Profit-hungry Orange County retailers credited early-bird specials, balmy weather and increased consumer confidence with filling their stores on Friday, a crucial first step on the road toward a strong holiday shopping season.
Early-morning shoppers huddled in a brisk breeze at Bloomingdale’s new store at Fashion Island Newport Beach; by noon motorists had jammed Interstate 5 near Laguna Hills Mall; and throughout the day, anxious parents scrambled to find the hot, new Nintendo 64 game system.
But this year’s holiday shopping sprint will be a challenge for retailers. Thanksgiving’s relatively late arrival trimmed several shopping days from the season, and some Orange County stores had more gawkers than shoppers.
Confident store operators, however, buoyed by the heavy turnout, say they’re sticking with rosy, preseason estimates of a 4% to 6% sales increase.
Nationally, early returns from Sears, Roebuck & Co. put the giant on track toward a healthy increase, and Macy’s West Chairman Michael Steinberg said his chain’s California locations seem to be slightly ahead of last year’s pace.
And, some shoppers said that they were ignoring budgets and instead paying attention to their shopping lists.
Kristi Mai, a college student from Garden Grove who was shopping at the Macy’s store in South Coast Plaza, took only a few moments to decide on a $650 Gucci watch for her boyfriend of six years. “He’s had his eye on it for a while,” she said. “I wanted to get him something nice.
That’s the kind of consumer response that retailers will need if the industry is to avoid a repeat of last year, when skittish consumers balked and holiday sales stalled.
The first shopping day after Thanksgiving rarely ranks as the top sales day during the holiday season. Last year, for example, it finished seventh, with Dec. 23, the last Saturday before Christmas, the busiest day.
But the Thanksgiving weekend historically drives 8% of total holiday sales and, as important, jump-starts the shopping season that drives 30% or more of the industry’s annual profits.
“You see a lot of families out on Friday,” said International Council of Shopping Centers Vice President John Konarski. “And when you’ve got the kids in tow, it’s hard to shop. But they’ll be back later on--without the kids.”
Friday’s sales totals won’t be available until Sunday, but some retail industry experts suspect that shoppers aren’t as bullish as retailers.
“This year will be a moderate success, with the emphasis on moderate,” said Kurt Barnard, a New Jersey-based retail industry consultant. “The malls were packed, you couldn’t find a parking space, but there were very few shopping bags in evidence.”
Retailers are anxious to study totals for the full month of November to see if shoppers were out in force before the start of the official shopping season, which this year is only 26 days long.
“It’s not the loss of five days that’s important to us, it’s the crucial fact that we have one less weekend,” said Vaneta Rogers, a Chicago-based spokeswoman for Sears, Roebuck & Co. “Our typical shopper is busy during the week and counts on weekends to do her shopping.”
Despite the short season, the National Retail Federation predicts that holiday sales will jump to $466 billion, up from a disappointing $440 billion last year, and the ICSC predicts that holiday sales will rise by 4.9%.
The outlook isn’t quite as bright in California, where some households are still struggling to regain their economic equilibrium. The New York-based Conference Board’s consumer confidence index is 20 points above the level reached a year ago--but the business group reports that consumer confidence in the Golden State still lags the nation.
“The economy in Southern California is healthy, but it’s not as strong as the rest of the nation because we were at the tail end of the recovery,” said George Argyros, chairman of Arnel Retail Group, which just staged the grand opening for Metro Pointe at South Coast, a new shopping center in Costa Mesa.
Retailers were working hard to lure shoppers into their stores during what’s typically a long holiday weekend for many Southern Californians.
Kmart stores were open for business on Thanksgiving Day and Wal-Mart is keeping some of its busier locations open around the clock. Sears and Toys R Us were among the growing number of national chains that opened at 7 a.m., and Circuit City and Best Buy were promising no payments for a year on big-ticket items.
At the Crossroads shopping center in Irvine, more than 500 shoppers started lining up well before dawn for Joe Montana footballs at Mervyn’s and Tweetie Bird gift packages at Target.
“We’re here for Christmas tree ornaments, and the store says they’ll have nice discounts and sales,” said newlywed Mary Sanchez, who was in line at Target before sunrise with her husband, Carlos.
