By  on October 23, 2006

As fast fashion retailers expand, they are putting greater competitive pressure on apparel retailers such as Old Navy and Aéropostale, according to a recent report from Coleman Research Group.

Jane Hali, vice president and director of retail consulting at Coleman, also said this segment of the market, which serves the price-sensitive shopper, is under pressure by mass retailers such as Target Corp. and Wal-Mart Stores Inc. — companies that are pushing trendier apparel at lower price points.

"Fast food at inexpensive prices was the new mode for restaurants in the Seventies, today it is fast fashion at inexpensive prices that has created a whole new genre of retail," Hali said in the report.

By incorporating low-cost fashion and continuous newness into their merchandise mix, stores such as Forever 21 and H&M, as well as Target, Wal-Mart and Kohl"s, have become superior competitors.

"In my opinion, Old Navy"s business started to decline when H&M increased their number of stores," Hali said. "Old Navy began by selling basics at low prices, while H&M is selling fashion at low prices."

Wal-Mart, Target and Kohl"s have been serious about taking their merchandise into new and trendier markets, with exclusive products and brand launches. Target has been successfully promoting their Isaac Mizrahi clothing and accessories line, while Kohl"s snagged an exclusive deal with the teen and contemporary Candies brand.

"Through fierce competition in the European ‘value" market, retailers have perfected the art of cheap private label or exclusive brand lines," Hali said. "These stores are changing the way Americans think about and shop for clothes."

Next year, American shoppers will have more choices. Mango and Topshop, two European fashion chains, will be landing in the U.S. over the next 12 months. Mango targets the 18- to 35-year-old demographic with price points ranging from $20 to $250. The company, which already has two stores on the West Coast, plans on opening its U.S. flagship in SoHo in the fall of 2007.

Topshop, owned by the Arcadia Group, will be opening its first store in New York City in the fall of 2007. The company currently operates over 300 stores in the U.K."In our opinion it is evident that it is not enough to sell merchandise at inexpensive prices. The merchandise must be compelling, on trend, of good quality and frequent shipments," Hali said.

She zeroed in on Express, Old Navy, Arden B, Gap, Aéropostale and New York & Company as retailers that need to step up their merchandising efforts in order to compete with these low-cost, fashion-forward retailers.

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