Spending gets pragmatic

Posted: Sunday, October 12, 2003

Kris Owens of Homer was at the Sears store in Kenai on Saturday morning shopping for a new refrigerator. Although she is among the 598,813 Alaskans who received Alaska Permanent Fund dividends this year, she said she had no plans to use it toward her purchase.

"I know I've needed it for awhile," Owens said. "I've sort of had the money set aside. My dividend will just go into savings."

Saving could be what was on the mind of many Alaskans during the first weekend after payments were dispersed. Owens' daughter, Mary Kate Field, 16, said she was splitting her fund, putting half in the University of Alaska college savings plan, and the other half in a savings account.

"I'm going to save that (other half) for college, too," Field said.

Wednesday began what many expected to be an all-out shopping frenzy, as direct deposit payments of $1,107.56 from this year's permanent fund dividend hit 438,125 bank accounts across the state.

While some Kenai Peninsula retailers hawking consumer goods began benefiting from the buying bonanza brought on by the state's petroleum bounty early, other retailers said the week was not all that spectacular.

"It really hasn't hit us yet," said Alan Reitter, manager at Soldotna outdoor equipment and apparel retailer, Wilderness Way just before closing Thursday evening.

"We're on par for what we've done in the past around this time of year. I think a lot of people have either predecided what they're getting or they're going to shop around first."

He said the store historically sees dividend purchases later in the month, as checks reach people's mail boxes.

"We normally see the second and third waves," he said.

Reitter said many people travel to Anchorage to make purchases, and pointed out that his daughter probably would make the trip to purchase a laptop computer for school.

Skyview High senior Maria Rich, 18, said she can't recall how she spent much of her $1,540.76 from the 2002 dividend.

"I bought a plane ticket to California," she said. "I think I spent the rest on shopping."

But this year, she said she's taken on a new attitude, investing her prize in her future after getting some advice from her boss.

"I'm getting smarter," she said. "I put some in my IRA (individual retirement account) and the rest into savings. I would assume most kids my age are saving their money for college."

Adults didn't appear to be splurging on toys like snowmachines and related accessories, said Brian Stephens of Arctic Motor Sports in Soldotna

"Usually, about this time, people are in the door buying as much as they can," he said on Saturday. "Stuff they don't need. But we've been dead."

Stephens said although some people have been in to make down-payments on some of the high-end machines those costing upwards of $6,000 nobody is buying out the store. And, he said, he can understand why.

"They're not going on the shopping sprees we've seen before," he said. "It's only (about) $1,000. I'm using my dividend to pay bills."

Some businesses, however, saw favorable returns from peninsula dividend recipients, beginning on the first day deposits were confirmed. Travel professionals, auto dealerships and furniture stores were prime locations for people with dividends.

"Wednesday was our second biggest day ever," said Michael Keeney, manager of Bailey's Furniture Outlet in Soldotna on Thursday afternoon. "Saturday will probably be almost as big."

He said October sales generally are as much as 30 percent over "regular" months. But he admitted that last year's dividend season saw a lull, with 20 percent fewer sales on the first day money was dispersed.

"One of the dividend managers came out and announced that we may not be seeing the dividend again," Keeney said. "So people kind of hung on to what they had."

Ken Peterson, sales manager for Hutchings Chevrolet-Cadillac in Soldotna, said the end of September and the early part of October are perennial hot periods.

"They are definitely some of the bigger months of the year, every year," he said. "You generally see an (increase) of about 30 percent over other months around October dividend time."

Peterson said in 2001, when dividend checks were $1,850.28 each, Hutchings had its best October ever, although he wouldn't indicate how much the dealership did in sales for that period.

"If you're looking at a four- or five-person family, that's $8,000 or $10,000 to play with," he said.

Peterson said the big sellers are pickups and sport utility vehicles. His company, like many Alaska dealerships, have special down-payment deals to work with dividends. He said with the combination of dividends, end-of-year model rebates and 0.0-percent interest financing, he expected to remain busy through the weekend.

Char O'Guinn, manager of the Soldotna One Stop Travel office, said business saw a marked jump Wednesday when dividend money was deposited. But she said it slowed down again, soon after.

"We did big business," she said of Wednesday. "We probably had 18 or 19 sales, versus five, six or seven a day in the last few weeks. And these were cash sales."

O'Guinn said Thursday was a relatively slow day, although she anticipated seeing more in the way of spending later in the month.

"As people get theirs in the mail, we will usually see a few more," she said.

Kenai Spenard Builders Supply assistant manager Jeff Warton said shopping at his store didn't pick up much, but he suggested that there are particular buys that customers would make this time of year.

"Big-ticket items," he said. "They'll either upgrade their tools or buy major appliances. It's funny how practical some people get."

But at the Kenai Sears, Bryan Lien said customers weren't flocking in to spend money on big-ticket purchases following what was a slow September.

"We were expecting it to pick up after dividends were deposited on Wednesday," he said. "With the economy like it is, and no snow last year, if their income depends on snow, they may want to hold onto it to see how this winter is."

As Owens perused the selection of refrigerators at Sears on Saturday, she displayed the same practical attitude Warton spoke of.

"I think I found one I like," she said. "If the price is right."

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