Third Street Promenade (File photo)

Retailers are expected to do well during the holiday season this year, especially if they embrace online shopping, develop loyalty programs and create special experiences for shoppers, according to a report by real estate and investment firm CBRE.

The report projects retailers will increase their sales by 4.6 to 4.8 percent.

“The consumer optimism is obviously up considering the country is at an all-time low in unemployment,” said Orbell Ovaness, a first vice president at CBRE. “Wages are going up, and they’re spending money like never before.”

Sales on the Third Street Promenade fell by 2.9 percent last year as online shopping continued to rise in popularity. But Ovaness said holiday experiences in downtown Santa Monica, such as the upcoming Unique LA Holiday Market on the pier, the Ice skating rink and Christmas tree and menorah lightings, will help draw shoppers into nearby stores.

Rob York, retail consultant for Downtown Santa Monica, said individual retailers, from mom and pop stores to flagship Promenade stores, are also trying to make shopping more of an experience.

“It’s about trying to be more engaging, even if they’re not making a purchase,” he said. “That means more events and tutorials to make it an interactive and social experience beyond just a transaction.”

Santa Monica BuyLocal chair Jennifer Taylor said she has seen more pop up stores aimed at experiential shopping open in Santa Monica, such as Candytopia at Santa Monica Place.

“Wherever we have vacancies, it’s nice for the holidays to activate the spaces as much as possible and not have vacancies in our commercial districts,” she said. “The pop-ups get some high profile attention without being locked into a long-term lease.”

Retailers are also encouraging customers to buy online and pick up items in store, the report said, which saves them money because they don’t have to stock as many products. York said that online purchasing model gives stores a chance to not only sell more merchandise when the customer picks up their purchase, but to interact with them and develop a bond.

Taylor said more customers of department stores like Bloomingdales and Nordstrom have been making online purchases and picking them up in store.

“That has interesting implications for the community, because wherever point of sales is made has different ramifications in terms of revenue brought back into the community,” she said. “When you go into a shop and buy something, you pay local sales tax that supports local schools and other programs. Online sales tax goes into the county pool and is more widely distributed.”

The report said retailers are rushing to fill the gap left by the bankruptcy of Toys “R” Us, and York said Downtown Santa Monica is looking to bring in more merchants that sell toys and children’s products. Taylor said she is also noticing businesses that customers wouldn’t usually associate with toys, such as drug and grocery stores, are now selling them.

“We do have some pretty thriving, longtime local brick-and-mortar toy stores like the Acorn Store, Puzzle Zoo and Quinnie & b,” Taylor said.

Nationally, many business owners are experimenting with rewards programs this winter, a trend Taylor said is echoed in Santa Monica. Main Street recently launched a loyalty card program in conjunction with the Ocean Park Neighborhood Association, she said.

“We’re seeing a lot of retailers developing strategies for how to get people physically into their shops by offering cool experiences you can’t get at your computer,” she said.

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