[November 08, 2007]

Weaker holiday sales in store, economist says

(San Gabriel Valley Tribune (CA) (KRT) Via Thomson Dialog NewsEdge) Nov. 8--Dasher, Dancer and the rest of the reindeer be advised: Santa's sleigh of gifts won't be too much heavier this year.

"It's going to be a tough Christmas," said Jack Kyser, senior vice president and chief economist for the Los Angeles County Economic Development Corp.

Speaking Tuesday at the 2007 Holiday Economic and Trend Forecast in the Glendale Galleria, Kyser said, "We will survive, but it won't be the Christmas we had last year."

Kyser estimates holiday spending in the county will be up 3.1percent in 2007.

"It's going to be a very interesting economic season because we are in very uncertain times," he said.

The housing market and gas and diesel prices are two key factors in predicting the weaker holiday sales, Kyser said.

On the brighter side, consumer confidence in the area is higher than the national level, and key sectors are seeing gains, Kyser said.

The National Retail Federation estimates sales increases of 4 percent, however Kyser said that he predicts the figure to be closer to 3 percent.

Both figures are lower than the average annual percent increase in holiday spending from 1997 to 2006, which is 4.76percent.

"With the weak housing market and current credit crunch, consumers will be forced to be more prudent with their holiday spending," NRF chief Economist Rosalind Wells said in a prepared statement.

Janet LaFevre, senior marketing manager of the Glendale Galleria, agreed.

"People are going to look for long, enduring items that are going to last," LaFevre said. "They may forgo the indulgences" for themselves to buy presents for other family members, she added.

LaFevre said that 20 percent of mall visitors are from out of the country, which Kyser said is an important asset to the county.

"Tourists always want to shop," Kyser said, citing Southern California's reputation as a leader in retail.

In addition to tourism, Kyser said international trade and technology are L.A. County sectors on the rise.

Kyser and LaFevre said gift cards play an increasingly important role in holiday spending. Kyser estimates that gift card purchases will increase 25 percent to more than $35 billion.

BIGresearch and NRF report that last year $24.81 billion was spent on gift cards, with the average amount on spend per card was $39.16.

Green products also have found favor with adults, and as always there are a wide variety of toys that are geared to be a hit with children and young adults.

At the forecast, LaFevre pointed out items like CARGO's Plant Love lipstick. Sold at Sephora, the lipstick tube is made from corn and the box the lipstick comes in can be planted and sprout wildflowers.

For men, Timberland has developed a boot made in part from recycled materials.

The Hannah Montana Singing Dolls and Pop Star Stage as well as the Transformers Starscream Barrel Roll Blaster are both predicted to be at the top of children's wish lists, according to LaFevre.

"Toy safety is going to be a huge issue," Kyser said. "A lot of people have said they aren't buying anything from China."

LaFevre said that stores have found ways to address this concern.

"Many retailers have been paying attention that parents want a choice," and are offering a selection in terms of where products come from, she said.

Theone Miller, marketing director at the Westfield mall in West Covina, said stores are gearing up for the holiday season, and that the mall itself is doing the same.

"We will have brand new holiday d cor," Miller said. "In the past we have had very strong customer traffic. We are expecting a very strong and healthy holiday selling season."

Kyser said that the effects of two major recent events in Southern California -- the Writers Guild strike and the wildfires -- will largely be unfelt by the San Gabriel Valley. The strike will have the most impact on Hollywood, West Hollywood, Glendale, Burbank and the San Fernando Valley, but "it won't throw us into a recession," Kyser said.

The fires, which had the most devastating effects in San Diego County, will actually "bump" the economy in that area, he said.

To see more of the San Gabriel Valley Tribune, or to subscribe to the newspaper, go to http://www.sgvtribune.com.

Copyright (c) 2007, San Gabriel Valley Tribune, Calif.
Distributed by McClatchy-Tribune Information Services.
For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

[ Back To TMCnet.com's Homepage ]