Bay Area consumers shopping for bargains

Last year the nation experienced a historically bleak shopping season. Retail revenue during the holiday season fell nationally by 4.3 percent, the first time revenue fell in eight years according to the National Retail Federation.

And as Bay Area residents continue to be cost-conscious and creative this holiday, experts are predicting another 1 percent decrease in revenue. But that doesn’t mean people aren’t giving gifts. It just means they’re looking for bargains or getting creative.

San Francisco resident Camille Broone, 22, said she is already finished buying presents for eight friends and family on her list.  
“I just love giving presents. I know it doesn’t sound like I made my list smaller this year, but I did,” Broone said. “This year instead of cutting down my [spending] per person, I just took some people off the list and made them cookies or something.”

As Bay Area residents adjust their shopping priorities, the average price they’re spending per present has fallen from $50 to about $30, said Eugene Muscat, a professor of management at the University of San Francisco’s School of Business and Professional Studies.

“So the price points are lower, but people are still shopping,” said Muscat, who has been analyzing holiday season trends for nearly 40 years.

That spending reduction is consistent with a national trend outlined in the retail federation’s 2009 Holiday Consumer Intentions and Actions Survey. According to the survey, more than half of holiday shoppers say that sales and price discounts or everyday low prices will be the most important factor when deciding where to shop. Meanwhile, features such as selection, quality and convenience are less of a priority to shoppers when compared to last year.

And major retailers, not small businesses, reap most of the benefits of the holiday shopping rush.

The retail federation’s report said department stores typically earn anywhere between 25 to 40 percent of their annual sales in the 55 days of the holiday season.

Pat Christensen, executive director of the San Francisco Small Business Network, attributed the disparity to the fact that national retailers can afford to have storefronts in the crowded Union Square.

When people think about holiday shopping in The City, they think about the Macy’s storefront decorated with bright lights that illuminate the square and is home to the 80-foot white fir, Christensen said.

“Local stores just can’t afford rent in those areas,” Christensen said.

And as the nation tightens its collective belt, retail jobs are becoming scarcer than ever before.

In 2008 more than 50 percent of seasonal jobs — 530,000 nationally — were placed on the chopping block because of the economic crisis, and this year experts expect the same trend to continue, said National Retail Federation spokesperson Kathy Grannis.

Some local retailers aren’t necessarily cutting jobs, but filling them with family members, according to Muscat.

“Frankly, some small businesses are getting by because they’re not hiring, they’re just bringing in their uncle and the aunt to help around,” he said.

Shlomit Heller, owner of Skin Care on Geary Boulevard since 1986 said she’ll do whatever it takes to make sure she can keep her two employees.

“Sure, I’ve heard of people [replacing employees with family members],” said Heller. “But one of my girls is a student and we all work very, very hard to keep them here.”


<p>Retail giants have a leg up for the holidays

As retailers compete to entice shoppers into spending their holiday dough, local business owners are struggling to keep up with the corporate giants in Union Square and the Westfield Mall.

David Heller, President of the Geary Boulevard Merchants Association, which includes about 1,400 shops, finds it difficult to battle with major retailers.

While the stores he supervises do occasionally offer incentives such as $5 off for every $50 spent, that can’t compete with major sales and aisles full of clearance racks.

“There’s so much we can still do, but sometimes I don’t see a light at the end of the tunnel,” Heller said. “They have sales every day. If one ends, another begins.’’

Some say money should be spent at locally owned businesses to help funds trickle down into the community. Director of the Small Business Commission Regina Dick-Endrizi said $1 spent in a local store is three times as strong as $1 in a corporation because it’s more likely to stay in the local economy.

Cities across the Bay Area are vying for shoppers to spend their holiday dollars.

While Dick-Endrizi encourages shopping at small businesses, ultimately she wants shoppers to come spend their money in San Francisco, and not be lured by malls and big box stores on the Peninsula or in the East Bay.

“Just stay in The City,” Dick-Endrizi said, laughing. “Don’t go to Serramonte. Don’t go to Daly City.”

Efforts are being made to boost sales at local stores. The City launched Shop SF, a campaign and Web site that allows locals to advertise for free and Bay Area residents to get discounts on some of The City’s local shops.

Dick-Endrizi also encourages shoppers to use Sunday FunDay Muni passes, all-day passes for local shoppers for the next two Sundays.

And some residents embrace the opportunity to frequent small stores to satisfy their retail needs.

“I’m just not buying that many gifts this year at all,” said Mission district resident Stephanie Stillman. “Some of my friends are making things for each other in lieu of spending cash. But for the gifts I am buying, most are coming from small local shops which I’d rather support.”

Shrinking revenue

Holiday retail numbers have been on a decline since 2007.

  Hotel retail in billions Annual retail in billions Holiday sales as percent of industry sales
2009 $437.60 $2,323.63 Number unavailable
2008 $441.97 $2,390.62 18.49%
2007 $457.75 $2361.12 19.39%
2006 $448.03 $2,291.31 19.55%
2005 $433.46 $2,180.55 19.89%
2004 $410.33 $2,065.36 19.87%
2003 $387.16 $1,946.79 19.89%
2002 $368.77 $1,873.75 19.68%
2001 $364.12 $1,818.44 20.02%
2000 $352.16 $1,760.53 20.00%
1999 $344.20 $1,678.30 20.51%

Analyses of holiday sales in 2008

Type of store Holiday Annual Holiday percent of annual
Discount $28,971 $127,823 22.66%
Department $48,434 $206,121 23.50%
Clothing and accessories $45,721 $215,962 21.17%
Jewelry $7,200 $28,267 25.47%
Sporting goods, book, hobby and music $19,398 $87,709 22.12%
Electronics and appliances $24,238 $111,081 21.82%
Furniture and home furnishings $18,275 $105,533 17.32%
Warehouse clubs, superstores $65,358 $323,305 20.22%
Building equipment and supplies $45,343 $323,279 14.03%
Food and beverage $74,045 $452,929 16.35%
Health and personal care stores $42,931 $245,752 17.47%

Source: National Retail Federation

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