Retail. (Barely Making the Grade).

Year in Review: Started out strong as consumers kept up the 2000 spending spree, but a precipitous slowdown began in late summer... Soon after Sept. 11 attacks, spending got a jolt from interest-free financing and home equity loans, but the push was short-lived. Despite heavy store promotions, consumers continued to tighten purse strings... Taxable retail sales for Los Angeles County in 2001 were estimated to be $71.2 billion, compared with $70.3 billion in 2000. Holiday sales season is likely to be the slowest in a decade, rippling to retail's bottom lines in January.

Players to Watch: Biggest retail stories likely to involve area's new shopping centers: Hollywood & Highland, already opened, and The Grove, in the Farmers Market complex, scheduled to open in March... Hot Topic Inc., the City of Industry-based teen apparel company, is on a roll with edgy, music-oriented clothes that every 16-year-old feels they need. The company is opening about 50 stores a year, including outlets geared to large-size teens... Right Start Inc. of Calabasas acquired educational toy retailer Zany Brainy and FAO Schwartz, including the New York flagship. The company is poised for expansion of its toy line to upper-income parents.

Buzz for 2002: No one expects any miracles in retailing... Sales will be flat in the first half of the year and then increase modestly... Overall retail sales in L.A. County are expected to grow 2.1 percent, reaching $72.7 billion... High-end retailers, department stores and specialty stores will have a tougher time than discounters... Kohl's Department Store, a discount chain out of Wisconsin, is moving into the Simi Valley area and Downey... Wal-Mart Inc. is opening stores in Long Beach and Pico Rivera.

Apparel sales are unlikely to grow as quickly as consumer electronic goods, whose prices are declining or being deeply discounted... That includes dropping computer prices... Reflecting a national trend, L.A. is populated with many more stores than demand warrants, which could mean more Chapter 11 filings. Traffic at The Grove and Hollywood & Highland will provide important clues. So will the ongoing sluggishness at Third Street Promenade, hit hard in recent months by the tourism decline.

Grade: C