Markdowns remain in full swing around the country, with stores discounting spring-summer merchandise by 40 to 50 percent and in some cases, as much as 80 percent. Together with discount coupons, $10 award cards and other incentives, it’s a bonanza for consumers as stores are seeing strong demand for clearance items.
Some mass retailers, such as Wal-Mart, were vocal in late June and early July about having too much inventory because of the unexpectedly cold weather on the Eastern seaboard. In fact, in early July, shorts weren’t budging off the shelves at stores such as Kohl’s, Target and Sears, Roebuck & Co., and already were marked down 30 to 40 percent.
Even though the sale ads seem to scream deeper discounts than in previous years, many retailers said their summer markdowns were at the same level a year ago. A few stores, especially on the West Coast, said they were in good shape since they cautiously entered the spring-summer season and ended up low in inventory and markdowns were fewer.
While many stores have been in sale mode all spring (Saks Fifth Avenue held its annual one-day, 40 percent off spring sale on May 1 for special customers), heavy-duty markdowns began in earnest in July and have gone from 30 to 40 to 50 percent and more off the regular prices.At present, retailers nationwide are stocked with fall merchandise and sale racks are delegated to corners and special areas. However, retailers are running major sale ads daily in newspapers around the country. TV ads have also run from retailers such as Sears trumpeting discounts on key categories such as denim.Footwear, bridge sportswear and better price and junior sportswear are some of the categories that have moved briskly at discounted prices.
“Retailers are cutting prices earlier and more often to clear merchandise,” said Steve Spiwak, an economist at Retail Forward, a Columbus, Ohio-based retail consultancy. “They are having a hard time keeping inventories in line.”
He also noted sluggish demand and mounting job losses have caused inventories to build, which is feeding steep price declines this year. Despite the Federal Reserve Board’s statement Tuesday that deflation appears less of a threat, retail apparel prices have been in a deflationary mode for the past year and a half. In June, prices for all apparel were down 2.4 percent against June 2002, although they rose slightly on a monthly basis in June against May. Women’s retail apparel prices have been hit even harder. Compared with June 2002, women’s prices fell sharply by 3.7 percent.As reported, U.S. retailers delivered better-than-expected sales for July, as consumers, tempted by promotions and improved weather, cleared store shelves of summer clearance goods and got fall and back-to-school selling off to a strong start. Same-store sales gains were the strongest they have been in over a year.
Overall, the Goldman Sachs comparable-store sales index increased 4 percent in July, far better than the 1.4 percent increase of July 2002.
Carl Steidtmann, chief economist at Deloitte Research, painted a more optimistic picture than Spiwak, claiming there aren’t as many sales this summer as in the past.
“From a retailer’s perspective, what margin hits they do take are relatively modest because inventory levels are so low, and there is not a need to be aggressive in markdowns,” he said.
Steidtmann also noted tax cuts and healthy wage gains in two-paycheck households have stimulated consumer spending. But the unemployment rate, which dipped slightly to 6.2 percent in July as more people gave up searching for jobs, could offset any boost from tax cuts or other gains, Spiwak argued.
Both economists agreed consumers have been trained to wait for bargains.
“If the consumer holds back purchasing in the hope that sales will get better in the future, that dampens current demand,” said Spiwak. “They are holding back because of job concerns and know the future holds the same type of deals.”
“I’ve seen comparisons of promotional activity to heroin,” said Steidtmann. “People need to have ever larger doses, even if it is only a placebo.”
He claimed a lot of the markdowns are “rhetorical,” as opposed to real.
Frank Doroff, executive vice president at Bloomingdale’s, said that markdowns were approximately at the same level as a year ago. In the contemporary area, they were a little less.
“We had a strong second quarter,” said Doroff. “Contemporary and bridge have been the strongest areas.” He also noted that the retail chain had “a good swimwear season.”
