All Signs Saying Go for Holiday Shopping


Maggie McKonnell admits to feeling uneasy about her bank teller job and the economy. But just a little, she says, not enough anyway to stop her from spending more for Christmas this year. “I have more people to buy gifts for,” she explained as she searched for bargains in Montebello Town Center.

McKonnell, 29, may reflect the mood of a lot of consumers these days. A bit nervous, yes. More cautious, certainly. But with their hands stuck in their pockets? Not in the least.

With the official start of holiday shopping a week away, early signals from shoppers and interviews with mall operators, store managers and analysts all suggest that retailers in Southern California are headed for a robust holiday season.

Tony Cherbak, a retail specialist at Deloitte & Touche’s Orange County consulting practice, already sees the momentum building from his 12th-floor office on Bristol Avenue in Costa Mesa, where he has a panoramic view of the parking lot at upscale South Coast Plaza.


The mall was packed on Veterans Day, and Cherbak thinks county retailers will have a very strong fourth quarter, although it will be hard to match last year’s nearly 9% increase.

Deloitte & Touche’s national survey on holiday spending almost two months ago suggested that Southland consumers would not be spending freely this winter.

But Cherbak thinks retailer and consumer sentiments have turned decidedly more optimistic in recent weeks, bolstered by the stock market rebound, signs of a surprisingly resilient national economy and, mostly recently, the Federal Reserve’s interest rate cut this week, the third in two months.

“I think we’re looking much more optimistic,” Cherbak said Thursday evening, after spending the day talking with retailers.


It appears expectations for consumer spending during the holidays have risen throughout the nation.

“The upcoming holiday season has all the trimmings of being a blockbuster,” said Lynn Franco, associate director of the Conference Board. The New York group Thursday released a survey that projects U.S. families will spend nearly $500 on Christmas gifts, 7% more than last year. Franco attributed that to the nation’s unusually low inflation and rising wages.

The Conference Board’s projection is much higher than some other survey-based forecasts. But there is widespread agreement that regardless of how well the Pacific region performs over the holidays, more vigorous Southern California should do as well as the national average, if not better.

Job growth and housing sales in the Southland have outpaced the country, and consumers have been spending heartily all year long. “We’re going into the fourth quarter with a 10% increase through September, which is spectacular,” said Cindy Chong, general manager of the Glendale Galleria, which has 250 stores.


Statewide, taxable retail sales this year have been running at nearly 6% higher than last year, more than a percentage point above the nation, says California’s Finance Department. Led by Orange and Riverside counties, the state is widely expected to close out the year on a strong note.

Holiday Sales Are Closely Watched

“California seems to have a lot of growth momentum,” said Ira Silver, chief economist at J.C. Penney Co. in Plano, Texas. Silver expects a 4%-5% increase in Christmas sales for the U.S., but higher in California.

Holiday sales, while having become less important to retailers in recent years, still account for a third of many merchants’ annual revenue. And this year, Christmas spending is being watched very closely, because its outcome could be critical to the national economy. Two key engines of growth, business investments and exports, have faded this year amid global financial turmoil, but brisk American consumption has helped lift the U.S. and worldwide economy.


Confidence among Americans still appears to be shaky but high, at least by historical standards. The latest study by the University of Michigan found renewed optimism in November, reversing several months of declining confidence upon the stock market’s summertime plunge.

Robert Eagleton, 68, hardly felt like buying anything three months ago, when his retirement income was shrinking with the stock market. But this week, the former stock broker was already splurging at the Century City Shopping Center & Marketplace, to play Santa Claus to his 11 grandchildren.

“I’m going to spend more this year because I’ve got two more grandchildren,” he said proudly, as he raised two shopping bags, stuffed with kids’ pajamas and clothes, a plush elephant sticking out of one bag. “I think everything’s back on track,” he said.

Not everybody would agree.


Maxwell Ramirez, 38, a mechanic who lives in Downey, worries about a slowing economy and is starting to squirrel away money. Alma Aguilar, 30, also of Downey, says she’ll be cutting her Christmas purchases in half, to about $300. In past years, Aguilar bought gifts for her parents, her sibling twins and adult relatives. But this year, she says, her husband’s income selling shoes has been down, so she will buy only for her two children and 14 nephews.

“I give love, only love for my family,” she said, with a sad smile.

An Air of Gloom in Some Districts

There was also little cheer in certain business districts like Koreatown, which has been smarting all year from the Asian crisis. “Frankly, I don’t see much excitement out there,” said Ernie Dow, a partner of a Koreatown accounting firm with area merchant clients.


The region overall, however, has absorbed the economic shocks from abroad quite well thus far. Unemployment has generally declined in the Southland--dropping to just 2.9% last month in Orange County--and many people have found new work with higher pay. The region’s vibrant housing market has boosted confidence, incomes and spending. Sales of home furnishings and cars are brisk.

Analysts see strong sales of household goods and electronics.

“I’ll probably buy more electronic stuff since the prices are so cheap,” said Simon Lau, 52, a Claremont dentist.

Retailers appear to be fairly optimistic as well.


Carl Womack, chief financial officer at Anaheim-based Pacific Sunwear of California, said sales at his stores in California have been very strong in recent months.

Overall, the fast-growing casual wear retailer will be going into the holiday season with relatively good momentum. Pacific’s same-store sales in October were up 5%, Womack said. That’s not much compared with the company’s past growth rates, but it is still better than the national increase of 3.6% for all retailers in October.

Specialty retailers like Pacific Sunwear and discount giants such as Wal-Mart Stores have been outperforming and cutting into sales at traditional department stores. And that trend is likely to continue into the holidays.

There is also much concern that a lack of exciting styles and colors will dampen general apparel sales.


Forecasts aside, retailers can take comfort in the heavy customer traffic in shopping centers.

After counting shoppers toting bags at the Citadel in the city of Commerce last weekend, economist Jack Kyser said, “That place was going bonkers.”


Holiday Sales


The year-to-year holiday sales increases in Orange County have recently run near or ahead of the change statewide. Percentage change in fourth-quarter retail sales from previous year:


Calif. Orange County 1993 1.3% 2.1% 1994 5.6 5.5 1995 3.4 3.3 1996 5.8 6.0 1997 7.0 8.9



Source: State Board of Equalization