Recession Puts a Crimp on Local Retailers’ Expectations

Southern California retailers may have “lots of shoppers” at the top of their Christmas wish lists, but economic indicators and polls suggest that Southland merchants will be disappointed again this year.

Yes, local retailers will lure buyers. And compared to last year, there may even be a slight increase in the number of shoppers. However, there are indications that Southland consumers will not spend enough to bring cheer to the local retail industry.

Recent sales trends are one indicator of late-season prospects. October sales in Los Angeles were 8.6% below those of a year earlier, according to the Houston-based Telecheck Services. Employment levels are another consumer spending factor. The ranks of the unemployed in the region--the counties of Los Angeles, Orange, San Bernardino, Riverside and Ventura--have increased by nearly 165,000 in the last year.

Finally, consumer confidence is another major determinant in any retail outlook. Consumer polls by the business services firm Deloitte & Touche and the Conference Board, a New York-based organization that measures consumer attitudes monthly, indicate that Westerners are relatively pessimistic about the region’s economic future.

There are also more specific indications that there will be no big Southland surge in retail sales. Business services giant Arthur Andersen & Co. found in a poll of Southern California consumers that about half the respondents plan to spend the same as last season and about half plan to spend less.

“The level of Christmas season sales will be about the same as last year,” said John Golisch, head of Andersen’s Southern California retail services division.

However, there are also some slightly encouraging signs. For example, the Los Angeles Times conducted a poll on short-term spending plans of consumers in California, Oregon, Washington, Alaska and Hawaii. The survey, conducted in late October, showed that 12% were planning to spend more than last year, 48% were planning to spend less and 38% were planning to spend the same amount. That’s a slight improvement from November, 1991, when 54% indicated plans to reduce spending and 33% planned to spend the same as the previous year.

Among those expecting a slight increase in Southland retail sales is Richard Giss, head of retail services in Southern California for Deloitte & Touche. Giss predicts that sales will be 3% to 4% higher compared to last year, even though a poll of 100 local retailers revealed that 63% expected lower holiday sales this year.

However, he added: “That would not be a strong (sales) performance because that increase would be based on a comparison with a very disappointing year.”

Citing the litany of economic problems facing Southern California, Jack Kyser, economist at the Economic Development Corp. of Southern California, predicts that sales will be flat or rise about 2%.

“We’ll be lucky if we get a modest increase in sales,” he said.

To be sure, retailers in Southern California are facing the prospect of their third consecutive holiday season disappointment. Retail sales in Southern California for November and December, 1990, totaled $22.4 billion, a rise of only 2.1% from 1989. Sales for the region during the same two months in 1991 were only $21.5 billion, a drop of 4%.