Economic recovery is slowly under way for California’s retail and apparel sectors, although the state’s overall rebound may lag the nation’s pace because of high unemployment and a weakened housing market, according to a new report.
Southern California, the largest market in the U.S., faces challenges but there are bright spots, according to the study from the Kyser Center for Economic Research at the Los Angeles County Economic Development Corp.
Los Angeles County’s apparel and textile sector will shed about 5,600 jobs this year, compared with 6,400 last year, and should see a modest gain in wholesaling and imports, according to the 2010-2011 Economic Forecast & Industry Outlook report.
California’s unemployment rate was 12.4 percent in December, among the highest in the U.S. The median price for a Southern California home was $271,500 last month, down 6.1 percent from December but up 8.6 percent from a year earlier.
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“The bottom line is until the unemployment rate starts to move down, consumers will continue to be cautious,” the report’s founder, Jack Kyser, said in an interview.
“If you are in the business of making apparel, it’s difficult because the customer pool has dwindled,” he said. “The good news is that people are looking for new design ideas and Los Angeles is a hotbed.”
For now, bargain seekers outnumber luxury shoppers. Value-driven retailers such as Los Angeles-based Kohl’s and Forever 21 and H&M have started to take over some of the state’s substantial vacant retail space. Kyser said more store closings are likely this year.