The Season of Small Bags

As the seasonal shopping days dwindle, the mood is somber among small retailers who were counting on the holidays to help them stay afloat. They watch as shoppers at malls such as the Glendale Galleria, the Sherman Oaks Fashion Square and the Westfield Promenade, walk into stores looking for big bargains, and come out with small bags. “The bags are definitely smaller this year,” said Maria Atanasio, owner of 818 Freight, a 26-year-old clothing boutique with stores in Sherman Oaks and the Westfield Promenade. “You don’t see people walking out with big bags full of presents like before. Now they’re buying less, they’re buying things like trinkets, and carrying smaller bags.” It’s a difficult retail climate and the recession is affecting everyone, she said, and until the job market picks up the retail industry is not going to get any better. The holiday shopping season is one of the most important times for retailers. At the Disney Store At the Sherman Oaks Fashion Square, salesperson Michelle Quinn said it accounts for about 60 percent of all annual sales. “We make more money now than during any other time of the year,” she said. The Disney store, like other retailers, is trying to boost sales with steep discounts luring money conscious consumers looking for the big bargains. At the Disney Store most toys were 40 percent off, she said. This year, retailers are not struggling so much because of fewer crowds as they are with the fewer dollar amounts that shoppers are spending. At the Glendale Galleria for example, the 6,500 parking spots of its garage were filled to capacity over the weekends leading up to Christmas, according to the Galleria’s senior marketing director Janet LaFevre. “Half the battle is getting traffic and we have not had any problems with traffic during this entire year,” she said. However, from their interactions with consumers, some retailers at various shopping centers are not very optimistic about the outcome of the shopping season. “The economy is not bouncing back like they say it is. I see it everyday with my customers, everyone is struggling and looking for the big bargains,” said the manager of a children’s clothing store at that mall, who did not want to be identified. Clearance signs are everywhere, with some stores advertising sales of up to 70 percent off, but it’s only the large department stores such as Macy’s or Target that can actually afford those types of promotions, according to Atanasio. Big chains can buy large volumes of merchandise and get steep discounts from manufacturers, enabling them to offer those promotions to consumers and still manage to make some kind of a profit, she said. Smaller retailers cannot. “They’re practically giving away the stuff. These kinds of deals are not the deals retailers can make any money from,” she said adding that even though many retailers might see their sales rise, their profits will still be down. Many will try to hold on as long as possible, hoping to recoup some of their costs and even pay out of pocket to cover the rest, but most will throw in the towel sooner than later, she said. Like many leading economists, including Jack Kyser, Senior Vice President and Chief Economist at the Los Angeles County Economic Development Corporation, Atanasio predicts shopping centers will look a lot different come February of next year. “Many small stores will be forced to close by the end of January when the new spring collections start coming out and they realize they don’t have money to purchase new inventory,” she said. “Every mall is going to look the same, it will have the same national stores. Those small, unique stores will disappear. The little guys, we’re all going to leave.” Sadly, 818 Freight will be one of them. A “closing sign” is already placed on the window display. “It’s sad. It feels terrible. It’s like your baby,” said Atanasio of her business. With a name that stems from the Valley’s 818 area code and the constant shipments of jeans and T-shirts that inundated the store with boxes during its first weeks back in 1983, 818 Freight has seen its share of Valley history, she said. “I’ve seen my clients get married, have kids, now their kids have kids,” said Atanasio. “We’ve seen this Valley grow, we were here before this mall was owned by Westfield, and we’ve become a part of people’s lives.” The holiday shopping season was not enough to save her store and the economy, which put the brakes on consumer spending, combined with the city’s high business tax, and the high cost of rent, left her no other choice but to close, she said. The 818 Freight located in the Promenade will close by the end of December and the location in Sherman Oaks will close in January unless the landlord agrees to lower her rent, she said. “We’ve now reached that point where we’re having to choose between paying rent or paying our vendors,. There’s just not enough cash flow anymore.” she said. Atanasio believes things would have been different if the city and state didn’t make it so hard for small businesses to operate. The combination of high taxes and high costs of doing business, as well as the unwillingness of landlords to renegotiate rents, are all ingredients in the recipe for her personal disaster. “We need good leadership from politicians; they need to lower the business tax. They make everything really hard for small businesses,” she said.