Foggy Holiday Forecast

By Ed Moosbrugger

November 5 -- Downtown has been a star on the Santa Monica retail stage this year, but the district faces challenges in sustaining its performance through the upcoming holiday season.

Mixed messages on the economic scene, including the impact of high gasoline prices, make it difficult to assess how strong the season will be. Downtown likely will post a solid sales increase, partly because of new outlets that have opened this year, but how big the gains will be for established stores is hard to predict.

The picture definitely isn’t clear. Some national forecasts see a modest Christmas season. Others see weak comparisons with last year for toys, but strong gains for consumer electronics.

There are even mixed signals from national and regional chains, with some showing strong sales gains and others posting weak results.

“I see things up in the air until after the election,” Mark Hennessey, owner of the Hennessey & Ingalls bookstore on Wilshire Boulevard, said in mid-October.

What is clear is that Downtown Santa Monica has been on a retail roll this year. In the second quarter of 2004, the Bayside District and Third Street Promenade had the biggest sales tax gains of any geographic area within the city.

The Bayside (excluding the Promenade) jumped 22.4 percent from a year earlier, while the Promenade rose 19.6 percent. New businesses, including apparel stores and eateries, and an improved economy contributed to the gains. Santa Monica Place, which is exploring a major redevelopment, had a slight sales decline.

Citywide, Santa Monica’s taxable sales rose 5.2 percent (2.8 percent after adjustments).

Downtown is strong in apparel, and that category posted one of the biggest increases in Santa Monica, with family apparel jumping 20 percent, men’s apparel increasing 16.9 percent and women’s apparel rising 10.2 percent.

But the hike in total sales shouldn’t obscure the fact that individual businesses still face challenges on how to increase sales.

At the Candy Baron store on Santa Monica Boulevard, “I find that it is about the same as last year,” said owner Ron Baron. “No ups, no downs.”

He’s not complaining. “I’m happy,” said Baron, whose store gets much of its business from office workers and local residents.

As for the holidays, Baron, who has five stores, said, “We always do well at Christmas.”

Hennessey, who moved from the Promenade to Wilshire Boulevard last year, said, “It’s been steady. We are doing as well as last year. Tourism is getting a little bit better.”

Looking ahead, Hennessey thinks retailers will be okay, but consumers may buy more inexpensive gifts even though their total spending will hold steady.

At the Noteworthy gifts and stationery store on the Promenade, owner Dick Freedman said, “I am buying to have a good last quarter,” even though sales dipped in September after gains in previous months.

“The customer count is down, but the unit sale is up,” he said. “It’s a good store.”

Meanwhile, the retail beat goes on amid mixed signals.

“The overall strength of the economic recovery continues to be uncertain due to current economic and political events,” said Steve Stark, Santa Monica’s director of finance.

Indeed, retailer Hennessey thinks the attention of many consumers probably was diverted by the intense political campaigns.

SANTA MONICA HOTELS scored the highest occupancy rate in Los Angeles County during August, although the gain from a year earlier was small.

Local occupancy was 90.3 percent, up 1.1 percent from August 2003, according to PKF Consulting. By comparison, hotels in Los Angeles County tracked by PKF had an occupancy rate of 81.3 percent, up 6.1 percent.

The Santa Monica daily room rate increased 9.7 percent to $199.68.

For the first eight months of 2004, the City’s occupancy rate rose 4.6 percent to 81.1 percent, and the average room rate rose 7.9 percent to $209.69.