A walk around Bloomingdale’s flagship here on Monday showed numerous clearance and sale signs, although the bulk of the merchandise was clearly new fall clothes. There were several sale signs in the Nine West, CK Calvin Klein, Ralph and Tommy Hilfiger areas.While the Joie fall merchandise had arrived, there were two sale rounders, with items such as a denim Joie skirt marked down to $45 from $130.The Kasper department seemed to be completely on sale, with signs all over the place, touting sales of 30, 40 and 50 percent off on suits. Kasper suits, which generally retailed for $240, were selling for $159.99.Sale merchandise was hard to find on the designer floor, except for the footwear department, where sandals were marked down 40 percent.
Discounts were plentiful at Saks Fifth Avenue as well. Joseph pants were selling for 50 percent off, and in some cases, 60 percent off, and there were several racks of contemporary clothes on the fifth floor with 40 percent off signs, featuring such labels as Joie, Marc by Marc Jacobs and 5/48.
At Lord & Taylor on Fifth Avenue, the first round of markdowns occurred in mid-July and round two began last week, with ads touting total savings between 55 and 70 percent, when one takes an extra 40 percent off already-reduced summer merchandise. Last week,the marked down merchandise was relegated to certain areas of the store, with toppers inviting customers to take an additional 40 percent off already-reduced merchandise by companies such as Lucky, Betsey Johnson and ABS. Racks of shorts, by companies such as Polo, Tommy Hilfiger and CK Calvin Klein, carried a 40 percent off topper.
A walkthrough of Barneys New York Monday showed that fall selling was in full swing, with marked down merchandise virtually nonexistent. Sale merchandise was shipped down to 255 West 17th Street for Barneys’ Warehouse Sale, which begins today and runs through Sept. 1. The deals include 50 to 80 percent off regular prices of designer clothing, suits, shoes and accessories.
Robert Burke, vice president, senior fashion director at Bergdorf Goodman, said the store had the same level of markdowns as a year ago. “We’ve been pretty prudent regarding our markdowns. We feel that to be fair to our designers and vendors, marking down early is a disservice to everyone. It sends a message to our customer, ‘don’t buy at full price.’”
“My feeling is markdowns have gotten so out of hand on so many different levels. At this point, deep markdowns mean a store is way overstocked and panicky. They want to get rid of merchandise before you have to job it out, and you only get a small percent on the dollar,” said Burke.The best-selling sale category at Bergdorf’s has been women’s shoes, which first went on sale June 5, except for Manolo Blahniks, which went on sale June 25.
“We were the last to break in the city. We’ve beefed up our selection, and we’ve started to get a reputation for shoe sales,” said Burke. He said the shoes were initially reduced 30 and 40 percent. “It was a late break. Women can’t help themselves in buying shoes at full-price, and even more at sale prices,” he said.
Bergdorf’s ran an ad in The New York Times on July 17 touting footwear at 75 percent off. That’s the lowest it goes, but it’s the same discount as last year. Manolo’s were 40 percent off. “Our shoe sales at Bergdorf Goodman have been known to bring out less-than-attractive behavior in our customers,” said Burke.
This week, sale racks were delegated to certain areas of Bergdorf’s, but for the most part, fall selling was in full swing. On the fifth floor, sale racks were filled with items from Joie, Marc Jacobs, Earl Jeans, D&G, and Theory.
Ed Burstell, vice president and general manager at Henri Bendel, said the store is doing well with marked-down merchandise when the items are very expensive and then become more affordable. He said vendors such as Anne Valerie Hash, Michelle Jank and Shami Senthi sell well on sale. The first round of markdowns is 40 percent off. “If it’s still around after a month, it goes deeper,” said Burstell.
“It does get business [during sales]. Customers wait and the customers know. We do so many New Creators. We do sell the bulk at regular price, but if it’s an unknown designer, it may sell better on sale,” he said.
Sarah Easley, co-owner of Kirna Zabete, the women’s specialty boutique here, said some of the bright, bold print dresses are selling well on sale, such as those by Matthew Williamson and Andrew Gn. Spring merchandise was reduced 50 percent on July 4.
Surprisingly, the chilly, sodden spring didn’t wash out New England boutiques. Admittedly, some had good results because they’d preemptively scaled back after a brutal winter. Others said the cabin fever generated from so much bad weather worked to their advantage, sending fidgety customers into stores.“There was not much else to do but shop,” said Cathy Cross, who owns a namesake boutique in Northampton, Mass. “Other people have said the awful weather worked against them, but it seemed to work for us.”
