CCEA Public Safety Team

When Charlie Woo set up shop at ABC Toys downtown 20 years ago, it was in a scuzzy industrial sector with little going for it.

But two decades later, the location has a bit more cache. With Woo and dozens of other merchants opening their doors, the area has turned into a thriving business community -- officially known as the Toy District -- but still one of the biggest secrets in L.A. bargain hunting.

"You're right next to your competitors, your friends, your suppliers and your customers," said Woo, now chief executive at Megatoys on Second Street. "That attracts a lot of people, just like Las Vegas. They go to the Strip because there's so many places to gamble -- it's the same here. You can find some great bargains if you get lucky."

Business, like most of the retail sector, has been slow lately as nervous consumers put off holiday shopping until the last minute. So in the crucial final weeks of the year, when businesses in the Toy District make 70 percent of their annual income, they're expecting the lure of massive discounts to draw back shoppers.

"When business overall isn't good, there's a lot of closeouts, which is actually good for us," said Steve Lee, a local property owner. "Our merchants can buy it and then resell it cheap, so you'll start seeing some good bargains."

Savvy shoppers can find some steals, Lee said, but they have to be willing to try some nonstandard techniques to get the best price.

"You've got to bargain here, that's the real name of the game," he said. "If you don't, the prices won't even be as good as Wal-Mart or Kmart, but if you do some talking, you can get up to 40 percent off."

The densely clustered community, roughly enclosed by Third, San Pedro, Fifth and Los Angeles streets, is a magnet for shops, which stay afloat with extremely low overhead. Feeding off each others' traffic, the shops offer the same urban shopping environment of the neighboring Garment and Jewelry districts. Though the shops aren't fancy and don't boost the amenities of the cookie-cutter malls that dot the landscape, most make it up in low prices. Many are family run with only a few employees, allowing for owners to reap profits off low-cost imports.

Like nearly every other industry, both wholesalers and retailers have felt the pinch of a slowing economy. A few months back, they were already worrying about the lack of hot commodities to drive sales.

"It's very slow this year because there's not enough new things coming out," fretted Seung Park, who runs Wall Trading. "Last year, we had the scooters, then before that, Pokemon, but now there's nothing much out. Retail is slow, so wholesale is, too."

And the general economic tightness that has ensued post Sept. 11 has definitely been felt in the district, which has suffered along with the greater retail world.

"We used to get clients in here every week, and now we see them once a month," said Michelle Bock, whose Crystal Art Gallery has been a wholesale fixture for a decade. "It's so slow right now everyone's trying to make every penny they can."

Though traffic is slow at the moment, local economic guru Jack Kyser foresees a pickup as the holiday season reaches its full frenzy in coming weeks.

"They have the image of the bargain," said Kyser, chief economist for the Los Angeles County Economic Development Corp. "If you're looking to score bargains, you'd think the outlet malls and places like this first. Everyone's looking for value, and this just shouts value!"

And though there are deals to be had, they're still largely ignored by most of Los Angeles, said Tracey Lovejoy, who serves as executive director of the local business improvement district.

"It's very hard to get the suburban housewife from Van Nuys to come down there," she said. "It's not name brand, but it's good quality stuff."

And once they get acclimated to the narrow streets and bazaar-atmosphere, she said, smooth holiday shopping can begin.

"If you realize that you're going into an urban environment, then you'll be OK," she said. "It's a little gem in the rough."