California Apparel News

Early-morning promotions on the Friday after Thanksgiving kicked off the Holiday shopping season, prompting hopeful expectations for the rest of the sales season.

“We knew we were going to have a good day when we saw people lining up at 4:30 a.m.,” said Janet LaFevre, senior marketing director for the Glendale Galleria in Glendale, Calif.

Many retailers in the mall posted double-digit and even triple-digit increases, according to LaFevre.

Several malls across Southern California reported in creased business over the entire weekend, but foot traffic was not as high as anticipated thanks to sunny weather.

Still, industry watchers saw signs of hope.

“This will certainly be the best season we’ve had in three years,” said Richard Giss, partner in the consumer business practice of Deloitte & Touche in Los Angeles. “But it’s too early to tell if it will be the breakout explosion that everyone’s been waiting for.”

Nationwide, the Holiday shopping kickoff continued to reflect the overall retail trend, with success found at the high and discount ends and the middle struggling to get more than just sticks in its stocking. Discount mega-chain Wal-Mart Stores Inc. racked up a record $1.52 billion on Nov. 28. Likewise, the Louis Vuitton boutique in the Beverly Center in Los Angeles temporarily sold out of certain popular wallets and coin purses, said Beverly Center General Manager Laurel Crary.

However, sunny Southern California weather over the Thanksgiving weekend “kept us from having a gangbuster weekend,” Crary said. Though sales for the weekend were flat, Crary remains optimistic for the season overall, as luxury items—such as anything with cashmere and shearling—were especially hot.

Still, some contemporary and high-end boutiques saw no discernible spike in traffic over the holiday weekend. These boutiques operate on a different sales calendar than more mainstream retailers, doing most of their business in spring and fall when new collections come in.

Sara Dovan, co-owner of the Traffic boutique in the Beverly Center, said she does not change her inventory or do anything different for the Holiday season, because it’s just like a normal month.

“Though I’m in a mall, Christmas isn’t my holiday,” she said, adding, “It’s for bargain hunters.”

With that in mind, many retailers devised creative promotions to ensure consumer turnout this season. Seattle-based Nordstrom Inc. launched a new campaign in which 300 early shoppers at each of its stores were given keys that opened boxes throughout the store, five of which included $150 gift certificates.

Sales drive

Though the Thanksgiving weekend is a vital indicator of consumer Holiday spending, it never tells the whole story. In 2002, the season’s first official shopping day started strong with a 12.4 percent increase over the previous year, according to consumer data company ShopperTrak. However, like a new toy that works for an hour and then breaks, same-store sales ultimately posted a gain of only 1 percent, the smallest gain in three decades.

According to Kurt Barnard, analyst and founder of Barnard’s Retail Trend Report, based in Upper Montclair, N.J., the early bird catches the worm—and then goes home to watch football. Many retailers such as Target Corp. featured special sales in the early morning hours. “They were tremendously successful, but as soon as they had run their course, all the cars in the parking lot drained away,” Barnard said.

“Americans today want bargains, and there were plenty of bargains available,” he continued. “But the malls were not overly crowded. No one seemed to be breaking down doors to get into the stores. It was almost like an ordinary weekend.”

It is likely that there will be the early post- Thanksgiving rush, then a last-minute rush with only modest shopping in between, Barnard said. “The public is still in a very cautious mood when it comes to spending. We hear all sorts of great economic statistics out of Washington, but so far they have not touched Main Street, U.S.A.”

Quick-turn season

One of the key concerns this season is inventory. Many retailers have kept their stock lean throughout the year.

Lonnie Kane, president of Karen Kane Inc., a contemporary womenswear line based in Vernon, Calif., noted that retailers this Holiday season were placing orders cautiously to control inventories.

“Retail orders certainly were not overbearing,” Kane said. “If anything, they were being somewhat cautious. But they were quick to have open-to-buys on reorders.”

With this in mind, Kane expects his Holiday sales to be flat with last year’s.

Low inventories could be a scourge on companies that source overseas. Those that source domestically might receive an unexpected boost, according to Jack Kyser, chief economist at the Los Angeles County Economic Development Corp. “Word to local apparel people is: Keep your eyes and ears open because you might get some lastminute, quick-turn orders,” he said.

If this turns out to be a breakout year, the crucial factor will be whether manufacturers can keep up with retailers’ demands for immediate goods.

The National Retail Federation is predicting a 5.7 percent gain for November and December over last year. Even if the gain turns out to be more modest, such as the 3 percent to 4 percent that Kyser is expecting, it could mean an extra few billion dollars in consumer spending in Southern California.

Giss is expecting the Holiday shopping season to post a 4.5 percent to 5 percent sales gain nationally and a slightly lower gain in California. While Southern California is recovering fairly well from the recession, Northern California, particularly Silicon Valley, has not fared as well.

But there are some auspicious factors at work. There is an extra shopping day between Thanksgiving and Christmas this year. Also, Hanukkah starts on Dec. 19, closer to Christmas than last year’s Hanukkah holiday.

With Dec. 25 falling on a Thursday, many people may take Friday off and hit the after- Christmas sales. “It looks like a pretty decent environment for Christmas retail sales,” Kyser said.

But it’s not over until it’s over. “We just don’t know until those last couple of weeks,” the Beverly Center’s Crary said.

Optimistic outlook

At Los Angeles–based juniors manufacturer Hot Kiss Inc., company Chairman and Chief Executive Officer Moshe Tsabag is anticipating a strong Holiday season—followed by good after-Christmas sales.

“I am very optimistic that the jingle in the cash register will still happen,” he said. “Lots of people didn’t go out yet and do their shopping— and I’m one of them. I’m just going to get out this weekend and start shopping for Holiday.”

Tsabag said many retailers who placed Holiday orders last August bought conservatively for the season. But, he noted, as consumers return to the stores, retailers will begin to fill in their inventories.

Fortunately for Tsabag, his company is in a position to fill those orders. Over the past six months, Hot Kiss shifted much of its overseas production back to Los Angeles.

A year ago at this time, I was [producing] 30 percent domestic and 70 percent imports,” Tsabag said. “Now I’m 70 percent domestic and 30 percent imports. I turned around my business completely.”

Although Hot Kiss is now able to fill lastminute orders, Tsabag said that was not the main reason for the shift.

“I like to have a little more control of my business,” he said. “Yes, it’s a little bit more costly, but at least I can see [the merchandise], feel it, touch it, send my Q.C. to watch it, make sure it’s going to arrive here on time. And they’re not going to tell me it’s on the boat, on the train, on the plane or that there’s no quota.”