What's in Store for This Season? Survey Says . . .

By LESLIE EARNEST

Nov. 5, 1998 12 AM PT

TIMES STAFF WRITER

Southland consumers are upbeat about the economy, but they plan to increase their spending by only about 1% this holiday season, according to an annual survey released Wednesday.

Shoppers in the western U.S. intend to spend $717, about $7 more than they said they planned to spend last year, the survey by the Deloitte & Touche accounting firm found.

The figures trail the survey’s findings on a national basis. It found that the typical American shopper will spend $814 this holiday season, up 4.5% or about $37 from last year.

The Asian economic crisis, this year’s volatile stock market and a number of large layoffs at major companies have eroded consumer confidence in recent months.

The stock market, which has rallied in recent weeks, could be the wild card. If it heads south again, shoppers are likely to again tighten their purse strings, especially regarding big-ticket items.

“We still have a full month-and-a-half to go until Christmas,” said Nate Franke, a partner in Deloitte’s Costa Mesa office. “Should some bumps occur in the road between now and then, we could see some of the consumer spending change.”

The survey was conducted in September and October in cooperation with the National Retail Federation trade association. It polled retailers and 1,010 people nationwide.

The survey’s mixed findings were reflected in the moods of shoppers at Toys R Us in Santa Ana on Wednesday afternoon.

Tracy Wilkins, a delivery man from Santa Ana, said his family will spend more this year, but only because they are buying a computer, a more-expensive-than-usual present that actually will be a gift for the entire family.

“We’ve got school-age kids, and that’s something we really need,” he said, adding that he is not feeling more confident about the economy.

In a nearby aisle, Adelina Munoz, 25, pushed a cart that was beginning to fill with Barbie-style dolls, toy cars and crayons for Christmas. But the Santa Ana resident said she actually expects to spend less this year because her rent rose $50 and she hasn’t been able to work as many hours in her part-time job.

“We pay more bills and I have two children and I need more things for them,” she said.

While the spending forecast was less rosy for the West than for the nation as a whole, Chapman University economist Esmael Adibi said Orange County residents may turn out to be among the season’s biggest spenders.

“The income level in general is much higher in Orange County than in the rest of Southern California,” he said. “As a result . . . the spending level is going to be higher.”

Southern California is enjoying a broad-based economic expansion that has translated into a record number of new jobs and a boost in disposable income, he said.

In addition, low interest rates mean more homes have been refinanced, leaving home owners with lower mortgages and more disposable income.

“Increasing income is the most important factor influencing spending,” he said. “We think the holiday season is going to be respectable.”

The survey, which measures the mood of both consumers and retailers, found that nationally 78% of consumers plan to spend at least as much as they did last year, up from 72% last year. Only 21% said they expect to trim spending, down from 26% last year.

Men plan to spend an average of $961, while women’s purchases are expected to be about $748. Shoppers plan to buy an average of 25 presents and one shopper in six expects to purchase 40 or more gifts. Top gift categories were apparel, toys, CDs and tapes.

The survey also defined the Internet as a growing option for shoppers. While online shopping played a minor role in last year’s holiday purchases, 30% of consumers who use the Internet said they expect to spend an average of $270 at their computers this year.

Further, the survey said consumers may start shopping earlier this year and continue longer. In fact, consumers said they have already spent about 20% of their total shopping budget and plan to save about 10% for after-Christmas sales.

Karen Barrow, a Santa Ana mother of two, is one of those shoppers who got a jump on the season. Barrow, who was at Toys R Us on Wednesday, said she has completed most of her Christmas shopping. Barrow said she won’t be surprised if she exceeds her $250 budget a bit, but she doesn’t plan to spend more than usual.

“We budget that amount every year,” she said.

Fireman Kent Hemseri, 30, said his spending will probably rise from $500 to $700 last year to as much as $1,000 this year. But the Mission Viejo resident said the increase is tied to a growing Christmas list and not to any changes in his financial picture.

If some consumers aren’t feeling as optimistic as the national survey reflects, the poll also revealed differing perspectives between retailers and consumers looking ahead to 1999.

The survey found that 70% of consumers expect the economy will be at least as strong next year as it is now, while 78% of the retailers expect a downturn.

And in more bad news for struggling traditional department stores, survey results indicated that discount stores are continuing to gain ground.

About 45% of consumers said they will spend most of their money at discount department stores, up from 35% just two years ago. And only 20% of the consumers surveyed said traditional department stores will be their first choice, down from 25% two years ago.

Department stores have been feeling pressure of late as the U.S. began feeling the effect of economic woes in Asia and elsewhere. Department stores collect as much as one-fourth of their annual sales and one-third of their annual profits between Thanksgiving and Christmas.

Merchants expect that sales at stores open at least a year, a key measure of growth, will rise about 4% from last season, the survey found. The first indicator of how they’re doing comes today, when the big chains are scheduled to release their October sales numbers.

Although the stock market is now rallying, Gerald Hirschberg, an analyst with S&P; Rating Services, said he expects consumer confidence won’t bounce back as quickly.

“It takes a longer period of time before consumers start to feel good again,” he said. “I don’t think they react like a yo-yo.”

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A Spending They Will Go

Shoppers will spend about $814 on holiday gifts, according to an annual retail survey. Men will outspend women by more than $200. Most Web surfers say they won’t shop online, although more retailers are offering goods at the click of a mouse. More than a quarter of all retailers offer goods online.

Shoppers in the West

1997: $710

1998: $717

* Men: $961

* Women: $748

Where budget spent:

Discount stores: 45%

Traditional department stores: 20%

Catalogs: 11%

Superstores: 10%

Other: 14%

Internet holiday shoppers