PRODUCTION NOTE BULLETS
By HOWARD FINE
For Los Angeles-area retailers, there was only a little cheer for the holidays.
Same-store purchases made by check in Los Angeles and Orange counties posted moderate gains of 2.3 percent this holiday season over last year, according to TeleCheck Services, a Houston-based check verification service.
"This was somewhat disappointing for retailers, who had been stocking for increases in the 5 percent to 6 percent range," said William Ford, TeleCheck's senior economic advisor.
With consumer confidence at levels not seen since the 1960s, the strongest labor market in 25 years and near-record highs on Wall Street, retailers were hoping for greater gains in sales, said Richard Giss, partner for trade and retail services at the Los Angeles office of Deloitte & Touche LLP.
"It's been a puzzling time for retailers. It appears that people just scaled back their purchases slightly out of personal choice," Giss said.
Same-store sales in Los Angeles and Orange counties were right in line with the national average increase of 2.2 percent, but ahead of the statewide average increase of 1.3 percent. The state figures were dragged down by a decrease of 0.1 percent in the Bay Area, which had come off a strong 4.6 percent increase in 1996.
"This was the year Southern California closed some of the gap with the Bay Area, which really roared out of the recession last year," Ford said.
TeleCheck compared retail sales from Nov. 28 through Dec. 29, based on a same-store dollar volume of checks written by consumers at 27,000 of TeleCheck's 167,000 subscribing outlets nationwide.
At Century City Shopping Center, marketing manager Linda Frost said merchants stocked up in anticipation of a 5 percent increase in holiday sales.
"We're projecting sales increases of between 3 percent and 4 percent," Frost said, noting that the projection includes new stores, not just same-store sales. "Retailers may have been just a touch over-positive."
Giss and Ford said that the lower-than-expected holiday sales were driven by several factors:
- Deep discounting by retailers faced with fewer-than-expected customers. "They moved the merchandise, but at prices that were just about the same as last year," Ford said. Many electronics and apparel retailers were able to pass along lower prices on imports from Asia as Asian currencies have tumbled against the dollar, he added.
- Shifting trends among consumers. "There's no question consumers had the money to buy more than they did. It's just that people are spending less money on holiday gifts and more on other things, like travel and entertainment," Ford said.
- A drop in the number of children under the age of 5, typically one of the biggest age groups for gift-givers.
- High levels of consumer debt. "People, especially baby boomers, may have looked at their credit card balances and concluded this was a good time to pay down the debt," Giss said.
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