This year is going to be a tough one for retailers.
Some Orange County store owners seem to be taking it in stride.
“You just have to weather it,” said Cynthia Dornsife, owner of Clothes for the Soul boutique in Costa Mesa. Her business is down compared to last year, but that’s the way business is, she said.
To cope in the down market, she’s said she’s sticking with the basics,pleasing her customers and buying and stocking what’s in demand.
Dornsife said she’s also being proactive: starting a Web site to help market her business.
Her prices, which she says are already competitive, won’t change.
“I can’t compete with the big guys by slashing prices,” Dornsife said.
That’s the up and down nature of business, said Cheril Hendry, chief executive of HLF Brandtailers, an Irvine marketing and advertising agency that works with retailers.
In down times, people will postpone buying, she said. But eventually, they’ll shop and stores need to keep their name in front of the customer, she said.
The Irvine Company, which owns Fashion Island, The Market Place and other shopping centers, has a long-term outlook.
“We’re sticking to the plan,” said Keith Eyrich, the Irvine Co.’s retail properties president.
Retailers still are clamoring to get into Fashion Island, which is expanding. Construction begins this year for Dean & DeLuca, a gourmet grocer slated to open in 2009.
The following year, a Nordstrom is set to move into the former Macy’s Women’s space. The mall will be expanding parking garages this fall to accommodate the new stores.
“Everything is long term,” Eyrich said.
Nordstrom Inc. hasn’t changed its expansion plans for the year. In 2008, Nordstrom plans to open nine stores in Florida, Boston, Thousand Oaks and elsewhere. It’s also opening a Nordstrom Rack at the Laguna Hills Mall.
Even though sales are off, Nordstrom won’t be lowering prices or having big sales,other than the three it usually has.
“We’re not promotionally driven,” said Michael Boyd, spokesman for the Seattle-based retailer. “We focus on things within our control.”
Customer service will be even more important this year, he said.
Cost Cutting
Other retailers are not so well off.
Starbucks Coffee Co., Ann Taylor Stores Corp. and Talbots Inc., among others, have closed stores or plan to. Others are laying off employees.
Big chains such as Sears Holdings Corp. are reorganizing. Wal-Mart Stores Inc. is consolidating some operations and laying off workers. J.C. Penney Corp. and Home Depot Inc. are laying off workers.
Smaller retailers, which do business on a month-to-month basis, are more vulnerable in a poor economy, according to market analysts.
This year, shoppers are more likely to pay with cash than credit and only spend what they can afford, said Hendry of HLF Brandtailers.
She doesn’t foresee much of a boost in shopping, when taxpayers get their rebate checks in May.
“They’re going to hang on to it,” she said.
BlankStyle, an online clothing company, recently called it quits with its first actual store at the Camp in Costa Mesa. The store opened in 2006.
Business was slower than what was expected, said Jared Fisher, one of the owners.
“It wasn’t profitable,” he said.
The online store, which is easier to manage and has fewer costs, continues to do well, he said.
Tracey Downey, owner of Downey’s Chocolates in Laguna Niguel, did brisk Valentine’s Day business and she’s forecasting a good year.
“We’re doing more on the services end,” she said.
Downey’s Chocolates is making the most of its 2,000-square-foot store and chocolate making factory by hosting private wine tasting and chocolate events.
Rough for Auto Dealers
Perhaps the worst hit could be auto dealers, although strong sales in autos and gasoline led the slight national increase in January retail sales reported last week.
Automakers don’t have much room to improve on incentives this year, said Hendry, who consults with several dealers.
“It’s almost impossible to make them better,” Hendry said.
Dealers likely will get more marketing money to woo local buyers, she said.
Still, “things are not that bad,” she said.
The latest national retail report showed a 0.3% rise in last month’s retail sales, following a worse than expected drop in December. Analysts had expected a 0.3% decline in January sales.
There’s been a lot of hype in the media about a retail slowdown, Hendry said.
“I think the media played a huge part in scaring people,” she said.
Hendry said business could pick up slightly in the summer.
“It’s all happened before. It’s cyclical,” she said.
