Slashing Prices--and Expectations

Bargain-savvy shoppers flooded Orange County stores Friday in search of big discounts that many merchants were offering in one last effort to salvage a disappointing holiday season.

Despite long lines at the checkout stand and jammed parking lots at centers such as South Coast Plaza and Brea Mall, many retailers and mall operators found themselves tempering their sales expectations for December.

“It has not been a stellar year, and it’s more promotional than last year,” said Michael Steinberg, chairman of Macy’s West, the San Francisco-based operator of the chain’s Western stores, including six in Orange County.

The slowdown in sales growth may be a sign that consumer attitudes on spending are changing.

Analysts had expected a moderately strong holiday sales season because unemployment and inflation have been low and the economy has been strong throughout the year.

However, analysts now believe that consumers are more interested in investing, saving and paying down high personal debt.

“Many families just aren’t willing to go hog wild on Christmas anymore,” said Nate Franke, a retail expert in the Costa Mesa office of the Deloitte & Touche accounting firm.

Among them on Friday was Kathleen Sheffield, who, along with 200 other shoppers, was in line for the 9 a.m. opening bell at the Container Store in Costa Mesa, where Christmas gift wrap and decorations were 50% off.

“It’s always better to buy it now so you can save money next year,” said Sheffield, a Santa Ana cellular phone saleswoman and mother of two. Like many consumers, Sheffield said she and her husband tried to rein in the spending this season, doling out about $400.

“We bought only one nice gift for each person, and we also made some things,” she said. Her purchases, a dozen rolls of gift wrap and other sale items, came to $98.

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Bargains were at the top of consumers’ minds on Friday, aided by no less than a dozen sales circulars in the Christmas Day paper. Big chains such as Sears, Macy’s, Robinsons-May and JCPenney were offering price cuts of 50%.

Nina Corman arrived at Wal-Mart’s Anaheim Plaza store at 8 a.m., looking for marked-down Christmas cards, paper and ornaments. So, it turns out, were a lot of other people.

“After 15 minutes, the Christmas department looked like it had been ravaged by locusts,” said Corman, 39, who owns an insurance office in Lompoc but was in Anaheim visiting her father and shopping for deals.

Corman scoured stores searching for bargains, particularly red items that could be worn or wrapped for Valentine’s Day or other holidays besides Christmas. This year, she said, she has been setting aside more for savings instead of spending on frivolous items.

“I’ll save a lot of money that could go toward groceries,” she said, “or something else.”

Other Southland shopping venues were crowded Friday, but not enough to offset tepid sales earlier in the month.

“The crowds today are larger than the turnout for the day after Thanksgiving, but if our sales for the entire holiday season match the seasonal sales we had last year, I’d be happy,” said Jim Mance, general manager of the Ontario Mills mall, which opened in November 1996.

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Century City Shopping Center in Los Angeles saw its 1996 sales rise about 4% thanks to the addition of a Bloomingdale’s, but the mall expects to fall short of that this year.

“I think we’ll have a small increase of 2% to 3% this year,” said Doug Roscoe, general manager of the Century City center. “The Bloomingdale’s opening created more interest last year, and to have any increase is good.”

Those sentiments are in line with the lowered expectations of retailers nationally.

While many analysts had predicted a holiday season spending increase of 3% to 5%, they now say the sales boosts could range from 2% to 3%. This kind of showing, coming on the heels of a modest 3.5% sales increase in the 1996 holiday season, would fall far short of the 8% increase in 1992 and the year-to-year gains of the 1980s, when increases such as the 10.6% rise in 1988 were the norm.

“It was a weak season,” said Ira Kalish, a retail economist at the Los Angeles offices of Price Waterhouse. “Consumers were not in heavy spending mood, and retailers were not prepared for this situation. Retailers were optimistic because the economy is strong, employment high and inflation low. Those were good reasons to believe that spending would be strong.”

But those economic indicators failed to measure the attitudes and broader concerns of consumers, Kalish said. For example, personal debt is high and consumers are disturbed about recent fluctuations in the U.S. stock market and some Asian economies, he said. Also, there are some concerns about job security in the wake of recent layoffs at high-profile companies such as Levi Strauss, Kodak, Singer and Kimberly Clark, Kalish said.

