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A MATTER OF PRICE EVEN AFFLUENT SHOPPERS EXPECT BARGAINS BEFORE THEY BUY IN TOUGH ECONOMIC TIMES.

Byline: Barbara Correa Staff Writer

If it's not on sale, the wallet stays shut. Retailers are hearing that message loud and clear from shoppers.

In an effort to keep Southern Californians shopping, retailers from department stores to specialty boutiques are plastering storefronts with sale signs, creating intense competition that leaves consumers big winners.

Buy one, get one half-off, Lady Foot Locker offers.

Gap Kids promises customers who provide their e-mail addresses a 10 percent discount on purchases of $50 or more.

The ``Shhh, Private Sale'' promotion at Bloomingdale's offers 20 percent off to shoppers spending $500 or more.

``Retailers understand right now that you can't go from a heavily promotional environment to a full-price environment and expect people to buy when they have less discretionary income,'' said Scott Krugman, a spokesman for the National Retail Federation, which revised its 2003 retail sales forecast April 1 from 5.6 percent growth this year to 3.8 percent growth.

``(Shoppers) are paying more in gas prices, and they are worried about their jobs. It's an incredibly competitive environment right now.''

Years into the nation's doldrums, consumers were still keeping the economy afloat by maintaining a feverish buying habit. But since the end of last year, the consumer confidence index has been plummeting, and it fell last month to its lowest level in a decade.

``It goes back to what a writer said about Gimbel's in the '40s - it's smart to be thrifty,'' said Tom Holliday, president of the Retail Advertising and Marketing Association, a trade group.

``It's still smart to be thrifty. That's why you see Ferraris parked at Costco. A guy wants to save $20 on a pair of shoes even though he spent $140,000 on his car.''

Alongside the growing economic uncertainty, discount chains including Wal-Mart and Target have been stocking more brand names, luring bargain-hunting customers with better fashion at cheap prices.

And the proliferation of warehouse stores, cheaper specialty stores such as Trader Joe's, and closeouts like the 99 Cents Only chain have taught California consumers how to bargain-hunt, which comes in handy during tight times.

``I never buy at full price,'' said Linda Clark, an actress in Sherman Oaks. ``Pottery Barn, Banana Republic, Gap always discount their stuff after two weeks.''

Clark's friend, Tara Cevallos, a stay-at-home mom, said she's been taking Banana Republic up on a policy that lets shoppers bring back merchandise up to two weeks after it was bought at full price and get a refund of the difference after it's been marked down.

``A lot of stores are following suit,'' she said.

She added that she's been getting discount cards in the mail for the first time from home decor stores like Linens N' Things and Great Indoors.

``They are giving you $15 off if you spend $75 or more. That was a surprise because when you go in the store, they say they don't have sales.''

Many retailers are careful how they describe their response to the competitive environment.

``We're still seeing a pretty promotional environment out there,'' said Debbie Eliades, a spokeswoman for The Gap Inc., which owns the Banana Republic and Old Navy chains. ``We're responding with some strategic promos but not markdowns.''

``Volume builder'' promotions may get customers to buy, but they aren't as great a deal as they may appear to be on the surface. Deals to buy one and get one at half price, for example, really give the consumer a net 25 percent discount, because they are still buying one item at full price, points out Richard Giss, a retail analyst in Deloitte & Touche's Los Angeles office.

But for retailers, all discounting is a double-edge sword. While it does get customers in the doors, it also addicts those customers to constant discounts, which can ultimately compromise the bottom line.

``When retailers get faced with tough economic times - this past holiday season was horrible - the surest way to get rid of inventory is to offer sales,'' said Giss. ``It works really well, but you condition people not to spend, and that mentality is hard to break.''

In previous years when shoppers were still eager to spend, he said, retailers found ways to compete other than on price. But in this past holiday season, stores were forced to cut prices to get people to open their wallets.

``It's going to take a long time to wean people off that,'' Giss said.

That means shoppers can expect to see discount promotions - for Easter, Mother's Day, summer, back-to-school season, etc. - until the economy improves.

``This is a really unique environment,'' said Barbara Jorgensen, a spokeswoman for Bath & Body Works, which is now offering five travel-size toiletry items for $20 or 12 for $40.

``The war is on. The mood is kind of somber. We want to make shopping fun.''

The purpose of the trial-size promotion is to get shoppers to try out the store's luxury products, such as aromatherapy fragrances, without making a major investment, she said.

``The personal-care category has been very competitive. People do have money to spend, but they're cautious about spending it. If you can find a way to get them to spend, you're going to win.''

CAPTION(S):

2 photos

Photo:

(1 -- color) Suits are on sale at the Georgiou store at Westfield Shoppingtown Fashion Square. In a tough retail climate, even shoppers in affluent suburbs expect discounts.

(2 -- color) Gap Kids promises customers who provide their e-mail addresses a 10 percent discount on purchases of $50 as advertised in the Sherman Oaks store.

John McCoy/Staff Photographer
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Title Annotation:Business
Publication:Daily News (Los Angeles, CA)
Article Type:Statistical Data Included
Date:Apr 13, 2003
Words:924
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