Cross said her sidewalk sale even ended up a little skimpy, causing her to put out fall early. “I probably could have used more inventory, but at the same time, you’re glad not to be stuck.”
Lisa Vanderweil, owner of four Crossing Main boutiques in Massachusetts, said sales froze in December and January, but broke loose this spring.
“All of sudden things opened up and we had a great season,” she said. “In fact, I’m desperate for inventory. While I’m speaking with you, I’ve got a rep below who we’ll be getting more from. I’ve also got to go back and revisit Chaiken and Theory because I just didn’t buy enough.”
Washington-area consumers were hard pressed to find full-price merchandise amidst the sales racks in department stores and specialty store chains in July, and the momentum has continued. Only small, more upscale boutiques appeared to keep the number of sales to a minimum. Major department stores, Macy’s and Hecht’s, would not comment on sales promotions“as a matter of policy” but the depth and range of their sales played out in The Washington Post, in store windows and in mass mailings all month long.
Hecht’s stores advertised fashion clearance up to 70 percent off and gave away free $10 award cards — on top of 15 percent-off coupons — with every $50 purchase of sale or clearance merchandise.
That led up to the blow-out “1-Day Sale” on July 26. Macy’s, which has four Washington area stores, held a “Summer Break Stock-up Sale” from July 16-20, according to a mailer. Discounts ranged from 25 to 75 percent and the company included a 15 percent-off coupon in the mailer.
While department stores continued to discount heavily, smaller specialty boutiques stuck to a twice-a-year sales strategy.
Relish, an upscale boutique in Chevy Chase, Md., holds two sales a year — one in January and one in July —and the store did not add any new sales this year, according to Tara Luizzi, sales manager at Relish. The summer sale runs three weeks in July.“People are nervous to buy fun and flirty things at full price,” said Luizzi. “They like to buy them on sale.”
She said the store did well with such sales items as white and black sundresses by Veronique Branquinho with 1930s flair as well as sleeveless tops with an empire waist by Nicole Farhi.
“Everything is 50 percent off. There is one markdown and that’s it,” said Luizzi. “People respond to that and the first week is really good because they know they have to get what they can and the prices are not going lower.”
At micmac bis, another upscale boutique in Chevy Chase, the discounts ranged from 30 to 50 percent and a few items hit 75 percent, according to Henri Peker, owner of the store. The store also holds two sales a year — one in mid-June and another in December.
Peker said summer business is flat due to rainy, cold weather in the first months of spring and summer. But his markdowns are on par with last year’s discounts.
He said he is doing well with sale items from such designer lines as Yohji Yamamoto, Issey Miyake and Michael Stars.
After a sluggish spring sales period and continued lackluster spending trends among customers, specialty retailers in the South concede that discounts and drastic markdowns of up to 75 percent are being used to clear overstock for arriving fall merchandise.
“We have absolutely no carryover in terms of merchandise from season to season,” said Susan Isenberg, owner of NYFO, a Norfolk, and Va.-based better-to-bridge boutique with a second location in Richmond. “Our customer usually buys what they want, when they want it. Sales and discounts aren’t necessarily a draw to them as much as they are an inventory-clearing tool to us.”
Discount sales begin in early July with spring separates including pants, T-shirts and blouses being marked down first, Isenberg said. “We start receiving fall merchandise earlier than many retailers,” she said. “Our customers buy early in the season and it’s important to get old stock out and new merchandise in as soon as we can. No one wants to see the same pieces hanging around for a long period of time.”Most discounted inventory moves at an equal pace, but skirts and dresses were bestsellers.
At Potpourri, a two-unit Atlanta-based boutique, markdowns and clearance sales started early in the summer in order to make-up for stagnant spring sales, said owner Julie Routenberg, who has biannual sales offering merchandise at prices 40 to 70 percent off the original retail price. “Markdowns and clearance sales are a matter of keeping inventory low and continuing to see a cash flow when sales are down,” she said. “We started marking items down the first week in June in order to get spring overstock out of the store.”
