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DELOITTE & TOUCHE SURVEY: RETAILERS IN SOUTHERN CALIFORNIA, NATIONWIDE FORESEE '93 HOLIDAY SALES UP OR LEVEL -- MANY EXPECT PROFITS TO RISE

 LOS ANGELES, Nov. 8 /PRNewswire/ -- Retailers in Southern California and nationwide are significantly more optimistic about sales activity this holiday season than they were a year ago, according to the annual Deloitte & Touche "Mood Survey: Retail Holiday Outlook" released today.
 Nationally and in Southern California two-thirds (65 percent) of the retailers surveyed said they expect holiday spending by consumers to increase or remain the same compared to year-ago levels.
 Nationally, 62 percent of retailers expect their own sales to increase this holiday season, while only 48 percent of Southern California retailers expect an upturn. However, retailers here are clearly more optimistic than they were a year ago. Two thirds of them expect spending by their customers to be up from a year ago, compared to only 37 percent who made that forecast last year. Currently 21 percent of retailers in Southern California expect their profits to decline; a year ago the percentage of pessimists was twice as large.
 Giving some support for that optimism, a simultaneous Deloitte & Touche survey of consumers found that most (60 percent) expect their spending to remain the same or increase compared to a year ago.
 The annual "Mood Survey" conducted by the international accounting, audit and management consulting firm provides an assessment of the holiday season from the perspective of both the retailer and consumer.
 Nationally more than half of the retailers surveyed said they expect to see an increase in profits, partly as a result of streamlined operations and lower costs. In Southern California, however, those expecting a profit upturn were in the minority, reflecting the region's lagging economy and highly competitive retail environment.
 Supporting that relatively upbeat view in the face of a sluggish economy is the survey finding that consumers expect to spend $646 on gifts this year, compared with $616 last year -- an increase of about 5 percent. Contrary to some stereotypes, the men in the survey continued to outspend women, saying they planned to spend an average of $754 on holiday gifts compared to the women's average of $544.
 "While consumers are still cautious this year, it is clear that they are more optimistic than they were at this time a year ago," said Alan L. Frank, Partner-In-Charge of the TRADE Retail & Distribution Services Group of Deloitte & Touche in Los Angeles. "These figures tell us that we are likely to see a relatively stable level of holiday sales activity this year -- certainly not a buying spree, but a healthy pace of business.
 "Consumers are not going to spend impulsively or frivolously, and they are looking for solid value for their money, which is not surprising given the state of the economy," Frank said.
 "But they are not planning to scrimp, which is good news for two reasons. It means that the important retail sector will get a much- needed boost. Just as important, it signals that the American public has a fundamental optimism about the future. Because consumer spending is vital to the health of our economy, that's a welcome indicator that the worst may be over," Frank explained.
 Retailers Optimistic About Sales and Profits
 Nationally, the majority (62 percent) of retailers project sales increases for this holiday season, vs. 48 percent in this area. Among these optimistic retailers, nationally 70 percent are projecting an increase in sales of up to 6 percent, with the remaining 30 percent expecting an even greater increase. In Southern California, about 60 percent of those expecting a sales upturn put them at 6 percent or less.
 About one-quarter (24 percent nationally, 25 percent in Southern California) expect sales to be flat. Only 14 percent foresee decreases in their holiday sales nationally, but one out of four retailers in this region expect a downturn in sales.
 "The fact that retailers are more optimistic about their sales than about their profits reflects the fact that in this highly competitive environment, retailers are operating on thinner profit margins, trimming their operating expenses as much as possible while delivering the best possible value to the consumer," noted Richard Giss, TRADE managing partner with Deloitte & Touche in Los Angeles.
 Across the country, the Deloitte & Touche survey found, retailers are keeping a close eye on expenses and tightening their control over inventory levels.
 In addition, almost one-third of retailers are increasing advertising as a percent of sales. Much of that increased advertising money is being spent on radio and television time rather than on newspaper ads, the survey respondents said.
 Where the Dollars Will Go
 Consumers clearly are planning to shop carefully this season. Discount stores were chosen by 57 percent of consumers as the "store of choice" for holiday shopping. This is a sharp change from last year, when traditional department stores were the most favored of any segment of the retailing industry, with 44 percent of shoppers headed their way.
 The relatively new phenomenon of buying from television home shopping shows seems to be catching on with a small but significant number of consumers. Nearly 4 percent of consumers said they would do some of their holiday shopping through television home shopping channels.
 "This is only a small fraction of the total market, but it is significant because the home shopping channels account for only 2 percent of retail sales nationally, so the shopping channels are almost doubling their market share for the holidays," noted Giss.
 Retailers are not ignoring the phenomenon, either. More than a quarter of those surveyed said they would be entering the home television selling market over the next three years.
 What Attracts The Shoppers