Toys--including Barbie and TurboMan--were in demand around the country, and Kay-Bee toy stores from Santa Anita Fashion Plaza in Arcadia to Jersey City, N.J. reported waits of up to two hours at check-out counters.
But there will undoubtedly be disappointed kids on Christmas, given the shortage of Nintendo 64 game systems and cartridges.
“We sold out of that three days ago,” lamented Mike Cantu, general manager of Kmart’s Monrovia store. “It hit off better than Sega [did last year].”
Retailers also reported strong interest in moderately priced apparel and accessories. Retailers tie increased demand for clothing to the fact that consumers who ignored their wardrobes in recent years are now in the market for replacement clothing.
Jewelry sales, which typically rise along with consumer confidence, were up noticeably on Friday, according Sears and the ICSC’s Konarski.
Three polls and a Commerce Department report released on Friday buttress the retail industry belief that Americans are ready to spend.
Americans continue to run up credit card debt, but so far there’s no indication that the $1 trillion in debt now being carried will cut deeply into the season’s sales totals.
Despite shoppers’ good intentions, Fredericks, Md.-based Ram Research Group predicts that card use will jump by 13% as consumers rack up an additional $131.4 billion in credit card debt.
Retailing experts are forecasting a strong performance by high-end retailers whose customers are reaping the benefits of the bullish stock market.
The shopping day started slowly in Beverly Hills but picked up about noon, said Rolfe G. Arnhym, executive vice president of the Beverly Hills Chamber of Commerce.
“In a place like Tiffany, it was almost standing room only. It was jammed, jammed,” Arnhym said. “The important thing is people have shopping bags in their hands. These are serious folk bent on a purchase or purchases.”
Michael Lindblad, vice president of Bloomingdale’s California stores, said that his chain’s most popular items were luxury clothing and accessories such as cashmere sweaters and Italian leather gloves, as well as exclusive jewelry lines.
“Overall, there is a sense that things are getting significantly better in California. There is a willingness to spend more, not on basic replenishment, but on the kinds of things that people have deferred.”
Chuck Henry, a salesman at Macy’s at South Coast Plaza, told of a couple who walked in shortly before noon to purchase three Swiss watches that retail for $2,850 each.
However, some retail industry observers say that moderately priced goods will do well this year because many shoppers are hamstrung by tight budgets.
“The lion’s share of the improvement this year will be enjoyed by Sears, Penney and shops with moderately priced merchandise,” Barnard said. “If you’ve got that kind of stuff, then this will be a healthy year.”
Donna Graf’s alarm clock shrieked at 5:45 a.m. Friday and by 6:30 she had thrown on some clothes and was headed for Westminster Mall.
The Costa Mesa resident and 31-year phone company employee had a bit more leeway this year than last, having worked a lot of grueling overtime. But two college-aged children and a house payment kept her spending budget in check.
“It’s been slow moving, but it’s been a better year for the working class,” Graf said as she rested on a mall bench with two giant sacks of sale corduroy clothes from J.C. Penney Co.
“But with the kids in college costs go up and up.”
Cherie Johnsen of Huntington Beach used to hit the stores without much advanced planning. But this past year her husband didn’t get a raise and her income remained steady--and small.
So Johnsen pored over ads and started clipping coupons in preparation for Friday, toting her ads with her so stores could match their competitors’ lower pricing.
“It’s more work, but I have to shop around for the best deals,” said Johnsen, who fought the lines at 6:30 a.m. at Mervyn’s and Target to get their early bird specials before heading for Westminster Mall.
There was no shortage of customers at the Wal-Mart store at Anaheim Plaza, where the massive store’s 26 cash registers were ringed with customers toting TurboMan toys, video games and merchandise tied to Disney’s “101 Dalmatians” feature film.
While apparel and toys are expected to lead the holiday shopping parade, the picture is cloudier for chains like Best Buy, which sells computers, electronic goods and appliances. Fierce competition is forcing price cuts that are eroding already-thin profit margins.
Individual chains won’t have hard numbers for Friday’s sales until Sunday at the earliest. But anecdotal evidence suggests that the first official day of the season was relatively healthy.
