The old financial tricks and merchandising sleights of hand aren’t going to work anymore.
Fashion companies were quick enough to cut expenditures, pare store openings and lean on suppliers to survive the first year of the recession and the start of the credit crisis. But shifting consumer values and brutal economic realities are forcing both the weak and strong to reconsider their reason for being and how they do business.
The paradigm in fashion is shifting. Well-established consumer segments are all changing independently and the industry is scrambling to keep up. The proof is everywhere, from First Lady Michelle Obama’s penchant for J. Crew to Jil Sander’s transformation into fast-fashion maven and luxury’s nosedive.
The global playing field is also in flux with financial pressures bearing down on economies of all shapes and sizes.
“What’s going on is unprecedented, at least in my experience,” said Allen Questrom, former chief executive officer of J.C. Penney Co. Inc., Federated, Barneys New York and Neiman Marcus Inc. “This is the deepest consumer retrenchment I have ever witnessed. It’s like someone turned out the lights and the world changed.”
The advice from retail’s Mr. Fixit?
“Get rid of nonproductive stores. Cut back expectations — cut back the business empire from 10 to 20 percent depending ontype of product — the whole business,” Questrom suggested. “It’s about cutting operating expenses, the number of physical facilities, sales, profits, the whole world. It could be four years, five years, or it could be we are in for a 10-year decline.”
Smaller is just a part of the new world order experts and industry veterans see coming.
The next couple of decades will see the coexistence of several “contradictory” distribution strategies, according to Gildas Minvielle, an economist at the French Fashion Institute. Slow and fast-fashion concepts will operate side-by-side and smaller retail formats will return to repopulate town centers.
“[Consumers are] coming back to basics and are less willing to be swayed by marketing campaigns,” Minvielle said. “But nothing’s sure. We could find at the end of 2010 a period of strong growth, and things could completely change.”
Shoppers who for years have subsidized mediocre collections and chains via credit-fueled purchases are reasserting themselves and forcing brands to produce goods that meet the demands of their lifestyles. Simply selling the same old, same old for 20 percent less will not be enough.
The whole economy is coming off of a period of excess, a gilded age of cash flow that covered Wall Street’s sins and filled holes in questionable business plans. Many see the quick growth and flameout of collegiate retailer Steve and Barry’s as just one example of the overabundance allowed to take root in the marketplace.
“What we now have will be a fundamental economic reset,” said Steve Ballmer, ceo of Microsoft Corp., at a House Democratic caucus retreat earlier this year. “The economy is going to have to re-establish itself at a lower level of spending that reflects the real value of underlying assets before we can all start growing again at a healthy rate.”
"I was driving back on Saturday afternoon from the beach, and I just saw this sign saying 'Skydiving for $95.' And I was like, I can't not sky dive for $95," says Tom Bateman about a moment in Hawaii while shooting "Snatched." #wwdeye (📷: @vsteves; Interview by @ktauer; Styled by @thealexbadia)