

Hailey Pessotti, 22, of Woburn, walked through Sears in the Burlington Mall empty-handed. “It’s hard to pay all the bills you need to pay,’’ she said. “I can’t shop.’’

The story was the same for Rosemary Dove, 49, of Roxbury, an X-ray technician at Tufts Medical Center who pushed a cart through Best Buy for her godmother. Dove said she herself wasn’t shopping this weekend because she can’t afford to. “I have no money,’’ she said.

On Boston Common, a 51-year-old Weymouth man named Richard, who would not disclose his last name but said he is a striking worker at Verizon, said, “My whole team is off, so we really can’t be doing any shopping right now.’’

Others were sticking more tightly to a budget, though they weren’t ready to give up shopping. “I’m usually a shopaholic,’’ said Pamela Mason, 34, a Dorchester woman who bought a 40-inch Sony television for about $400 yesterday at Best Buy. “But I haven’t been shopping as much because things have been so tight.’’ Mason, a lab assistant, said she wasn’t going to buy anything else over the weekend.

Despite those reluctant to shop, Sarah Cooney, spokeswoman for Circle Furniture, an Acton-based chain of furniture stores, said the stores were enjoying higher sales and foot traffic than in past years.

Ken Park, 33, a shopper at the Circle store in Cambridge, said he was searching for a living room set. Park, an engineer, said the economy hadn’t made him more cautious.

“We’re all aware of the markets,’’ he said, “but I don’t think the trickle-down effect has hit me yet.’’

That free-spending sentiment was echoed by Anne Garrity, 81, of Arlington, who snapped up a Kenmore washing machine at the Sears in Burlington Mall.

“I don’t give a damn,’’ she said of the stock market gyrations. “I let my husband worry about that.’’

Globe correspondents Kathleen Pierce and Miriam Valverde contributed to this story. Robert Weisman can be reached at weisman@globe.com,.Taryn Luna can be reached at tluna@globe.com.