By Michael Janofsky
Rodeo Drive, the 'epicentre of luxury fashion', is shrugging off the credit crunch and economic slowdown.
By the time they reached Harry Winston on Rodeo Drive in Beverly Hills, Australians Jason Finlayson and Vanessa Rodriguez were carrying five bags with clothes from Ralph Lauren, Hugo Boss and LaCoste.
"Just doing the traditional thing," said Finlayson, 33, a vacationing salesman for Nortel Networks Corp in Sydney. "When you're in Los Angeles, you come to Rodeo Drive as part of the whole Beverly Hills shopping experience."
Thanks to big-spending foreigners and wealthy locals, the three-block strip that Rodeo Drive's website calls "the epicentre of luxury fashion" is shrugging off the credit crunch and economic slowdown. Stores in the heart of the 90210 zip code are less vulnerable than others, said Thomas J Blumenthal, president of the Rodeo Drive Committee, a business group.
"It's our opinion Christmas is still coming on Dec 25," said Blumenthal, the CEO of Gearys watch store on the Drive and a jewellery store nearby. "We're doing much better than our colleagues at other locations, so we're cautiously optimistic about the fourth quarter."
The committee doesn't track sales or make forecasts for Rodeo Drive, which is lined with palm trees and more than 100 stores, including Tiffany, Hermes, DeBeers, Prada and Jimmy Choo.
"Given what's going on, things could be a lot worse," said Radha Arora, regional vice president and general manager of the Beverly Wilshire Four Seasons hotel at the intersection of Wilshire Boulevard and Rodeo Drive, where parts of the 1990 Julia Roberts movie 'Pretty Woman' were filmed.
Through September, the monthly occupancy rate was exceeding that of 2007, Arora said. It's slipping now, he said, at 68 percent occupancy last week compared with 85 percent a year ago.
"But our suite sales are still holding," he said. "That's our bread and butter, really." Nightly suite prices start at $1000, according to the hotel website.
Christmas sales at Blumenthal's shops, both called Gearys, will likely rise, he said, without providing a specific projection. Last year, holiday sales increased "in the low double digits," he said.
The national picture looks different. Consumer purchases fell 1.2 percent in September, extending a decline to three straight months for the first time since comparable record-keeping began in 1992, the Commerce Department said last week.
For Christmas, the Washington, DC-based National Retail Federation foresees a 2.2 percent rise in sales from a year ago, the smallest increase in six years, said spokesman Kathy Grannis.
Charleston, South Carolina-based America's Research Group estimates sales could fall as much as 4 percent.
"In 17 years of projecting, I've never before projected negative sales," said Britt Beemer, chairman of the group, which surveys 10,000 consumers a week.
Rodeo Drive merchants "may be surprised'' when their holiday sales wind up being "flat or up or down 1 percent," he said. "On the other hand, they might be okay because of the tourist business."
Rodeo Drive is surrounded by wealth. In 2006, the last year for which data are available, the per capita income in Beverly Hills was $50,218, compared with $17,413 for all of Los Angeles County, according to the city of Beverly Hills website.
For the richest 20 percent of Beverly Hills residents, the average household income was $619,766, said Alison Maxwell, the city's director of economic development and marketing.
The Drive gets a boost from the steady stream of tourists and gawkers hoping to spot Tom Cruise, Ellen deGeneres, David Beckham and other celebrities known to shop in the area, Blumenthal said.
"Every store on the street has celebrities, whether they pop in the front door or come in the back."
And in recent years, as much as 30 percent of purchases on the Drive have been made by foreigners, he said. The question is whether that will continue as growth slows abroad and a rise in the dollar reduces the buying power of foreign currencies.
Finlayson said he bought US dollars several months ago when one Australian dollar got him 88 cents. "I got lucky," he said. "It turned out to be a great deal. We're almost staying here for free."
An Australian dollar bought 68 cents last week.
Another possible omen of change: Business is booming at Beverly Loan Company, a pawnshop two blocks from Rodeo Drive that stocks jewellery, watches, gold and art, said Jordan Tabach-Bank, CEO.
"We've never made so many loans of $50,000 and more," he said. "They go to white-collar clients, blue-collar, you name it. Every demographic." Even celebrities?
"Let's put it this way," he said. "The B-listers come in to sell. The A-listers come in to buy."
This article is courtesy of Bloomberg.