Despite strong retail sales in other parts of the country, Los Angeles has been lagging behind largely the result of El Ni & #324;o, the Asian economic crisis and the fact that the area has become inundated with new stores.
Los Angeles retail sales for the first quarter were up slightly more than 1 percent over the like period last year, according to Telecheck Services, which monitors check writing. Nationwide, there was a 3.1 percent sales increase, and in the hot mid-Atlantic region sales are up by about 4.5 percent for the first three months of the year.
The results are especially striking when compared with the Goldman Sachs Retail Composite Index, which reported a whopping 6.5 percent average nationwide sales gain for the first quarter.
Several major shopping malls in L.A. confirm Telecheck’s results, reporting flat or modest gains of around 1 percent for same-store sales.
“The rest of the country had the nice weather, and we’re stuck with the bad,” said Doug Roscoe, vice president and general manager of Century City Shopping Center, which saw a first-quarter sales increase of less than 1 percent.
“In general, the weather was very tough for us,” he said. “Our traffic was down (and) our retail sales were flat.”
Richard Giss, a retail analyst at Deloitte & Touche LLP, agreed that weather probably played a big role in L.A.’s disappointing sales. “The one thing that (slower) retail sales are always blamed on is bad weather, but never in California,” Giss said. But this year is a different story. “Locally, retailers really have been impacted by (the weather) and they continue to be impacted.”
Los Angeles is not the only Western city experiencing El Ni & #324;o storms. According to Telecheck, same-store retail sales rose an average of 2.1 percent during the first four months of the year in Western states from Hawaii to Colorado.
Last week’s unexpected rains are likely to further dampen the retail picture. The only solace among merchants is that the storm occurred on Tuesday and Wednesday instead of during a normally busy weekend.
At Santa Monica Place, same-store sales were up 1 percent for the first three months of 1998 compared with the same period last year. The biggest hit, according to marketing manager Michelle Malynn, was taken by retailers selling athletic footwear. That’s because their customer base is made up largely of Asian tourists, who tend to buy in bulk.
“The thing that’s affecting us the most is (the lack of) Asian tourists we are feeling the effects of the Asian crisis,” Malynn said.
At the Promenade in Woodland Hills, spokesman Ken Stephens said there was a “slight increase” in sales. He wouldn’t say how much, but put it at between “zero to five percent.”
The retail industry typically lags behind other sectors during an economic boom, analysts say. While L.A. is currently experiencing faster growth in real estate values and employment than the rest of the nation, its recovery started later than most other parts of the country.
William Ford, economic advisor for Telecheck, also attributes the lower sales figures to the fact that there haven’t been any significant price hikes in consumer goods, particularly electronics. Angelenos, Ford said, are among the nation’s biggest purchasers of electronic goods, such as computers, because of above-average incomes.
“People are paying less for a better computer,” said Ford. “While the numbers are weak, they belie the fact that there have been meaningful increases in (unit) sales. It’s been a little weak so far, but it’s a plus and not a minus I do think things are getting better.”
Local retailers are not overly troubled by the low numbers because first-quarter sales, which come after the holiday period and head into the tax season, typically are softer compared with other quarters.
Indeed, merchants are optimistic that retail sales in Los Angeles will soon catch up to the rest of the nation. Until this quarter, local retail sales had been growing quickly, and the recent results may well just be a weather-induced fluke.
Sales tax figures released by the state Board of Equalization’s research and statistics section show that taxable sales grew more than 4.1 percent in L.A. County from $80.8 billion fiscal 1995-1996 (running from July 1995 to June 1996) to $84.1 billion in fiscal 1996-1997. More recent numbers are not yet available.
When they do come out, they may show more impressive results than Telecheck’s data. That’s because there has been significant retail development in Los Angeles, with many new stores coming online over the past few months. The Telecheck figures measure only same-store sales, not overall sales.
Angelenos may be deciding to shop at the new outlets.
“Retail development is extremely hot, it’s a fight to find good spaces,” said Jack Kyser, chief economist at the Economic Development Corp. of L.A. County. Kyser points out that retail employment in the county saw a strong first-quarter gain of about 13,000 new retail-related jobs.
Local retailers report the biggest sales gains for family and children’s apparel, costume jewelry, sunglasses and specialty clothing like maternity and lingerie. Lloyd Miller, general manager at the Northridge Fashion Center, said electronics, like cellular phones and computers, are on the rise.
Shoe sales are said to be struggling across the board.
Nationwide, the biggest retail sales increases in April were experienced at apparel stores like The Gap, with a 29 percent increase compared to last year, and women’s retailer Talbots, which reported a 28 percent gain in sales.
Discount stores also saw double-digit gains. Wal-Mart saw an increase of 13.2 percent and sales at Kmart were up 16 percent compared to April 1997.