Retailers Cheer 2003 Forecast But Face More Competition
By JENNIFER BELLANTONIO
The battle is on.
Wal-Mart Stores Inc., Target Corp., Lowe’s Co. and Home Depot Inc. all have opened stores in Orange County in a bid to serve the growing population.
Newcomer Kohl’s Corp. also wants in on the game. The Menomonee Falls, Wis.-based chain plans to open eight OC stores in the first quarter, with a goal of having 28 stores in Southern California by spring.
The influx of “big box” stores has stepped up competition and put pressure on small and midsize retailers, said Tony Cherbak, a retail analyst in the consumer products group at Deloitte & Touche LLP’s Costa Mesa office.
And next year will be more of the same.
A renewed focus on fashion by Wal-Mart and Target could pull jobs from department and apparel stores, said Jack Kyser, chief economist with the Los Angeles County Economic Development Corp.
“It’s the incredible pressure in the retail sector,” Kyser said. “Wal-Mart and Target have become major forces in Southern California. They are big and efficient.”
The retail sector will continue to face challenges next year, but forecasts look a bit brighter than 2002.
OC retail sales are expected to grow 2.8% in 2003, according to Esmael Adibi, director of the A. Gary Anderson Center of Economic Research at Chapman University in Orange.
The center estimated (final figures aren’t available yet) that OC’s retail sector grew 1.9% in 2002.
“It was much weaker than we anticipated,” Adibi said.
Some sectors, such as automotive, which offered interest-free financing, fared better than others.
But several factors took the wind out of retail sales.
Job growth weakened, which “contributed to less income and as a result less spending,” he said.
Jobs in the retail sector, OC’s largest by employees, saw five months of consecutive declines on a yearly basis through November.
The sector was impacted by a sluggish economy and volatile stock market, Adibi said.
Though OC’s retail sales in the first quarter of 2003 are expected to outpace last year’s, Adibi said overall growth “is going to be very modest,” since job and retail growth are both down.
Here’s a look at what some companies are planning for 2003:
& #149; Irvine-based Billabong USA plans to open up to five U.S. stores in the next 18 months. Billabong is eyeing sites in Hawaii, Florida, the Mid-Atlantic and the Pacific Northwest.
& #149; High-flying Anaheim-based Pacific Sunwear of California Inc. expects to open about 50 new PacSun outlet and d.e.m.o stores in the U.S. and move 30 stores to larger locations.
& #149; Foothill Ranch-based Oakley Inc. is stepping up its focus on its women’s line of apparel, footwear and more. Besides bringing on a woman designer, Oakley plans to add more women to its sales team, female mannequins to the company’s tradeshow booth and more ads featuring women. Plus, look for Oakley to work on its basketball shoe line, which had a weak launch.
& #149; Neiman Marcus is expected to complete its 33,000-square-foot expansion at Fashion Island in Newport Beach.
& #149; The Mall of Orange, which was bought by San Francisco-based RB Orange LLP in April, may move on a major redevelopment plan.
& #149; Buena Park Mall expects to finish up major renovations next year. The center plans to open a 90,000-square-foot Krikorian Premier theater complex and 30,000 square feet of retail space. Wal-Mart is slated to open a 175,000-square-foot store by the summer.
& #149; Triangle Square in Costa Mesa will continue its facelift. Triangle Square Investments LLC has hired Grubb & Ellis Co. and a new management company, Los Angeles-based Charles Dunn Co., to spearhead the changes. Look for new tenants, such as Fugu Entertainment LLC, a high-end Asian-fusion restaurant and nightclub.
COMPANY to watch: Grupo Gigante
Mexico’s Grupo Gigante SA de CV should have a busy 2003 as it looks to double its number of Southland stores to eight and debut its first ones in Orange County.
The Mexican grocery chain operator expects to open a store in Anaheim by April and one in Stanton by year’s end.
“We’re still negotiating with Stanton, but we’re very close to reaching an agreement,” said Justo Frias, president of Gigante USA Inc., the company’s Santa Ana-based U.S. arm.
In March, Gigante plans to open two stores in South-Central Los Angeles, Frias said. Gigante is building those stores from the ground up. In OC, Gigante is renovating space.
The company had a turbulent 2002. In the summer, Ana-heim’s Planning Com-mission rejected Gig-ante’s bid to sell beer and wine at its proposed store. The city backed down after Gigante raised charges of bias because it caters to Hispanics.
New stores should give the company a “considerable” sales jump next year, Frias said.
“We expect very aggressive revenue growth,” he said.
The company is scouting the Southland for sites to open additional stores. The company still is looking for sites in Santa Ana, Frias said.
,Chris Cziborr
PEOPLE to watch: Kelly Gray, Bruce Fetter
Kelly Gray and Bruce Fetter have big shoes to fill.
The pair took the reigns as co-chief executives this fall after Robert E. Gray, 76, Kelly’s father and founder of Irvine-based St. John Knits International Inc., retired.
Robert Gray will stay on as a consultant, but the duo will steer the company’s course. Kelly Gray, the company’s signature model, oversees advertising, merchandising, and sales and retail. Fetter, who also is chief operating officer, handles production and finance.
The two plan several initiatives in 2003.
A big one: opening flagship stores in Tokyo and Seoul, South Korea (and a boutique in Beijing) next spring.
St. John is looking to grow its European bu-siness. Other plans call for expanding handbags, shoes and accessories.
And St. John is looking at adding fine- and semi-precious pieces to its jewelry, and may relaunch eyeglasses. A licensee hunt is on.
St. John is increasing its marketing push in 2003, and is trying to broaden its image to a younger audience.
,Jennifer Bellantonio