Minneapolis-based Dayton Hudson Corp.'s Target and Mervyn’s chains “were very, very busy in the morning,” said spokeswoman Susan Eich. “All the anecdotal evidence says that we’re doing better than last year.”
But despite the rosy predictions, retailers remain wary because sales could tumble if consumer confidence slips or Mother Nature plays tricks with the weather.
“We’re paid to be optimistic,” acknowledged Greg Weaver, president of Pacific Sunwear of California, an Anaheim-based apparel chain that hopes to match or beat last year’s 5.5% holiday sales increase. “But you can never be overly optimistic, or you’ll end up buried with excess inventory and your stores will be overstaffed.”
Retailers also know that their fate will undoubtedly be tied to shoppers like Doug Crawford, who strolled through Westside Pavilion on Friday--but who won’t start shopping in earnest until late in December.
“I like to shop at the last minute,” Crawford said. “I like that panicky feeling.”
Contributing to this report were Times staff writers George White, Nancy Rivera Brooks, Marla Dickerson, Lee Romney, Jill Leovy and Tom Gorman, and special correspondents Melinda Fulmer, John Canalis and Mayrav Saar.
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This year, shoppers are expected to rack up $131.4 billion in credit card charges between the day after Thanksgiving and Christmas Day. That’s a 13% increase over last year, even though this year’s shopping season is 26 days, which is unusually short. Consumer credit card volume during annual holiday shopping season, in billions of dollars and percent increase:
Christmas charges % increase 1992 $66.8 11.7% 1993 79.1 18.4 1994 96.9 22.5 1995 116.3 20.0 1996* 131.4 13.0
Decide how much you can spend this holiday season, then plan a budget and stick to it. Tips for savvy spending:
Cash, Check or Charge?
* Cash: Withdrawing a set amount of cash to spend on a shopping trip can help keep spending under control. But thefts increase around the holidays and carrying large amounts of cash can be dangerous.
* Check: Provides a way to document and track expenses and canceled checks; can be used as proof of purchase. But don’t write a check unless the money to cover it is in your account. Banks impose fees of $15-$20 each for bounced checks. Plus, you may also be charged a return check fee by the retailer.
* Major credit card: Charging provides the advantage of delayed payment, but carrying a balance is costly. During the holidays, it is very easy to rack up more than you can pay at the end of the month. However, if you pay with a credit card and are billed more than $50 for a faulty item, you can usually withhold payment while disputing the charge. Some credit card companies also offer promotional benefits such as frequent-flier miles, toys and credit toward the purchase of a new car. But these enticements are a true advantage only for those who pay in full each month.
* Credit card cash advance: One of the most expensive ways to borrow. Interest rates usually exceed 15% and most banks charge a fee of up to 4% of the amount advanced.
* Store credit card: Some stores offer a 10% discount on purchases if you open an in-store charge account. But store cards charge higher interest rates compared to bank cards and even a discounted purchase can be expensive if not paid in full. Since most stores accept bank cards, a store credit card is usually unnecessary.
Buy Now, Pay Later
* Offers of “No payments for six months or more!” should prompt you to ask “Where’s the catch?” Read the fine print before delving into one of these offers. Some stores charge interest on the balance during the no-payment grace period. Others will charge full interest if you fail to pay off the entire balance by the due date.
* Low minimum payments are also offered as a consumer enticement. These arrangements allow consumers to pay small amounts over a longer period, but the total interest paid could exceed the cost of the item purchased.
* Salespeople receive generous commissions from the sale of these optional plans. Yet only 12% to 20% of those who buy a warranty will ever use it. It’s better to buy a reliable product and hang on to what you would have paid for an extended warranty and add it to your own emergency repair fund.
Home Equity Fraud
During the cash-strapped holidays, unscrupulous home-equity lenders pump up their advertising efforts in an attempt to reach homeowners with an immediate need for cash. They offer tax-deductible home equity loans as a way to consolidate debt and reduce monthly payments. But fees, high interest rates, and balloon payments can actually increase debt and result in foreclosure. Avoid home equity loans for short-term needs. Check out the lender’s reputation before applying.
Source: RAM Research Group, Consumers Union; Researched by Janice L. Jones / Los Angeles Times