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The trend was not lost on investors Friday, as shares of most of the top department store chains--Dayton-Hudson, Federated, May, Nordstrom, J.C. Penney and Sears--all fell in abbreviated trading on a day when the stock markets rose.

Anaheim-based Pacific Sunwear of California, which has posted impressive sales increases all year, saw its shares slip 4.5%, or $1.13 a share, to $24.38. Officials at the 219-store youth apparel chain could not be reached for comment.

December sales are crucial for retailers. Some merchants generate as much as 30% of their annual revenue and as much as 50% of their annual profit during the period between Thanksgiving and New Year’s.

Post-Christmas sales have become increasingly important in recent years as more and more bargain-hungry consumers--as well as those seeking refunds and exchanges--descend on shopping centers from Dec. 26 to Jan. 1. Last year, 11% of all late-season sales were generated during the six days after Christmas.

Many merchants have adjusted to this trend by maintaining leaner inventories. And some post-Christmas sales are planned and feature merchandise that retailers obtained at a discount.

Seattle-based Nordstrom Inc.’s semiannual men’s sale was a huge draw at Costa Mesa’s South Coast Plaza, where it took 10 minutes to find a parking space at 10 a.m. By late afternoon, the wait had doubled.

Kevin Hampton, quickly and efficiently navigating his way Friday through the sea of humanity in Nordstrom’s men’s department, had one goal in mind: shirts for himself.

“I’m looking for values and a few other things,” said the 34-year-old Newport Beach resident, who estimates he spent nearly $5,000 on brothers, sisters, nieces and nephews--about 20 family members in all.

His haul Friday: 18 dress and golf shirts, about half of which were on sale, for $749.

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Thanks to a 50%-off sale on decorations and gift wrap, the day after Christmas typically is the biggest sales day of the year for the Container Store, a Dallas-based chain that has a store in Costa Mesa. All 88 of the store’s employees were on duty Friday, compared with only 60 last year. In addition to the Christmas sale, the store’s annual 30%-off sale on closet organizers began Friday.

By 4 p.m., the store had reached its goal of selling $30,000 worth of gift wrap and was “70% of the way there” to hitting $80,000 in sales, which would be a one-day record, said manager Lynn Langit.

Going into Friday, the store had already met its plan of increasing holiday sales by 5%, “so anything we do today will just be frosting,” she said.

Many merchants were not so lucky.

Analysts said there is excess merchandise this year because many retailers failed to meet their seasonal sales projections. In the wake of a lackluster season--along with the modest 3.5% seasonal sales gain in 1996--many analysts said it is time retailers permanently lowered their holiday sales expectations.

“Christmas is no longer the hot selling season it once was, and retailers will have to face up to new realities and find ways to attract more customers throughout the year,” said Kurt Barnard, a New Jersey retail economist. “Consumer attitudes have changed, and the year-end herd mentality has ended.”

Merchants made a more concerted effort to encourage consumers to shop earlier, offering sales events in October and November. That effort failed, and some analysts say it may have actually backfired.

“Retailers hurt themselves by extending the sales season because that makes people more immune to hype and less likely to make impulse buys,” said Richard Giss, a retail expert at Deloitte’s Los Angeles office.

For some, the crowds proved to be more than the bargains were worth.

By 10 a.m. at Westminster Mall, the only empty parking spaces found were in the employees’ lot that lined the shopping center’s perimeter. Lynn McArthur, who works for a small retailer at the mall, showed up for work at 9 a.m., several hours early by mistake. So she decided to pick up a few items, such as book bags, sweaters and overalls, for herself and her sister. But she found the bargains were not worth the hassle.

After standing in line for an hour to make a purchase at the Disney Store, she decided to walk out after not even making it to the halfway point.

“I gave up,” said the 17-year-old Santa Ana resident. “It wasn’t worth the lines.”

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Times staff writers Daryl Strickland in Orange County and Karima A. Haynes in the San Fernando Valley contributed to this report.