Same-store sales may continue to tumble, but that’s not preventing specialty retailers from continuing to explore opportunities to identify and build new markets during the downturn.
Speakers came to this week’s Piper Jaffray retail conference in New York loaded with stories about what they’re doing to cut costs and inventories, but several also shared their ideas on how best to take advantage of the Internet and secondary markets and fine-tune merchandising and marketing strategies, including private label, to cope with the transformed retail landscape.
American Apparel Inc., which has only recently seen a slump in same-store sales, views old-fashioned brick-and-mortar expansion, with a geographic twist, as key.
“We believe there’s an opportunity to reach beyond young, metropolitan adults,” said Adrian Kowalewski, chief financial officer of the Los Angeles-based retailer and wholesaler of trendy basics, noting that there are many “underpenetrated urban markets” in the U.S. and Canada and abroad.
As the company has slowed the pace of its expansion — it opened 78 stores in 2008 and plans 25 to 30 new stores this year — there is also a renewed focus on “execution,” which includes cost control and inventory streamlining.
“One of the reasons we are holding onto the wholesale business is because it allows us to keep costs down while building our retail business,” he said, adding another advantage of its in-house production is faster inventory turns.
Still, as the company continues to grow abroad even as it manufactures locally, shipping expenses may prove costly in the long run. The company has explored overseas production to save money, but Kowalewski said part of the firm’s DNA is “made in America.” Changing that model could “erode the brand,” he said.
J. Crew Group chairman and chief executive officer Millard “Mickey” Drexler struck a blow for exclusivity, both online and off.
“We are not open to others cutting prices,” Drexler said. “If you own anything others own, you are vulnerable of the competition selling it at a lower price.”
At the firm’s annual meeting earlier this month, Drexler said that, while “a work in progress,” the company plans to launch e-commerce for its Madewell unit in the first quarter of next year.
“We are not in a hurry, but we want to keep growing, obviously,” he said. “I think the world is going where it’s going. We’re not going to fight it.”
While Gap Inc., Pacific Sunwear of California Inc., The Talbots Inc. and Abercrombie & Fitch Co. have either abandoned secondary nameplates or, in the case of the latter, are considering doing so, The Wet Seal Inc. has started to see signs of improvement at its long-suffering Arden B. division.
“Arden B. really required major surgery, major reconstruction,” said Ed Thomas, president and ceo of Wet Seal, noting Arden B. not only modeled the quicker merchandising turns after its sister brand, Wet Seal, but also lowered prices and improved the fashion mix to target “everyday wear.”
The new strategy improved Arden B.’s comparable-store sales practically overnight. Last month, Arden posted an 11 percent comp jump, as the Wet Seal division’s comps fell 12.4 percent. Arden’s April comp increased 6 percent, while Wet Seal’s comp declined 4 percent.
Wet Seal executive vice president and cfo Steven Benrubi said, “It is critical to our fast-fashion business to stay lean and to turn inventory as quickly as possible,” especially as it’s up against competitors such as Hennes & Mauritz and Forever 21.
Thomas pointed out that the trading down that has taken place since the economic downturn had the “biggest impact on the young contemporary market,” as fast-fashion firms have been jockeying for lower price points to grab market share.
But the competition is fierce in every sector, as stores try to reel in consumers on price. According to Rob Campbell, vice president of investor relations and treasurer of Nordstrom Inc., the upscale retailer’s “focus remains on providing a compelling merchandise offering to meet the evolving needs of the customer.” That’s included more private label in the women’s business.
Like Nordstrom’s Campbell, Jim Kenney, senior vice president of corporate strategy and investor relations at J.C. Penney Co. Inc., has seen “signs of stabilization” in the business. The company’s American Living label, from Polo Ralph Lauren Corp., is enjoying double-digit year-to-date increases despite the economy.
“We are articulating our value proposition, not reinventing who we are,” he said. “We don’t want to be the slowest turtle, but the fact is if you are the fastest turtle — you’re still a turtle.”
EXCLUSIVE: Two and half months after John Targon, cofounder and codesigner of Baja East, was hired as creative director of the contemporary division at Marc Jacobs, he has left the company, WWD has learned. Marc Jacobs International, which is owned by LVMH Moët Hennessy Louis Vuitton, confirmed Targon’s departure in a statement: “John Targon is a talented designer and we appreciate the work he has done here. Ultimately working together did not make sense for the brand and we wish him the best.” Read the story by @jessiredale, link in bio. #wwdnews
@theluxurycollection is officially launching a collection, tapping Sofia Sanchez de Betak for the capsule. Over 30 styles will be featured in the Chufy x The Luxury Collection, debuting next month at Bergdorf Goodman, The Webster, FiveStory and more. De Betak, known as “@chufy,” drew inspiration for the collection from her trips to Japan in the past year #wwdfashion
@lhd, founder and CEO of @thewebster, has teamed up with @lebonmarcherivegauche for the European launch of her ready-to-wear line, LHD. The launch will come with an exclusive pop-up opening today that’s set to run through May 20. Located on the second floor, it carries her debut Miami-themed resort collection, launched in November as see-now-buy-now. #wwdfashion
@longchamp, which marks its 70th anniversary this year, just opened its biggest U.S. store on Manhattan’s Fifth Avenue. On the lower level there’s a floor-to-ceiling display of the brand’s iconic Le Pliage bag – in all of its different colors, shapes and sizes. Customers can also have their product personalized in-store by imprinting names, initials or emblems. #wwdfashion (📷: @ericmtownsend)
“Whenever I’m in that place of sound and music, I don’t have fear or nervousness…This album has a lot of themes of courage and boldness and I want to be the soundtrack for people’s lives. I’ll be so happy if [my songs] evoke strength in people, which I know music has done for me,” says @kimbramusic of her newest album “Primal Heart.” The New Zealand-born singer sat down with WWD to talk about her music, newest tour and connecting with hear fans — read more on WWD.com #wwdeye (📷: @jilliansollazzo)
Luxury handbag resale company @rebagofficial is planning to sell a rare collectible for $70,000: the @hermes White Crocodile Himalayan Birkin. The exclusive Birkin sold for about $100,000 in 2008, when @davidbeckham bought one for his wife @victoriabeckham to add to her collection. Read more about the rare Birkin on WWD.com #wwdaccessories
With her costume pearl necklace and what-you-see-is-what-you-get style, Barbara Bush, who died Tuesday at age 92, was a straight-shooter from start to finish.
Born Barbara Pierce in New York City, Bush served as the 37th first lady, as well as the country’s second lady from 1981 to 1989. In addition to being part of the longest presidential marriage — 73 years — Bush also had the unlikely distinction of having one son, George W., become the 43rd president and another son, Jeb, run unsuccessfully in 2016. Having served as second lady during the Reagan administration’s two terms and lived all over the world during her own husband’s ascending political career, Barbara Bush made it clear that literacy — not fashion — was her priority. Read more from Rosemary Feitelberg’s obituary on the late First Lady in WWD.com, link in bio. #barbarabush #wwdnews
Western and ’90s trends have influenced denim for fall 2018. Think raw, dark and coated jeans mixed with bold prints and tough leather. #trendtuesdays #wwdfashion (Styled by @thealexbadia;📷: @ryanplett)