Chamber survey gets real picture of economy from local companies
More than half of the businesses recently surveyed by the Santa Monica Chamber of Commerce have seen their sales drop in the past three months. But the picture is not as bleak as economy experts would have you believe.
More than 100 businesses responded to the November survey, which will be used to gauge the business climate in Santa Monica and find ways to combat the problems. Kathryn Dodson, the chamber’s executive director who spearheaded the survey, said she wanted an accurate picture of the state of affairs in Santa Monica.
“All of the experts were saying the economy was getting better but instead of listening to the economists, I really wanted to get a pulse of business owners here,” she said. “It was important to me to hear what they had to say. It was worse than I thought it would be if you listen to the economists.”
“All of the experts were saying the economy was getting better but instead of listening to the economists, I really wanted to get a pulse of business owners here.” — — KATHRYN DODSON Santa Monica Chamber of Commerce, executive director
And what business owners had to say wasn’t as surprising to Dodson as the response was. Within three weeks, 103 businesses responded to the survey — an extraordinarily high percentage, according to Dodson.
Of the businesses that have seen sales go down, 30 percent of them said their business has dropped by 21-30 percent. Another 26 percent say they had business decline between 11-20 percent and 9 percent experienced a drop of more than 50 percent.
As a result, almost one-third of the businesses have laid off employees. Dodson thinks that reflects two things: Many of the companies are small businesses that don’t have people to lay off and business owners expect the economy to bounce back quickly so they are hanging onto their employees. When asked if they felt they would have to lay off employees before the economy recovered, 35 percent said they would while 65 percent said their workforce was stable.
And even though it’s a challenge to stay in business in Santa Monica, particularly because of Sept. 11 and what some business owners say is overregulation by local government, 90 percent of the companies surveyed said they expect to remain in Santa Monica five or more years. Those who are considering leaving said it was because of taxes, real estate rates or overregulation.
“The positive response to that really surprised me,” Dodson said. “When times are bad people usually close up shop. Obviously in Santa Monica, as hard as it may be to do business here from a regulation standpoint, is important to them (to stay).”
Those hit hardest since Sept. 11 have been hotels, retail shops and restaurants. Of the 11 hotels that responded, all of them had a drop in business and 82 percent have laid off employees. Of those surveyed, 67 percent of the retailers and 75 percent of the restaurants had a decline in business. Half of the restaurants laid off employees and said they might have to lay off more people. About 20 percent of them said they might not be in Santa Monica in five years.
“It was pretty clear that everyone affected by tourism were the hit the hard-est,” she said. “The shocks continue down through the economy.”
Some businesses have actually done better since the terrorist attacks on Sept. 11. According to the survey, 18 percent of the businesses surveyed said they have seen an increase — insurance companies, mortgage companies, auto dealerships and the healthcare industry.
Dodson hopes the $100,000 marketing campaign “Shop Santa Monica” helps end-of-the-year sales numbers for local merchants. The campaign is pushing residents to spend their hard-earned dollars within the city by inundating them with advertisements and messages through television, print, radio and direct marketing.
“It’s not going to cure it but it will help,” she said, adding the survey gives the chamber a basis on what direction to go from here. “We do need to determine what besides the Shop Santa Monica campaign we can do.”
Nearby communities like Beverly Hills have started to see their residents and guests get a bit looser with their money.
“By talking to some of the retailers they have said business and sales was better than expected (this holiday season),” said Todd Steadman, director of economic development and government affairs for the Beverly Hills Chamber of Commerce. “There is a lot of pent up spending and people do feel obligated to spend more this year.”
And according to Jack Kyser, chief economist of the Los Angeles Economic Development Corporation, an expected interest rate cut of a quarter percentage point on Tuesday may boost consumer confidence through the end of the year, but it won’t solve the worries of the westside.
“I have talked to the westside communities and they are suffering,” he said. “It’s going to be a tough couple months because a lot of people are waiting and waiting to see what will happen.”
Originally published in the Santa Monica Daily Press print edition on December 10, 2001. Read the original PDF.