Post-Holiday Bargains Draw a Crowd
Southland shoppers swarmed the malls on Saturday, seeking deep discounts that retailers offered in the aftermath of what one analyst called a “ho-hum” Christmas season.
Early predictions of robust holiday sales across the nation began to fizzle in the weeks before Christmas, though retail experts said Southern California would probably fare better than the rest of the country.
The swarms jostling through shopping centers from Glendale to Costa Mesa on Saturday were clearly looking for bargains. At Banana Republic in the Beverly Center, consumers mostly bypassed $298 suede jackets and $98 cashmere sweaters to grab long-sleeved ribbed T-shirts for $19.99.
“The week after Christmas is going to be a very explosive sales week,” analyst Walter Loeb said. “But a lot of retailers took markdowns, so the profits won’t be there.”
In Southern California, sales will probably rise 4.5% to 5% this year, with a national increase closer to 4%, Richard Giss, a partner in the accounting firm Deloitte & Touche’s retail services group, said Saturday. Some other experts are forecasting much lower results nationwide.
Retailers were hurt this year by warm weather that blanketed the nation in November and early December, taking a chunk out of early apparel sales. The recent cold snap has probably softened the blow, they said, but not enough to make up the difference.
In addition, intensifying competition for consumer dollars appeared to reward discount retailers such as Wal-Mart at the expense of department stores.
“We’ve been getting a somewhat grimmer picture from certain retailers who have broken ranks and said it’s become more competitive . . . profits are going to hell in a handbasket,” said John Pitt, a retail analyst with LJR Redbook Research in New York. “It’s starting to look a little messy.”
Indeed, it was clear that Saturday’s shoppers were drawn by the less-profitable markdowns. Bargain hunters were out in strength in the early morning, including the big shopping centers of Southern California. Merchants were using a variety of techniques to lure customers, offering slashed prices and early-bird specials.
Although the Disney Store at Glendale Galleria didn’t open until 8 a.m., Kim McConnell was waiting at 4:30 a.m. to get first crack at the half-price Mickey Mouse light sets, Tigger ornaments and gift items for next Christmas.
“This is my favorite day, I wait for this day every year,” the Silver Lake resident said.
At 7:45, a Disney clerk made her umpteenth speech reciting the rules of the day: “You must be in a single-file line. One person in front of the other, like kindergarten. And today is Good Neighbor Day, be nice to everybody, no grabbing, no pushing, no taking something out of anyone’s hand.”
Meanwhile, at Fry’s Electronics in Fountain Valley, nearly 1,400 shoppers formed a snaking line in front of the store before it opened at 9 a.m.
Huntington Beach resident Paul Kwon, 18, waiting close to the front of the line, said he arrived at 5:30 a.m. to make sure he did not miss any of the year-end bargains.
“I was one of the first ones,” said the UCLA freshman. “Watching the sunrise was kind of nice.”
Inside, shoppers and carts crowded the aisles but there was little of the manic dash associated with blowout sales. Shoppers were grabbing CD-ROM drivers, sound cards, and mouses, some priced as low as 99 cents apiece, by the dozens.
Retail experts had predicted that 1998 would be a bang-up sales year. But two recent surveys revealed gains of only 0.7% and 0.8% in the first 24 days of the shopping season.
“It’s embarrassing to me,” said William F. Ford, senior economic advisor at TeleCheck Services Inc., the Houston check processing firm that conducted one of the studies. Initially, Ford predicted gains of 3% to 5% for same store sales, but he has since decided that 1.5% is more realistic. “As it turns out, the low end of my [prediction] is probably going to be too high.”
The initial optimism was based on the strong economy, salary growth and low unemployment, but the shopping season was showered with both blessings and woes. Although earlier talk of a possible recession in 1999 has faded--thanks to three interest rate cuts by the Federal Reserve in the past three months--Asia’s economic problems are now being felt locally and layoff phobia is spreading like a low-grade fever, analysts say.
