Orange County malls and retailers are cautiously wading through the back-to-school shopping season.
Many are hoping to stay flat or beat last year’s sales for July and August as parents buy clothes, school supplies, electronics and other items for their kids returning to class.
“We expect to do as well or better than last year,” said Patsy Sanquist, area director of marketing for the Shops at Mission Viejo and Laguna Hills Mall, both part of Indianapolis-based Simon Property Group Inc.
That’s not going out on a limb, but only because last year’s sales were bad.
2008’s back-to-school season was difficult, according to Greg Palme, a retail partner in the Costa Mesa office of Deloitte & Touche LLP.
Back then, Wall Street hadn’t melted down yet but the recession was well under way with falling home prices and rising unemployment chilling consumer spending.
After the shock of the fall meltdown and a dismal holiday shopping season, “there is a stronger sense for retailers that there is a bottom in front of them,” Palme said.
Nationally, back-to-school shopping is projected to be down.
The average family is expected to spend $548, or nearly 8% less than a year earlier, according to the National Retail Federation in Washington, D.C.
In July, sales at U.S. chain stores were down 5% from a year earlier, according to the International Council of Shopping Centers. The New York-based trade group projects a 4% decline for August.
Retailers have come to grips with the downturn, according to Palme.
“They’ve been buying very carefully, so the risk of a bad outcome is much lower,” he said.
Stocking shelves for 2010 and beyond is going to be trickier, he said, as no one knows how fast or even if consumers will snap back to their old ways.
For now, discounts rule.
“Consumers are buying—they’re just buying at 60% off,” said Robert Cohen, executive vice president and head of the Los Angeles office of New York-based Robert K. Futterman & Associates, a retail leasing brokerage and consultancy.
Markdowns, which cut into retailer profits, are expected to continue through the end of the year.
“People are kind of pulling their heads out of the sand,” said Duke Edukas, owner of Surfside Sports in Costa Mesa, which sells clothes inspired by surfing, skateboarding and snowboarding.
Edukas said he’s expecting improved sales for back-to-school and the holidays.
“Last holiday (season) was the worst we’ve ever seen,” he said.
Ikea
For Ikea in Costa Mesa, shopping for cookware, sheets and other items for college dorms has been a pleasant surprise, spokeswoman Yumiko Whitaker said.
Big crowds showed up after the retailer’s catalog arrived in local homes, she said, with cars lining up to get in the parking lot.
Last year when the catalog hit, the response was soft, Whitaker said.
“We’re pretty tickled by this,” she said. “Now we’re thinking: Are we staffed to handle the increase?”
Ikea is predicting stronger holiday shopping after last year’s dismal season, according to Whitaker.
Other retailers and malls are doing what they can to spur sales.
Shaheen Sadeghi and his wife Linda, owners of The Lab and The Camp shopping centers in Costa Mesa, couldn’t find a tenant for a spot at The Camp. So they opened their own 12,000-square-foot boutique, Seed People’s Market, which also has a small eatery.
The Sadeghis own and run the store, which sells handmade art, clothing and jewelry.
Luxury Sales Down
The days of $300 jeans are gone, according to Sadeghis.
Tucson-based vintage clothing store chain Buffalo Exchange, which has stores at The Lab and in downtown Fullerton, is doing well, according to Vice President Rebecca Block.
The company, which has 36 stores in all, is up 6.3% in sales from a year earlier, she said.
The Lab store is one of the chain’s highest grossing per square foot, according to Block.
A recovery is going to be a hard slog, according to Deloitte’s Palme.
“It won’t be a strong and accelerated recovery,” he said. “It will be a little bit more of a journey.”
Luxury retailers, like those found at South Coast Plaza and Fashion Island in Newport Beach, could face the biggest challenge.
Their sales are projected to be flat or down by single digits this year, Palme said.
So-called “aspirational” luxury retailers—think Saks Fifth Avenue—could fare worse. They had a heyday during the boom as upper middle class shoppers stretched to buy luxury goods.
Robert K. Futterman’s Cohen and others see positive signs.
“We’re seeing an uptick in retailers looking for opportunities,” he said.
Landlords that delayed projects now are ready to make deals, Cohen said.
Holes at the malls are starting to fill up, according to Cohen.
Stores have cut back on the amount of merchandise they carry and have pared workers. They’ll soon have to up buying and hiring, he said.
