Downtown Retail Picture Mixed

By Ed Moosbrugger

April 14 -- Early signs give a decidedly mixed picture on the direction of Downtown Santa Monica retailing for 2006. While some retailers report solid sales gains for the first two months of the year, others have posted flat or lower results.

This uncertainly about the strength of retailing this year is reflected in early national and state economic forecasts and retail sales reports.

For example, the Los Angeles County Economic Development Corp. in February issued a forecast that the Southern California region would outpace the nation in economic growth in both 2006 and 2007. But an economic index issued by California State University, Fullerton indicated that the region will lag behind the nation in growth over the next few months.

Take your pick.

Meanwhile, retail sales nationally were solid in January and soft in February, with weather being a factor. What is clear is that Downtown Santa Monica retailers are showing widely varying results so far this year.

Puzzle Zoo on the Third Street Promenade has posted “pretty strong” gains this year following a very strong fourth quarter in 2005, reported President Jay Demircift.

“I had a very strong January and February compared to the year before,” reported Mark Hennessey, owner of Hennessey & Ingalls art and architecture bookstore on Wilshire Boulevard.

That followed one of the store’s best years in 2005. “We had an excellent Christmas,’” Hennessey said. Sales were aided by an influx of tourists, he reported.

The picture is a bit different at some other stores. At Shiva Imports on the Promenade, sales were down substantially in December, January and February, reported owner Naren Patel. He said that vendors who supply his store tell him their business has also fallen significantly.

“The general public is holding back,” Patel said. He believes that high gasoline prices have reduced visits to Downtown Santa Monica from consumers in the region.

He also cited increased competition from other shopping districts and the negative impact of the large homeless population Downtown.

At Adamm’s Stained Glass & Gallery on Fourth Street, business is probably equal with last year, said owner Adamm Gritlefeld, with his stained glass business doing very well.

Business at the store rose last year, with the Christmas season about the same as in 2004. Gritlefeld said retailers will probably get a better picture of the outlook for 2006 after tax time in April.

At the Giorgio Vasari men’s apparel store on the Promenade, business is “decent, not phenomenal,” said owner Sameer Jooma, with sales about even with last year. Business in 2005 was about the same as in 2004.

The changing character of the Promenade poses challenges for independent stores, Jooma noted.

“There are so many national tenants now,” he said. “You don’t get the mom and pop customer any more. It’s more the chain store mentality.” In response, he has added more name brands.

At the Guess apparel store on the Promenade, business is about even with last year, when sales were way up, said Sarah Benny, general manager.

When discussing the health of business on the Promenade, everything is relative. Some of the chain stores on the strip are among the top performing units in the country. And the strong performance holds true for some independents as well.

For Puzzle Zoo, which has five stores and another planned for Dallas, “Third Street is the best,’” Demircift said. “It’s always been my best store, by far.”

Downtown may receive a boost from the March issue of Sunset magazine. In a cover story on five spring escapes, readers are urged to shop, dine and relax in and around Santa Monica. The one-page spread includes a photo of the Third Street Promenade.

On a negative note, the closure of the Robinsons-May store in Santa Monica Place and the number of vacancies at the shopping center may hurt some Downtown retailers, at least temporarily.

“We used to get a good outflow from Santa Monica Place,” Jooma said. “We don’t have that cross traffic any more.”

The future use of the space being vacated by Robinsons-May is uncertain, but, as of early March, the owner of Santa Monica Place (Macerich Co.) reportedly was close to acquiring the store.

That would be in line with what another shopping center owner is doing, as some Robinsons-May and Macy’s stores are sold off following Federated Department Stores Inc.’s acquisition of May Department Stores Co.

In February it was reported that Westfield Group would acquire some stores from Federated, including a Robinsons-May at the Fox Hills Mall in Culver City. Some of the stores may be divided into smaller spaces.

Control of the vacated Robinsons-May store would give Macerich greater flexibility in planning changes at Santa Monica Place.

SANTA MONICA HOTELS started 2006 on a solid note. The hotel occupancy rate rose 7.4 percent from a year earlier to 78.6 percent, and the average daily room rate increased 10 percent to $239.85, according to PKF Consulting.