Even as vendors and retailers continue to struggle with nonshopping consumers, declining sales and a near-term outlook that remains uncertain, the outlines of the world beyond the economic downturn are coming into focus. And the result can be summed up in one phrase: Less will be more.
The NPD Group estimates that 12 percent of vendors will not survive the recession and nearly 20 percent will abandon expansion strategies and retrench, focusing on their core products and markets. There will be fewer consumers, which will mean fewer stores, fewer collections, fewer products per collection and lower inventories.
That will be what will be required to adapt. But to survive, vendors and retailers will have to ensure there is less duplication, faster turnarounds and more exclusive, innovative product to excite shoppers.
Here, WWD canvasses manufacturers, analysts and consultants on the key factors that will drive the age of the New Normal.
Retailers are cutting inventories by 15 percent or more from a year ago, meaning reduced orders for vendors, as well. Small manufacturers are the most vulnerable as merchants stick with tried-and-true labels to lure reluctant shoppers back into their stores. Although a painful process, the weeding out is a necessary one, most vendors believe, since it forces them to become more creative to make the cut. It also will benefit retailers as they are forced to edit their assortments and create a distinct point of view.
“[Reducing inventory] is probably one of the healthiest measures being taken, not only to help profitability, but also to help the customer understand a store’s point of view. Assortments have become too homogeneous. There needed to be some editing. It may take one or two more seasons to win back the shoppers’ trust in price-value ratios, but ultimately, our collective responsibility is to delight the customer. If we keep our eye on that, she will return with conviction.” — Marion Davidson, president and chief executive officer, Slane & Slane
“There was just too much stuff out there. Hopefully, retailers will start curating their stores more creatively, in a way that’s more specific to their customers and not be bound to the strange version of a ‘season’ as defined by the current delivery cycle.” — Scott Sternberg, designer, Band of Outsiders and Boy
“Sometimes overassorted categories are confusing. Narrow and deep is good for the retailer, and a very good thing for the vendors that continue to supply the retailer. It gives them greater exposure.” — Jeff Rudes, president and co-founder, J Brand
“For strong brands, these shifts are a good thing, as there will be opportunities to increase market share as retailers further consolidate vendors. The supply-and-demand process is imperfect. There will be an overreaction on the reduction of inventories, which will be followed by an overreaction on increasing inventories when the recovery builds momentum. In the short term, lower inventories will create a much-needed sense of urgency for consumers to shop earlier and pay full price. It will take years to happen, but it also took many years for the U.S. to get into the massive oversupply state that we are currently in.” — Tom Murry, president and ceo, Calvin Klein Inc.
“We’ve been overassorted in national brands and store brands for years. This has been driven by both retailers and manufacturers to meet various distribution and financial strategies. Unfortunately, an excellent example of this can be seen in the current crisis with the U.S. automobile industry. It’s designed to meet short-term goals with often disastrous long-term consequences.” — Richard Leeds, chairman, Richard Leeds International
“I think that the new disciplines we are all executing over the last year will not and should not disappear. The painful learnings on inventory controls, monitoring of our personal overhead and generally bettering expense controls in total are a positive we will all take out of a very difficult time period for retailers and suppliers alike.” — Seth Morris, president, The Carole Hochman Design Group
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