Signals Point to a Robust Holiday Shopping Season


Maggie McKonnell admits to feeling uneasy about her bank teller job and the economy. But just a little, she says, not enough 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 the Montebello Town Center mall.

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


Nationally, expectations for consumer spending during the holidays have risen lately, bolstered by renewed consumer confidence, signs of a surprisingly resilient economy and Wall Street’s recent rebound. The Federal Reserve Board’s interest rate cut this week, the third in two months, also may help.

“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 released a survey Thursday that projects U.S. families will spend an average of 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 Southern California, with its vigorous economy, should do as well as, if not better, than the nation as a whole.

Job growth and home sales in the Southland have outpaced the country, and consumers here 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 nearly 6% higher than last year, more than a percentage point above the nation, according to 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% to 5% increase in Christmas sales for the U.S. this year, but even more in California.


Holiday sales, while becoming 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 closely because the results 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 American consumers appears somewhat shaky but still 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 paralleling the stock market’s summertime plunge.

Robert Eagleton, 68, hardly felt like buying anything three months ago as he watched his retirement income shrinking with the stock market. But this week, the former stockbroker was splurging at the Century City Shopping Center & Marketplace, preparing 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, displaying two shopping bags filled with children’s pajamas and clothing, a stuffed 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 says he 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 other adult relatives. But this year, she says, her shoe salesman husband’s income is 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 also is an air of gloom in certain business districts like Koreatown, which has been smarting all year from the Asian economic crisis.

“Frankly, I don’t see much excitement out there,” said Ernie Dow, a partner in a Koreatown accounting firm that serves area merchants.


Overall, however, Southern California has absorbed the economic shocks from abroad quite well so far. Unemployment has generally declined in the Southland, and many people have found new work with higher pay. What’s more, the region’s vibrant housing market has boosted confidence, incomes and spending. Sales of home furnishings and cars have been brisk.

Analysts see strong Christmas sales of household goods and electronics, especially with the flood of imports from Asia.

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

Southland retailers appear to be fairly optimistic, although less so at traditional department stores, which have been squeezed by giant discounters such as Wal-Mart Stores and specialty boutiques. There is also some concern that a lack of exciting new styles and colors might dampen apparel sales.


“Nothing is new or appears new to anyone,” said Vera Campbell, owner of Los Angeles-based Knit Works, a clothing manufacturer.

Taking Comfort in Heavy Mall Traffic

Forecasts aside, retailers can take comfort in the heavy customer traffic already being seen at the malls.

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


Tony Cherbak, a retail specialist at consultant Deloitte & Touche, gauges the action from his 12th-floor office in Costa Mesa, where he has a panoramic view of the parking lot at the upscale South Coast Plaza. So far, so good, he said.

“When I talked to merchants, they were even more optimistic than I was,” said Linda Frost, marketing manager at Century City Shopping Center. Last week she surveyed 30 of her tenants: “I had one person who said they thought sales would be down 5%, and everybody else said they expected increases from 5% to 20%,” she said.

People like Rich Kjenstad support such optimism. A car salesman, Kjenstad was having a look around the Cerritos mall this week, thinking about his Christmas plans.

Kjenstad, 52, says he’s having a terrific year at Manhattan Toyota and Ford in Manhattan Beach. He says the value of his Lakewood home has risen 10% over the last year. And, with mortgage rates low, he is considering refinancing.


And so he’s preparing to spend as much as $1,500 for gifts--$500 more than last year. Come Christmas Eve, he says, his wife of 11 years can expect the usual card with cash inside. But this year, he plans to tuck in an extra Ben Franklin or two.

“Crisp new bills,” he added with a grin. “Just the way she likes it.”