Shoppers Go Hunting for Big Bargains

Orange County shoppers swarmed the malls on Saturday, seeking deep discounts in the aftermath of what some analysts described as a disappointing holiday shopping season.

Early predictions of robust holiday sales across the nation began to fizzle in the weeks before Christmas, though retail experts said Southern California would likely fare better than other parts of the country.

“The week after Christmas is going to be a very explosive sales week,” said analyst Walter Loeb of Loeb Associates in New York. “But a lot of retailers took markdowns, so the profits won’t be there.”

It was so busy at South Coast Plaza that Costa Mesa police were summoned to help untangle gridlocked traffic, police said.

Cars were also spilling out onto the streets around Fry’s Electronics in Fountain Valley, where store employees worked to control the crowds as if a sporting event were underway. Nearly 1,400 shoppers formed a snaking line in front of the store before it opened at 9 a.m.

Huntington Beach resident Paul Kwon, 18, waiting near the front of the line, said he arrived at 5:30 a.m. to make sure he did not miss any of the year-end bargains.

“I was one of the first ones,” said the UCLA freshman. “Watching the sunrise was kind of nice.”

Inside, shoppers and carts crowded the alleys but there was little of the manic dash associated with blow-out sales, with the exception, perhaps, of the computer-equipment department. Shoppers were grabbing CD-ROM drives, sound cards and mouses, some priced as low as 99 cents, by the dozens.

“We got a lifetime supply of mice,” said Sam Wilson, 25, of Huntington Beach.

Shopper Jerry Caggiano said the scene was hectic at times. “The excitement was something else,” he said. “There was a guy, he almost began crying when they ran out of CD-ROM drives. I felt sorry. I almost gave him one of mine. Almost.”

Meanwhile, the annual men’s sale was underway at South Coast Plaza’s Nordstrom in Costa Mesa, where many items were marked down 33%.

“I am going to go out of here with a complete wardrobe,” said Newport Beach resident Bill Camp, 48, a vice president at Kia Motors.

The store was “crazy from the get-go. This is the busiest I’ve seen in years,” said Matt Forgay, a sales associate.

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Deborah Reyes Castro, 31, of Irvine, shopping for her husband, browsed calmly through men’s sweaters.

“It is worth waiting for after Christmas,” said Castro. “You take a chance on the selection, but the prices are unbeatable.”

Despite the enthusiasm at some stores on Saturday, some analysts say they’ve been generally disappointed with the 1998 shopping season.

In Southern California, sales will likely rise 4.5% to 5% this year, with a national increase closer to 4%, Richard Giss, a partner in Deloitte & Touche’s retail services group, predicted Saturday.

Other experts forecast much lower nationwide sales.

Retailers were hurt this year by warm weather that blanketed the nation in November and early December, taking a chunk out of early apparel sales. The recent cold snap has likely softened the blow, they said, but not enough to make for the slow start.

In addition, intensifying competition for consumer dollars appeared to reward discount retailers like Wal-Mart at the expense of department stores.

“We’ve been getting a somewhat grimmer picture from certain retailers who have broken ranks and said it’s become more competitive . . . profits are going to hell in a handbasket,” said John Pitt, with LJR Redbook Research in New York. “It’s starting to look a little messy.”

Retail experts had predicted that 1998 would be a bang-up sales year. But two recent surveys revealed gains of only 0.7% and 0.8% in the first 24 days of the shopping season.

“It’s embarrassing to me,” said William F. Ford, senior economic advisor at TeleCheck Services Inc., the Houston check-processing firm that conducted one of the studies. Initially, Ford predicted sales gains of 3% to 5% at stores open a year or more, but he has since decided that 1.5% is more realistic. “As it turns out, the low end of my [prediction] is probably going to be too high.”

The initial optimism was based on the strong economy, salary growth and low unemployment, but the shopping season was showered with both blessings and woes. While earlier talk of a possible recession in 1999 has faded--thanks to three interest rate cuts by the Federal Reserve Board in the past three months--Asia’s economic problems are now being felt locally and layoff phobia is spreading like a low-grade fever, analysts say.

“We are all reading those headlines about massive layoffs around the country,” retail economist Kurt Barnard said. “A lot of people with very good jobs and very good incomes are saying ‘I better be very careful about how I spend my money because my job may be merged out of existence next year.’ ”

Meanwhile, the stock market has helped fuel both uncertainty and optimism in the second half of 1998, bucking wildly at times, and then breaking once more into a gallop.

It has become increasingly difficult to predict holiday sales in recent years, as consumer buying patterns have splintered into two directions.

Many consumers are spending more freely throughout the year, and buying gifts months before the season actually arrives. Many others are buying closer to the holidays and are reserving a sizable chunk--between 10% and 25%--of their budgets to spend after Christmas.

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To be sure, some analysts still think many retail companies will hit their projections, partly because about 40% of the overall holiday sales occur in the week before and the week after Christmas, said Pamela Rucker, a spokeswoman for the National Retail Federation in Washington, D.C.

“The week after Christmas has increasingly become an important part of retail’s holiday bottom line,” Rucker said. “The story isn’t over yet.”

The season’s sales figures won’t be reported until the first week in January, when the major chains disclose December totals. Some industry groups will report their results on Monday.

Analysts say two factors could boost this year’s final tallies: the season has one more shopping day than last, and the day after Christmas fell on a weekend.

The Internet has also muddied the water this year, claiming a growing slice of the retail pie. Recent surveys predict that online holiday sales could range from $2.5 billion to $3.5 billion this year, with twice as many adults shopping on the Internet than a year ago.

Still, that accounts for only about 1% to 2% of the estimated $173 billion spent during the holidays this year.

Investors are enthusiastic about online commerce and have sent some Internet stocks soaring. Analyst say Internet retailers’ fourth-quarter sales will likely top analyst forecasts.

Some analysts also think customers have become less susceptible to markdowns in recent years, since flattened inflation allows merchants to offer better prices throughout the year.

“Consumers have been getting bargains anywhere without having to wait for leftovers,” said Ed Weller at Sutro & Co. in San Francisco.

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Abigail Goldman, Karima A. Haynes, Nancy Trejos and Daniel Yi contributed to this story.