Southland Expected to Spend More This Holiday

Consumers in Southern California, feeling confident about the region’s steadily strengthening economy, are expected to spend more this holiday season than they did last year, but not as much as the rest of the nation, according to a survey released Monday.

Consumers nationally will spend about $779 this year, and Southern California shoppers will drop nearly $760, according to the survey by Deloitte & Touche.

Retailers in Southern California, however, are less optimistic about their profit expectations for the 1997 holiday season. In the Southland, 65% of the retailers surveyed foresee higher profits, compared with 80% who held that view a year ago. But nationally, 69% expect holiday season profits to rise, versus 66% in 1996.

The survey also found that about 90% of Southern California retailers expect total holiday season purchasing by consumers to increase or remain the same compared with year-ago levels. Last year, about 83% of the national sample and 90% of Southern California merchants were expecting holiday sales volume to increase or hold steady.

These figures suggest that Southern California retailers expect consumers to make their way into their stores but will probably wind up spending their money on fewer expensive items and more discounted goods.

“Everybody thinks the dollars will come through, but the question is how much will remain on the bottom floor,” said Richard Giss, who watches the retail industry for the Los Angeles office of Deloitte & Touche, the international accounting firm that conducted the survey of 500 retailers and 1,000 consumers. The survey had a margin of error of 3 percentage points.

Giss said the lack of optimism among Southland retailers is an aftereffect of last year’s exceptionally high profit margins as the region emerged from an economic slump. Retailers traditionally are less likely to believe they will do better following a good year.

“Overall, [California retailers] are not as bullish this year as last year,” he said.

Consumers, however, are feeling otherwise.

“Consumers have a strongly positive outlook, as they have had throughout this year, and the result of this optimism is that they are planning to spend freely during the holiday season,” Giss said.

According to the survey, shoppers nationwide expect to spend an average of 2% more, or about $779, this year, compared with $764 last year.

As in the past, consumers in California and other parts of the West say they will be spending a little less than the national average, with outlays in the range of $710 expected in 1997, compared with $732 in 1996. That represents a 2% decrease in spending compared with last year, Giss said.

But Southern Californians are poised to spend more. The survey found men in the region are budgeting $792 and women $727, for an average of $760 this holiday season. Figures for Southland spending were not calculated in previous surveys.

Tomasa Hernandez of Santa Ana, shopping for videos at Best Buy’s Costa Mesa store on Monday, said she’ll spend more than $1,000 on gifts for about 20 friends and relatives.

“I don’t know yet what everybody wants, but we’ll spend,” said Hernandez, a uniform attendant at the Four Seasons Hotel in Newport Beach.

Larry Pau also said he’ll spend more than $1,000, buying gifts for about half a dozen relatives.

“That seems like a reasonable amount,” Pau said.

Analysts cite several factors for consumers’ rising confidence.

“In Southern California, the most significant factor is an increase in existing property values” and job growth, which contributes to an overall optimism among consumers, said economist Howard Roth of Bank of America.

California’s “late recuperation” from the recession is also a factor.

“Things are still getting better in California” compared with other states, Roth said.

According to the survey, discount and department stores will be where 70% of consumers will do at least some of their holiday shopping, up from 60% last year. Traditional department stores have continued to gain in popularity and are the choice among 54% of shoppers, up from 48% a year ago. Discount warehouses are next, at 42%; catalogs will attract 32%; smaller apparel stores, 30%; and factory outlets, 20%.

According to Giss, much of this year’s holiday purchasing will be for practical items such as apparel, electronics and other items for the home. Children’s toys, as usual, will also account for a major portion of holiday shopping volume.

Apparel tops the list as the most popular category for holiday gifts, followed closely by toys; recorded entertainment (CDs, tapes and videos); gift certificates, cosmetics and fragrances; jewelry; sporting goods; and electronic items such as computers, digital phones and stereo systems, according to Giss.

But retailers should keep in mind that while the nation is ready to spend more money this season, the figures represent only a slight increase, said Kurt Barnard, president of Barnard’s Retail Consultants.

He said consumers this year are more likely to buy items for the home. Many families will purchase a few expensive items rather than many small items such as clothing.

“America is an aging society, and they are less keen on wearing expensive apparel,” Barnard said. “There is an element of downtrending. We are moving away from upscale to thrifty. That’s the landscape from coast to coast,” he said.

*

Times staff writer Russ Stanton contributed to this report.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Season for Giving

Shoppers nationwide are expecting to spend an average of $779 this Christmas. That’s a 2% increase from last year and the highest amount for any of the last five holiday seasons:

1997: $779

1996: 764

1995: 685

1994: 714

1993: 646

Retailer Optimism

Nine in 10 retailers nationwide and in Southern California believe holiday sales will increase or stay the same as last year. Percent saying “increase” or “remain same”:

*--*

So. U.S. Calif. 1997 91% 90% 1996 80 97 1995 86 87 1994 88 92 1993 86 73

*--*

Source: Deloitte & Touche