On a recent Saturday afternoon, the unseasonably warm weather brought some life to Montana Avenue in Santa Monica. People walked their dogs and lounged on restaurant patios, having late-afternoon snacks and taking in the sun.
They window-shopped as they walked down the trendy retail strip between Sixth and 17th streets. Some popped into the myriad boutiques the clothing, accessory and jewelry stores that line the street.
But few were carrying shopping bags.
The lack of buying has led to signs of retail distress.
About 30 shops have "sale" signs in their windows, some offering to chop 50 percent or more off regular retail prices. Worse, an additional 31 boutiques have closed or are closing. Those stores represent about 12 percent of the available space on the well-known stretch of Montana.
"It's obviously a significant number," said Dan Fagan, a board member of the Montana Avenue Merchants Association, a merchant-based business improvement district for the area. "There's definitely been a downturn in the size of purchases."
Montana can be seen as a microcosm of what's going on nationally: While virtually all retailers are getting roughed up by the recession, boutique stores appear to be getting whacked the hardest.
The kind of conspicuous consumption that used to be done at boutiques has become less popular in the downturn. Department stores, which carry items similar to those found at the trendy shops, are discounting deeply. And many boutiques, which typically don't have the financial resources of bigger stores, are struggling.
On Montana, the trend is clearly visible.
Il Primo Passo, a luxury shoe retailer, shuttered in January, and Saylor, a women's clothing store, closed Feb. 28. Il Primo Passo isn't reopening elsewhere, and Saylor's Web site doesn't indicate any immediate plans to reopen anywhere.
People working in many of the stores said that business has been slow for months, and many shops were devoid of customers on what would have been a busy weekend a year ago.
"Some stores are having zero days. No sales at all," said Jane Walker, manager of Three Bags Full, a specialty sweater store.
Marice Egan is in the midst of a closing sale for her store, KidsBizz, a designer children's clothing boutique. Her shop has been a fixture on the avenue for nearly 19 years, but the pressure to discount just to get people in the door proved too much. While she is keeping an online store, Egan will shutter her Montana store, the only one, March 31. She'd like to find another space on the avenue, but isn't optimistic.
"I can't wrap my mind around leaving Montana Avenue," she said. "A customer came in crying and asked me not to charge her the sale price. She wanted to pay full price, she wanted me to stay. It's sad."
Egan thinks that the falling sales that did her in might be more than a passing phase. Not only are her former customers trying to cut spending, they seem nervous about flaunting it.
"Some customers are embarrassed to be spending a lot on designer children's clothing," she said. "They'll go to Target instead. It's chic to downsize now."
Ketty Maisonrouge, a marketing professor specializing in luxury products at Columbia Business School in New York, agrees that small, independent stores have been hit hard by the recession.
When Saks Fifth Avenue and Neiman Marcus offer discounts of 70 percent off high-end merchandise, which they have been doing since the holidays, even the most loyal boutique customers are going to shop elsewhere.
"The smaller stores might not have the financial strength and backing to be able to sustain what is going on right now," Maisonrouge said. "Very often those boutiques take bigger risks because historically they've supported younger, lesser-known designers. But they have no choice but to discount, and they lose money. And if they don't have a big institution backing them, they have to stop."
Of course, the rash of closures isn't unique to Montana. For-lease signs have been popping up on West Third Street, Melrose Avenue and Robertson Boulevard, and other boutique-lined shopping streets.
For example, Tracey Ross, a West Hollywood boutique that had a celebrity following, closed in December after 18 years in business. Other high-end shops that have closed include Sergio Rossi on Melrose Place, Presse on La Brea Avenue and Parasuco on Robertson.
Montana has some of the highest rents in the city, from about $6 per square foot to more than $9. A recent listing showed a 3,300-square-foot space available for $27,000 a month, which is more than $8 a foot.
Many shop owners have expressed concern over the high rents, and some landlords have lowered them in an effort to retain tenants, said Fagan of the merchants association.
"I have landlords that are adjusting rents somewhat," he said. "They want to keep stores on the street and understand that it's time for everyone to work together as a community. We're starting to see them invest a little more."
Those stores that are hanging in there are doing so by discounting and offering loyalty incentives, such as coupons mailed to good customers.
Walker, at Three Bags Full, said her store hasn't been hit as hard as some of her neighbors sales at the shop were down 12 percent at the end of 2008, while others have told her they're down 40 percent to 60 percent from 2007.
But to draw customers in, Walker recently introduced a 20 percent discount for the first time. She also sent out $25 gift certificates to a list of loyal customers for Valentine's Day.
Walker said that in these tough economic times, catering to those customers has never been more important.
"Service is all you have now," she said. "Before, you had more leeway. You don't have that leeway anymore."
For reprint and licensing requests for this article, CLICK HERE.
Stories You May Also Be Interested In
- Boutique's Retreat Evidence of Pain In Specialty Sector
- Fashion & Beauty Awards: WINNER - Retailer of the Year
- Some Local Stores Willing to Give Until It Hurts
- The Weekly Briefing
- Web Boutique Seeks to Click With High-End Crowd
- Big Store Interest in Wilshire Worries Santa Monica Shops
- Mukluks and Mettalics Pace Trendy Shops' Holiday Sales
- SHOPPING - Soap