I spent about an hour this afternoon listening to a friend and allowing her to cry on my shoulder for a bit.
She runs a little boutique store which until the past six months has been very successful. It sells all manner of interesting little gifts and expensive trinkets that tend to do very well on LA's west side. In her 10 years of operation, Christmas has always been a great time, even during the 2000 bust.
This year, she hardly has any traffic at all. Her Christmas sales are at 25% of where she expected them to be.
There are a lot of things that she thinks is causing this, some of them local in nature, some national and some global trends:
- The writer's strike and it's expanding impact is killing all business in LA, even at the high end. Too many people just don't know what's going to happen next and are not spending.
- The housing bust is hitting people hard, even on the expensive westside. Her clientele are exactly the kind of younger up-and-coming people who may have pushed the envelope a bit too far in their finances. Now, they don't have the money and have to cut back on non-essentials.
- While there have been many "internet Christmases" this may turn out to be the one that is the tipping point. Internet commerce has reached the point where it is no longer expanding the total pie, rather it is stealing share even from niche bricks-and-mortar merchants who were historically immune. A slowing economy in which the total size of the shopping "pie" is no longer growing tends to exacerbate this trend.
- She notes that her UPS delivery guy reports a significant reduction in deliveries to all merchants, but a significant increase in direct home deliveries, which tends to support the above hypothesis.
The trend is not isolated, at least not in the LA area. She has talked with owners of similar shops in various "hot" shopping areas around town. The consensus is the same. All dead.
I think I'd better keep my shoulder ready.
-btc