To further clear inventory, the store participated in a co-operative group sale in July where 10 local specialty retailers contributed discounted items to be sold at a supplementary marked-down price. Most items were tagged at an additional 20 percent off the lowest in-store price.
Routenberg said all discounted categories have sold well, but strong sellers throughout the summer have been transitional separates such as lightweight jackets and tops.
Bargains abounded Aug. 2-3 at Neiman Marcus’ big NorthPark Center store in Dallas, which launched its semiannual Last Call sale with extra merchandise shipped from stores in the Northeast, where clearances had already ended. Merchandise was marked down as much as 70 percent. It helped that Aug. 1-3 was a statewide tax-free weekend for clothing and shoes priced under $100, a tax holiday intended to help parents save on back-to-school shopping.
Among the deals: Jean Paul Gaultier’s tan punctured-leather dress for $658.50 from $2,195; Carmen Marc Valvo Signature’s gold embroidered lace gown for $282 from $940; Sue Wong’s black silk chiffon dress with scattered beading for $87 from $290, and Laundry’s black matte jersey dress for $49.50 from $165.
Other Southwest retailers are also in a markdown mood and are slashing prices on summer merchandise as well as early fall styles. Among the most promotional and aggressive sales are those offered by mid-tier department store chains such as J.C. Penney, Foley’s and Dillard’s, all of which have headquarters in the Southwest. Shoppers were enjoying Texas’s tax-free weekend on back-to-school related apparel and other items. The discounts range from 25 percent to 90 percent off full retail, and there was plenty of signage and collateral letting shoppers know about the price cuts.During a mid-week visit to Penney’s at Valley View Mall in Dallas, WWD found customers responding to the sale and snapping up styles such as Asian-embroidered suede jackets from Bisou Bisou, originally priced $199.99 but now on sale for $109.99, and colorful summer sportswear from Koret, Alfred Dunner and Norton McNaughton originally priced $36 to $80 but now on sale for $24.99.
Just down the corridor at Foley’s, most summer fashions were marked down from 50 to 75 percent. Shoppers were purchasing a range of junior denim shorts for $9.99 from vendors including Angels, Bongo, L.E.I., Mudd, Paris Blues, Union Bay and Periscope,which all carried original prices of up to $30.
Dillard’s offered discounts from 30 to 75 percent on a spectrum of styles, from T-shirts to sportswear, including capri pants and junior tops.
On the West Coast, several retailers went into summer with lean inventories and suffered little heavy markdowns.
At Gottschalks’ 65 department stores and 12 specialty stores, the number of markdownshas been “according to plan,” mainly because inventories have been carefully managed, according to Jim Famalette, chief executive officer of the Fresno, Calif.-based chain.
And yet, no one was more surprised than Famalette himself.
“I think we’re better than we thought,” he said. “We took a very conservative approach in inventory and are not finding ourselves drowning in goods.”This year, markdowns generally ran between 25 and 40 percent off, far better than the rash of 75-percent-off signs seen at other retailers.
Planet Funk’s nine junior stores in Southern California also entered summer lean. “We were actually a lot leaner than in the past summer-fall transitions,” he said. “We bought very close to the season.” Markdowns of between 25 and 40 percent held weekly or biweekly did move more skirts and tops than usual, he conceded. Still, Hayun is careful not to train customers to wait until the end of season for a sale. “It’s kind of a struggle to stay away from that,” he said.
At Ron Herman’s four stores in Southern California, summer warranted fewer markdowns than in years past. Herman said locals weren’t traveling as much and bought more regularly priced goods. He even gave up a planned spring sale. But, in June, stores hosted an aggressive 50 percent-off sale. “A sale should be judged on the basis of its momentum,” Herman explained. “It can’t be built. It has to be fast and furious and intense from the moment it starts. I think at the end of the year, I will look back at total markdowns and say it was one of the lighter markdowns we’ve experienced.”
Alberta Ferretti's "Rainbow Week" sweaters are back. The designer closed her #MFW show with a few day-of-the-week sweaters, which first debuted on the catwalk last January as part of the pre-fall 2017 collection. #wwdfashion (📷: @delphineachard)