D.C. retailers turn to promos, events to lure customers as federal layoffs threaten sales
The Trump administration and its cost-cutting Department of Government Efficiency has, so far, cut tens of thousands of jobs across the federal government. Employee reductions could affect at least 12% of the 2.4 million federal workers, according to The New York Times. Additionally, federal agencies may close buildings or relocate to new locations.
In the Washington, D.C. region and in other cities that house agency headquarters or military bases, that adds another reason for anxious shoppers to tighten their budgets — on top of the same macroeconomic concerns like tariffs and still-elevated interest rates impacting customers all across the country. As a result, small businesses have looked to new ways to lure in customers, from community gatherings to discounts and promotions.
“It does disrupt people, and people start to think about [whether] they actually want to stay in these jobs,” said Kathy Dalby, CEO of Pacers Running, which has five stores in D.C. and northern Virginia.
Retailers already see reasons to readjust
Dalby said February was one of the worst months on record for Pacers, which missed its sales targets by 23%, she told Modern Retail. As a result, she launched an eight-week sales sprint beginning that month as sales performance started to dip, including discounts for returning customers and social media followers. The store also hosted special events for nearby groups such as high school run clubs, students and medical staff; running events sometimes paired with food or discounts; weekend promotions like buy one, get one 30% off; and sales incentives for her employees.
“We consciously took some margin hits just to get people in a cycle to come in and see the products,” Dalby said, adding that she believes that made a positive impact. “Our March was very strong compared to our February.”
Additionally, Dalby worries about a potential government shutdown in October. Congress passed a stopgap bill in March to keep the government open, but only through September. A shutdown could cost Dalby’s business roughly $1 million in sales, she said, because it likely would cancel a Marine Corps marathon on federal property at the end of October for which Pacers sells merchandise such as commemorative jackets.
David Ward, president of D.C. real estate firm H&R Retail, said his clients have yet to report sales downturns, but he still expects the federal layoffs to eventually make an impact on retailers.
“It’s going to have a negative impact on people’s willingness to spend on luxury items and nonessentials,” Ward said, adding that retailers have bigger concerns right now. “We’ve just been digesting some of the other negatives in the market. Higher interest rates have been plaguing us for a long time, and increasing construction costs — or fear of increasing construction costs now because of tariffs — are impacting some retailers that work off smaller margins.”
The latest recession indicator: puppy yoga
Ally Kirkpatrick, owner of Old Town Books in Alexandria, Virginia, said this moment reminds her of the uncertainty and fear in the early days of the Covid-19 pandemic. She said a sister of one of her employees was recently furloughed by the federal government, and that although that sister has since returned to the office, she is still nervous about her job stability as things change every day.
“People are a little bit on edge,” Kirkpatrick said. “What bookstores do well is good vibes. That’s what we’re leaning into and hoping that it helps us keep those customers through the rocky times.”
As a result, she said, more customers have expressed interest in feel-good programming, and she has started hosting more events. A puppy yoga event at the bookstore in March “sold out in, like, two seconds,” she said, adding that she plans to do another one in June.
“Folks are turning toward independent retailers like us for that emotional reprieve from the real world,” she said. “We’re a community outlet, and I’ve definitely noticed that that seems to be appealing to people a lot right now.”
Kirkpatrick said she hasn’t seen the federal layoffs impact her sales numbers yet, but she is worried that as more people try to budget more, they may pull back from shopping at independent bookstores.
Dalby has also noticed that people are looking for a break from the bad headlines. In making decisions about their disposable income, people may opt to buy new shoes instead of going out to eat. And even if they’re not buying anything from Pacers, the stores regularly hosts social runs and races that at least keep them around.
“Most people turn to exercise when they’re stressed out,” she said. “We’ve got a lot of people coming out to run with us. They’re buying running shoes; they’re cheaper than a gym membership.”
That may not last forever, Dalby admits.
“At some point, you can’t afford to buy another pair of shoes,” she said.