 Retailers seemed to be a little out of step with their customers when it came to an understanding of what drew their shoppers through the front door.
 Consumers listed the top three reasons for selecting a particular store as everyday low prices, convenient locations and larger selection.
 Retailers, by contrast, said they believed that the biggest motivator for consumers was price promotions or markdowns, followed by customer service and better quality merchandise. Customer service, which each year appears among the top three on the retailers' list, retained its low position for consumers, ranking seventh.
 "It may be that in an age of self-service, consumers have largely given up any real expectation of service," said Jacqueline Fernandez, director of the Deloitte & Touche TRADE Retail Services Group in Los Angeles. "What they are saying they really want is value."
 Retailers and consumers are in agreement as to what sales promotion techniques work best. They both rank free gifts with purchase, free gift wrapping and VIP customer nights as the most effective attractions.
 Who Gets The Gifts (Not Dad)
 While men will be outspending women by a considerable margin, they will certainly be on the short end when it comes to receiving gifts, according to the survey. Asked who will likely receive the most expensive gift on their holiday shopping lists, consumers' first choice was the whole family, followed closely by the wife. Next in line were sons and daughters. Husbands were low on the list, cited by only 6.5 percent of respondents.
 The most expensive gifts consumers will be buying this season will be toys, electronics and jewelry, in that order.
 The Economy: Retailers Upbeat, Consumers Nervous
 Consumers' view of the economy was distinctly more gloomy than that held by retailers. More than 60 percent of the consumers surveyed said that they believe the economy will either remain the same or get worse in 1994. Only 27 percent of consumers felt that the economy would improve.
 Retailers were more upbeat both nationally and in Southern California. Across the country, 43 percent anticipated an improvement in the economy in 1994. Almost the same percentage expected it to be the same. Only 15 percent of retailers believe the economy will get worse, in sharp contrast to the 36 percent of consumers who expect a downturn.
 Among Southern California retailers, almost 48 percent foresee an upturn, 40 percent expect the economy to be unchanged, and only 12 percent expect it to get worse.
 Retailers are notably more optimistic this holiday season compared to last year, when the majority (60 percent) believed the 1993 economy would worsen or remain unchanged compared to 1992.
 In spite of pessimism about the economy, consumers did not seem personally threatened by what they saw as a bleak outlook. About 55 percent of those surveyed felt "very" secure or "extremely" secure about keeping their jobs through 1994, and another 28 percent felt "somewhat" secure. Only 14 percent of respondents felt "not very" or "not at all" secure in their jobs over the next year.
 Retailers Back NAFTA
 Three-quarters of retailers in this survey (72 percent nationally, 78 percent in Southern California) favor the passage of the North American Free Trade Agreement, or NAFTA. However, most feel that it will take some time for the benefits of NAFTA to show up at their cash registers.
 Although 57 percent nationally (and 70 percent in Southern California) said NAFTA will have a positive impact on their business in the long term, only 27 percent nationally, and 45 percent in the area, said they will reap benefits in the near future. Nationally nearly 60 percent of retailers feel that it will have no short-term impact on their business, while in Southern California the figure was 46 percent.
 "We believe retailers are expecting NAFTA to mean an easier movement of apparel and other merchandise that now comes across the border from Mexico, and perhaps a switch to Mexican production by suppliers that are now in the Far East," said Frank. "In addition, a number of retailers believe there is a real opportunity for them to expand into Mexico."
 Survey Methodology
 The retailer survey was conducted by the TRADE Retail & Distribution Services Group of Deloitte & Touche during October, 1993, by 35 of the firm's retail practice office locations nationwide. The mail survey was completed by 1,059 retailers, representing a broad sampling of retail executives in general merchandise, apparel, home furnishings, and other retail categories. The survey has a margin of error of plus or minus 3 percent.
 The Deloitte & Touche poll of 1,009 consumers, comprised of 525 females and 484 males, was conducted by an independent research company via telephone from Oct. 22 to Oct. 24, 1993. The margin of error is plus or minus 3 percent.
 About Deloitte & Touche
 Deloitte & Touche, one of the nation's largest professional service firms, provides accounting and auditing, tax and management consulting services through 15,800 people in offices in more than 100 U.S. cities. The firm is part of Deloitte Touche Tohmatsu International, a global leader in professional services with 56,000 people in 108 countries.
 The TRADE Retail & Distribution Services Group of Deloitte & Touche is the profession's largest practice dedicated exclusively to serving the needs of retailers and related industries.
 -0- 11/8/93
 /NOTE TO EDITORS: For additional comment, contact these Deloitte & Touche retailing experts directly: Alan Frank, 213-688-3202, Richard Giss (office), 213-688-5115, (pager), 213-508-5227, Jacqueline Fernandez, 213-688-5163. For weekend or evening interviews, phone Alex Auerbach at, 818-501-4221./
 /CONTACT: Alexander Auerbach or Diana Siegel of Auerbach & Co., 818-501-4221/


CO: Deloitte & Touche ST: California IN: REA SU:

NY-LM -- LA021 -- 1660 11/08/93 10:08 EST
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