Mod Squad: Retailers Primed for Big Season
By JENNIFER BELLANTONIO
Orange County retailers found coal in their stockings the past few holiday seasons. Now they’re banking on Santa bringing plenty of shoppers this year.
They may get their wish.
Consumers say they’re more willing to open their wallets, according to Deloitte & Touche LLP’s annual survey on holiday retail spending patterns. Clothing retailers are looking for the latest fashion trend,based on a throwback to the “mod” style of the 1960s,to ignite clothing sales.
About 67% of people surveyed in Southern California said they plan to spend more or the same as they did in last year’s holiday season, up from 63% last year and 62% in 2001, according to Deloitte.
Deloitte forecasts a 6% to 7% jump in U.S. sales in November and December compared to last year. Sales grew an anemic 0.5% last year.
“Barring any catastrophes, it should be a good holiday season,” said Tony Cherbak, a partner in Deloitte’s Orange County consumer business practice in Costa Mesa. “People are starting to feel a little bit better about economic prospects in 2004.”
The good news: the stock market has rebounded, housing prices are staying high and people have saved money by refinancing this past year, Cherbak said.
“Anything that puts extra money in people’s pockets is going to give people a reason to spend a little bit,” Cherbak said.
Last week, the Commerce Department said U.S. gross domestic product grew at a 7.2% clip in the third quarter, the fastest pace since 1984.
Retail analysts, OC apparel companies and malls generally are optimistic about the upcoming holidays, with reason.
They’re coming off a strong back-to-school shopping season, which typically is used to forecast holiday shopping trends.
On a national level, same-store retail sales grew 5.9% in September versus a year ago,the best results since March 2002, according to a report by Bank of Tokyo-Mitsubishi Trust Co. in New York.
The National Retail Federation projects that sales of general merchandise,including apparel, electronics, books and music,will rise 5.7% in November and December compared to last year.
“Holiday in general should be better this year,” said Jeff Vin Sinderen, analyst at B. Riley & Co. in Los Angeles. Vin Sinderen said the results were “pretty good” in the back-to-school and fall periods for retailers that had a good mix of clothing.
Among them: Anaheim-based Pacific Sunwear of California Inc., which posted an 18.5% jump in September same-store sales.
“Historically, when PacSun has a good back-to-school selling period we have a good holiday selling period,” said Tim Harmon, PacSun’s president and chief merchandising officer.
The teen apparel retailer often posts faster growth during the holidays than the back-to-school period because it has a chance to tweak its clothing displays.
“That’s historically been one of our formulas,” Harmon said.
Some hot sellers: fleece, denim, skate sneakers and girls’ accessories, Harmon said.
“It’s traditional for us to have a gift table for the Christmas selling season featuring girls’ products,” Harmon said.
Elizabeth Pierce, analyst at Sanders Morris Harris in Los Angeles, said she expects PacSun’s focus on girls to bode well for the retailer this holiday season.
“Their whole accessory table last year was very successful,” she said. “They have good momentum.”
Momentum is something that clothing sales have lacked in the holiday season in the past few years. Spending last year was dampened by a bad economy and no hot fashion trend.
“We haven’t really had a major fashion trend” since bohemian-style clothes went cold, said B. Riley’s Van Sinderen.
This year, some retailers are hoping “mod” fashion, making a resurgence from the 1960s with bright colors and mini skirts, lures shoppers.
Pierce, who recently came back from England, said mod is hot in London and has made its way to the U.S.
“We’re coming into a much stronger fashion cycle,” Pierce said. “It’s been a long time since we’ve had one that worked for a large variety of consumers.”
Foothill Ranch-based Wet Seal Inc., which is going with the mod look in its stores, could get a much-needed boost if it takes off.
The struggling retailer posted a 10% decrease in same-store sales for the five-week period ended Oct. 4, versus a 7% drop in the year-ago period. The company said the dip resulted from discounting clothes to make room for holiday merchandise.
“One would think if we’re headed into a strong fashion cycle they would be able to win back market share,” Pierce said. “I think they’ll have a better holiday than they did” in 2002.
Wet Seal Chief Executive Peter Whitford recently said the company will look at what’s been selling well, support “winning styles” and “bring in freshness” during the holidays.
Meanwhile, South Coast Plaza, OC’s largest shopping mall, is readying for a busy holiday season.
“We have been experiencing positive increases going into the fourth quarter and expect to see further improvement on those numbers through the end of the quarter,” said Debra Downing, the center’s executive director of marketing.
South Coast Plaza plans to double its concierge staff to about 60 workers and increase its valet staff by 25% to 100 employees during the season.
“Our tenants of course will add seasonal help as always,” Downing said. “Most are well under way with the hiring process.”
Newport Beach-based The Irvine Company also is making plans at its shopping malls.
The company has seen an increase in foot traffic and sales across its malls through the back-to-school and fall seasons, said Nina Robinson, vice president of marketing at the Irvine Co.’s retail properties.
“We have an optimistic outlook for the holiday season,” she said.
The Irvine Co. is planning several events to lure shoppers, including holding its annual tree lighting at Fashion Island shopping center, which usually draws about 22,000 people over two days, and installing an ice rink at the Irvine Spectrum.
Robinson said home furnishings are expected to be big, as well as luxury-type items, such as suede or cashmere and accessories with monograms. “Anything with a monogram or letter on it is going to sell,” she said.
Surf apparel sellers also are expecting some buzz.
“All the signs are pointing to it being a great holiday season, especially in our industry,” said Aaron Pai, owner of Huntington Surf & Sport. “It’s going to take off where summer left off. Summer rocked. It was the best summer ever.”
The retailer is looking to continue capitalizing on the popularity of surf. Huntington Beach-based Quiksilver Inc., among other brands, is helping drive the craze with its hip clothing brands and entertainment deals. Quiksilver posted a 44% jump in sales to $251.1 million in the quarter ended in July.
“We’ve had down cycles and up cycles, and this is definitely an up cycle,” Pai said.
