Retailers manage to hoist their sales.

• Position: Retail

Many Tar Heel merchants started the fall in a funk. A sputtering economy and the Sept. 11 attacks had them predicting a dismal Christmas. Their sales had been down in September, and, with the recession, it looked as if things could only get worse. But by October, shoppers were returning to the stores, spurred partly by the Afghan war turning in America's favor. "Never bet against Santa Claus," quips Fran Preston, president of the North Carolina Retail Merchants Association.

North Carolina numbers weren't available in early December, but the U.S. Commerce Department said the nation's retail sales roared back in October, rising 7.1% -- the biggest one-month gain ever recorded. That was fueled partly by strong auto sales, thanks to low interest rates and generous dealer incentives.

Still, not even the most optimistic merchants were expecting a return to the heady days of the late '90s. In the fiscal year ending in June 1999, Tar Heel retail sales jumped 8.1% over the prior year. That compared with 1.8% in fiscal 2000 and 2.8% in 2001.

Of course, averages are an abstraction: Somebody is typically higher, and somebody lower. And lately, Charlotte has been falling short. Its sales slid 3.7% in fiscal 2001, falling by $500 million from the prior year. But as more stores and shopping centers open in fast-growing surrounding towns, shoppers there have continued their spree. Concord experienced a 9.1% increase in sales; Mooresville, a 15.8% increase; and Cornelius, a whopping 56% increase. "Retailers have caught up with population growth," says Frank Warren of Frank Warren & Associates in Charlotte, which tracks retail real estate.

The Triangle finished fiscal 2001 with healthy increases all around. But two massive regional shopping malls are being built that could change the calculus next year: Streets at Southpoint in Durham, along Interstate 40, and Triangle Towne Center in Raleigh. "We are going to see a shakeup pretty soon," says Michael Williams, vice president of Raleigh-based Karnes Research, which studies commercial real-estate development.

In the Triad, the two biggest cities, Winston-Salem and Greensboro, both beat the state average, with sales up more than 3%. But in High Point -- hit hard by a slowdown in the furniture industry -- 2001 sales stagnated, coming in at $1.7 billion, the same as 2000.

In tough times, folks turn to comfort foods, which could account for the rise in Winston-Salem-based Krispy Kreme Doughnuts' stock in 2001...