Dollars and Sense : Business: With slow sales on the well-heeled streets, the need to attract local shoppers has become more critical to the financial health of merchants and the city.
After years of advertising itself to the world as a shopping mecca for the glitterati, Beverly Hills is hoping to lure shoppers from its own back yard by putting an emphasis on families.
Family values indeed may be making a comeback in the city, but economics is the real catalyst.
Although sleek black limousines with smoked glass still glide down the streets of the city’s well-heeled shopping district, Beverly Hills has not been spared the effects of the recession. Faced with a statewide downturn in tourism, the need to attract local shoppers during this holiday season has become more critical to the financial health of Beverly Hills merchants.
“We’ve got to get to our own people. There’s no need for them to go shopping elsewhere,” chamber President Les Bronte told the City Council at a recent meeting.
During December, merchants in the shopping district near City Hall designated Thursday evenings through Dec. 17 as local-shopper nights, according to a promotion mounted by the Beverly Hills Chamber of Commerce and Visitors Bureau. Stores and restaurants will extend their hours in hopes of drawing local customers. Entertainment will be provided by trumpeters who will sound their horns from sidewalk corners and choirs who will board the city’s trolley to serenade shoppers throughout the evening.
The chamber has mailed out shopping directories to 25,549 households in Beverly Hills, Bel-Air, Brentwood, Holmby Hills and Pacific Palisades.
The chamber and its new retail council are also trying to tone down the city’s image as a shopping mecca only for the very wealthy.
“We’re promoting diversity and a wide range of shopping experiences,” said Ed Bodde, who is the chairman of the new council and also general manager of Saks Fifth Avenue. “Certainly there’s Rodeo, but there’s also Beverly Drive with the Gap, Gap Kids, Geary’s and Bare Escentuals.”
Even Rodeo Drive merchants are looking to the local clientele this year.
Rodeo Drive merchants are planning a holiday street party with Santa and his elves, face painters, and jugglers this afternoon, which has even the chamber reacting with surprise. A street fair on Rodeo Drive?
“That is new for them,” said Bill Boyd, the chamber’s executive vice president.
Rodeo Drive has had holiday parties before, but this year it’s grown, said Wanda McDaniel, who has been president of the Rodeo Drive Committee since August. “There is a heightened awareness that many clients are also family people. Clients indeed do have families and do wear jeans as well as buy Giorgio Armani suits.”
“We’re not as expensive or as intimidating as the folklore may lead people to believe,” added John Petterson, vice president of both the retail council and Tiffany & Company on Rodeo Drive.
“After all, what other Westside shopping area can claim 5,000 two-hour free parking spaces?” he said.
Merchants are alsoc reaching out to the community in other ways.
The street party is also a fund-raiser for Dream Street, a private Beverly Hills charity that provides camping experiences for children with life-threatening illnesses. Just before Thanksgiving, Rodeo Drive employees filled 15 bins with food during a drive to benefit The Westside Food Bank, McDaniel said. Employees of the tony street dropped off canned goods and chatted over doughnut holes and coffee.
Traditionally, merchants have looked to the holiday season to make up a substantial portion of annual sales, said Boyd. Some of the boutiques along Rodeo Drive bring in as much as 60% of their total annual sales during the months of November and December.
However, in a city that touts itself as America’s most prestigious business address, there are indicators that business has been anything but usual, even in the exclusive Golden Triangle shopping district. The Golden Triangle, so named because its 640 retailers bring in a goodly share of the city’s $1 billion in gross annual sales, stretches from Wilshire Boulevard to Little Santa Monica Boulevard and Beverly Drive.
Stores along Rodeo Drive have advertised discounts as deep as 75% and prime street-level storefronts throughout the district are pocked with vacancies. In the small triangular district, there were 30 empty stores during November, and many more outside of the lucrative triangle.
Bronte said that although merchants don’t like to say, business thus far this year is probably down from last year. “Merchants are very closemouthed about how they are doing. They will say they’re ahead or above plan or they’re below plan but they don’t say what that plan was or if the plan was scaled back from the previous year.”
