Inflation

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Inflation/22″/mike1st/mark2nd

By EDVARD PETTERSSON

Staff Reporter

L.A. apparel prices are getting lower and lower compared to elsewhere in the nation, as a price-conscious market, coupled with the effects of a cheaper dollar last fall, have caused retailers to put out the sale signs.

The reluctance of local shoppers to pay top dollar is showing up in the apparel consumer price index for the five-county Los Angeles area, which fell 5.8 percent in June, vs. a year ago. Nationwide, the apparel CPI dipped only 1.2 percent. Among other major cities, New York was down 1.0 percent in June, Chicago down 4.2 percent and Philadelphia up 4.8 percent.

In fact, apparel prices have fallen more sharply in Los Angeles than in the United States for every month so far this year.

“There is increasingly more competition and new businesses entering the market,” said Maria Arias, store manager with The White House Black Market, a women’s apparel store in the Glendale Galleria.

“We are seeing a lot more major sales now than we did a year ago at the department stores, and we, too, have started to mark merchandise down as much as 40 percent, something which we never used to do before,” she said.

One reason for the lower prices involves L.A. being the point of entry of inexpensive imports from Asia. Last fall’s drop of Asian currencies against the dollar is now being seen in lower prices at the checkout counter, as orders that were placed last year have arrived in the stores.

“Since we are the point of entry for imports from Asia, the impact of these cheap imports will be most strongly felt here,” said Rajeev Dhawan, director of econometrics with the UCLA Anderson Forecast. “By the time the goods get to New York, there will be added costs that are passed on to the consumer.”

Another factor driving down local prices is the area’s still-sizable garment industry. While many manufacturers have shifted their cutting and sewing operations to Mexico in recent years, there remain 4,352 apparel manufacturers in Los Angeles, generating an estimated $10.8 billion in annual sales, according to the Los Angeles County Economic Development Corp.

That manufacturing base means L.A. retailers have easy access to inexpensive goods. “You see a lot of small shops selling goods at incredibly low prices,” said Lonnie Kane, president of Karen Kane Inc., a Vernon womenswear manufacturer. “(Retailers) can buy overrun merchandise at a discount directly from the manufacturers.”

These and other factors have resulted frequent and substantial discounts among merchants large and small.

“This is a very tough market for apparel retailers,” said John Golisch, a partner with Arthur Andersen. “You’ve got the whole range of retailers here, from deep-discount outlets, where you can buy clothes for five dollars, to Target and JCPenney, all the way to Bloomingdale’s. At the same time, we have a pattern of high promotional activity because, clearly, the mood of most consumers right now is very focussed on sales.”

Cynthia Vincent, chief executive of St. Vincent, a Los Angeles-based designer of women’s apparel, said she cut her prices by 10 to 15 percent this year. “I saw there was a gap in my customers’ base, partly because there was a psychological barrier against spending over a certain amount,” she said. “As a result my volume has gone up substantially.”

Large national chains tend to price their merchandise consistently throughout the country, said Tony Cherbak, a partner and retail specialist with Deloitte & Touche LLP. However, regional differences will occur as local stores mark down merchandise in order to move their inventory, and competition among stores will drive prices down here more than elsewhere.

“Los Angeles is well-known as a great place to shop for clothes,” said Arthur Sharif, owner and general manager of J. Colton, a local chain of men’s clothing stores. “Tourists from other parts of the country come here looking for trend-setting merchandise at bargain prices. We have a larger number of independent stores here than other major cities, often owned by recent immigrants, who are more used to dealing and wheeling in order to make a sale.”

Cindy Chong, vice president and general manager of the Glendale Galleria, said, “You don’t see significantly more promotional activity at the specialty stores, such as Banana Republic and Structure. It does seem, however, that department stores are offering more and more promotions, and since they generate such substantial sales volumes, it would not surprise me that they should impact a trend in prices more than specialty stores.”

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