“We are all reading those headlines about massive layoffs around the country,” retail economist Kurt Barnard said. “A lot of people with very good jobs and very good incomes are saying, ‘I better be very careful about how I spend my money because my job may be merged out of existence next year.’ ”
The stock market, meanwhile, has helped fuel both uncertainty and optimism in the second half of 1998, bucking wildly at times, and then breaking once more into a gallop.
It has become increasingly difficult to predict holiday sales in recent years, as consumer buying patterns have splintered into two divergent directions.
Many consumers are spending more freely throughout the year, and buying gifts months before the season actually arrives. Many others are buying closer to the holidays and are reserving a sizable chunk--between 10% and 25%--of their budgets to spend after Christmas.
To be sure, some analysts still think many retail companies will hit their projections, partly because about 40% of the overall holiday sales occur in the week before and in the week after Christmas, said Pamela Rucker, a spokeswoman for the the trade group National Retail Federation in Washington, D.C.
“The week after Christmas has increasingly become an important part of retail’s holiday bottom line,” Rucker said. “The story isn’t over yet.”
The season’s sales figures won’t be reported until the first week in January, when the major chains disclose December totals. Some industry groups will report their results on Monday.
Analysts say two factors could boost this year’s final tallies: The season has one more shopping day than last, and the day after Christmas fell on a weekend.
The Internet has also muddied the water this year, claiming a growing slice of the retail pie. Recent surveys predict that online holiday sales could range from $2.5 billion to $3.5 billion this year with twice as many adults shopping on the Internet as a year ago.
Still, that accounts for only about 1% to 2% of the estimated $173 billion spent on the holidays this year.
Investors are enthusiastic about online commerce and have sent some Internet stocks soaring. Analysts say Internet retailers’ fourth-quarter sales will probably top forecasts.
Some analysts also think customers have become less susceptible to markdowns in recent years, since flattened inflation allows merchants to offer better prices throughout the year.
“Consumers have been getting bargains anywhere without having to wait for leftovers,” said Ed Weller at the investment firm Sutro & Co. in San Francisco. But in spots, discounts were particularly deep Saturday.
At Valencia Town Center in the Santa Clarita Valley, department and specialty stores cut prices up to 70% in some instances, drawing a moderate-sized crowd in the morning.
Kathy Brown snapped up half-price specialty ornaments, plush toys and collectible Barbie dolls at a Hallmark shop, one of a handful of stores that were crowded with shoppers.
“I got here at five minutes to 8 [a.m.] and there were already 50 people in line,” said Brown, a West Los Angeles resident who calculated that she had bought about $1,000 worth of Hallmark holiday items for $500. “There was one lady in the store who kept saying, ‘I can’t handle it’ because it was so crowded.”
At the Beverly Center, early morning shoppers flocked to buy housewares at stores such as upscale Restoration Hardware and casual dish-and-candle mecca Pottery Barn.
Meanwhile, the annual men’s sale was underway at South Coast Plaza’s Nordstrom in Costa Mesa, where many items were marked down 33%.
“I am going to go out of here with a complete wardrobe,” said Newport Beach resident Bill Camp, 48, a vice president at Kia Motors.
The store was “crazy from the get go. This is the busiest I’ve seen in years,” said Matt Forgay, a sales associate.
Deborah Reyes Castro, 31, of Irvine, shopping for her husband, browsed calmly through men’s sweaters.
“It is worth waiting for after Christmas,” said Castro. “You take a chance on the selection, but the prices are unbeatable.”
But not all customers were thrilled with the offerings at the Southland’s shopping centers.
Bargain-hunters Rick Kolb, 51, and his wife, Trudy, 50, of Canyon Country arrived at the Valencia Town Center mall at 7 a.m. looking for deals on just about anything. But they were disappointed.
“I think there is more hype than real buys.” said Rick Kolb, a computer programmer. “I saw a great pair of shoes for a great price, but they only had three pairs--all size 11. I think stores are just trying to get rid of their stock.”
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Abigail Goldman, Karima A. Haynes, Nancy Trejos and Daniel Yi contributed to this story.