Thomas Levyn, the newest member of the City Council, said that instead of congratulating him on winning the seat, a friend called and asked: “What’s happening in Beverly Hills with all the empty stores?”
“It’s distressing to see so many empty storefronts,” Levyn said in a recent interview. The chamber is working hard with landlords to get quality tenants and the council is more sensitive to business needs than at any time in the past, he said. But empty storefronts and downturns in business are a reflection on the economy as a whole.
City and chamber officials were dismayed in July when Gump’s of San Francisco announced that it was abandoning its Beverly Hills store on Wilshire Boulevard because of poor sales. The storefront is still vacant.
“It’s a beautiful piece of property in the right place at the wrong time,” said Karen Klein, the real estate agent for the property.
Klein said she has been talking to restaurant proprietors, book store owners and other retailers about taking all or part of the space but no deals have been signed yet.
“A few years ago, this space would have been gone. I wouldn’t have had to even put my sign on it,” she said.
Klein, a Santa Monica realtor who specializes in renting high-end retail space, said rents overall are coming down. Landlords are negotiating lower short-term leases to keep their current tenants and to attract new tenants.
“They have to come down or nobody will make money,” she said. Owners would rather get something so they are negotiating short-term deals. They’ll negotiate short-term leases of two to three years at lower rates with the proviso that the property will go to market rate after the lease is up.”
The city which holds nearly 30 retail leases of its own has set an example by reducing rents or deferring rent payments for some of its tenants located on the ground floor of city parking garages.
In October, for example, the council approved a request by Federal Express to reduce its rent by about $1,000 and renew its lease for five years with the option to renew for another five years at the going market rate.
Because of the recession, retail sales taxes have fallen off in recent years, according to the city. Retail tax income declined from a high of more than $13 million for the 1989-90 fiscal year to a low of about $11.5 million for the 1991-92 fiscal year.
Sales tax, hotel tax and business licenses together made up about $34.5 million of the city’s $74 million in local revenues for 1991-92, said Boyd of the Chamber of Commerce.
Faced with a statewide downturn in tourism, the need to attract local shoppers during this holiday season has become more critical to the financial health of Beverly Hills merchants. The reality of having to compete with other retail centers such as the Beverly Center, the Century City Shopping Center and the Westside Pavilion has the city and chamber working together in unprecedented ways.
Traditionally, the city has given the chamber money to operate the Beverly Hills Visitors Bureau and to pay for holiday decorations, but efforts this year have gone beyond the usual. The city balked at a chamber proposal for $1.2 million in new street decorations, but agreed to put up $50,000 to help the chamber promote a buy-in-Beverly Hills campaign. Merchants matched the grant with contributions ranging from $200 to $2,500.
Most of the money has gone to buy advertisements in Los Angeles-area newspapers and to print the store directories, Boyd said. The remaining money will be used toward promotional tie-ins celebrating the 50th anniversary of the Golden Globe awards, the Grammy awards and the Super Bowl next year.
Despite all the bad news in a city that isn’t used to bad news, there are some positive signs, city and chamber officials said.
The city recently honored the Peninsula Beverly Hills Hotel with a proclamation recognizing the hotel’s one-year anniversary. The hotel is the first to open its doors in Beverly Hills in more than 25 years.
Barney’s of New York is moving ahead with plans to open a five-story department store on Wilshire Boulevard at Camden Drive next October. The 108,000-square-foot store is being built at a cost of $30 million.
Although Saks Fifth Avenue pulled back from plans to build a three-story men’s store on Peck Drive, the company plans to start renovation work on its Wilshire Boulevard store in January.
The positive signs point to the resilience of business in Beverly Hills according to the chamber’s president.
“We know it’s a struggle,” Bronte said, acknowledging the effects of the recession. But with the chamber and the city working together, “We have the resources and desire” to succeed over the long term, he said.
