It’s going to be all about price, value and quality as intimate apparel executives look to the second half of the year.
Following a tough first six months, during which sales and inventories of intimates at retail were down by 10 percent or more, a number of vendors are embracing tactics they don’t want to: encouraging more promotions and discounts, and in many cases, lowering prices — or at least not raising them.
Enhanced promotional activity is viewed by many executives as diluting a brand’s image and integrity, but it’s also being regarded as a necessary evil to maintain a brand’s franchise in a shrinking marketplace. Better and luxury brands that are listed at lower prices might be a perk for consumers, but it doesn’t mean quality will not be compromised, according to industry executives. Case in point: a number of bra brands are featuring more unlined styles, which cuts out the costs of molded cups, heat-sealing applications and additional fabrics that had become important added-value elements in the category.
For a number of intimate apparel brands, particularly bras, the price threshold for consumers now is $40, whereas it used to be as high as $48 or $50, according to innerwear executives. But a majority of better-price bra specialists say the pricing sweet spot is now actually $36 to $38, a few dollars less than a year ago and a psychological lure that gives consumers the feeling of getting a better deal for the same quality brand. In some cases, consumers loyal to an upscale brand are still buying bras in the $60 to $69 range, but are purchasing one style as opposed to two or three.
Linda LoRe, president and chief executive officer of Frederick’s of Hollywood, said a “savvier customer has led to a higher demand for quality and comfort, therefore an increase in intrinsic value of product.
“Consumers, now more than ever, expect quality when they purchase any product, including intimate apparel,” LoRe said. “They are very careful about where and how they spend their money. Buying something like a new bra that makes them feel good about themselves and stands the test of time will convert them into a loyal customer. Loyal customers are our biggest assets, so value and quality come first.”
Regarding pricing, LoRe said, “We have been able to keep our 2010 pricing consistent with 2009 with price points at an attractive level. For example, our chemises start at $20, bras at two for $49 and corsets start at $54. Our recent merger [with parent company FOH Holdings Inc. and Movie Star Inc.] has enabled us to begin our vertical integration process, thus keeping prices and quality equal to or better than prior years.”
From a vendor’s viewpoint, Bob Vitale, executive vice president of sales and marketing at Wacoal America, said discussions with retailers over repositioning prices began this spring and have escalated.
“While many new [bra] styles would have been priced at $60, there seems to be a threshold at that price,” Vitale said. “So we introduced new full-figure styles for $48 that would have sold from $58 to $68 before. It’s still full-figure and within the Wacoal price range, but it’s at the bottom of the Wacoal price range. Our hope is twofold — that the consumer will buy one bra at $60 and two at $48. Also, the thinking for that consumer is she’s trading up to a better brand, but it’s easier to buy a $48 bra than a $60 bra.”
Vitale added, “Prices for our b.tempted by Wacoal brand have been pretty sharp, $36 to $45, and we believe one of the reasons our product was an instant success was because the consumer said, ‘Wow, I can buy a Wacoal bra for $40.’”
Richard Leeds, chairman of Richard Leeds International, said creating stronger partnerships with retailers is vital.
“Previously, our pj sets retailed for $40 and separates for $20 to $24,” Leeds said. “However, to allow retailers to draw consumers into their stores, we challenged ourselves on how to best help our retail customers. Whether it’s branded or private label apparel, we must help in two critical ways: we must help the retailer to increase the percentage they are willing to reduce off their listed retails and to do this, we must reduce our prices to allow retailers to maintain their margins.
“Secondly, we must press retailers to increase how often they promote. This can be done by offering the retailer an additional incentive on the wholesale price offered, allowing the retailer 2 to 3 percent more in initial markups, which is calculated on a reduction in wholesale pricing, which in turn allows the retailer to hit key departmental margin goals. Sometimes in this business, there are tough times when you have to pay to play. The focus turns from how much money can I reasonably make to how much money am I prepared to lose. By investing in the retailer and consumer today, you secure the future. But this must be done with credible quality product and integrity.”
Jon E. Lewis, president of the D2 Brands division of Delta Galil Industries Ltd., said, “In the current economic climate, aspirational purchases, or conversely, those based on price alone, are a thing of the past. Regardless of her economic status, the consumer wants to see value, a perceived need, and-or an emotional connection to the product. In response to this, rather than further reduce our already competitive prices, we have added value by incorporating fabric innovation and sharpening our design focus. In Tommy Hilfiger [innerwear] for example, our panties table program remains at three pairs for $24, where our competition is priced at three pairs for $27 or even $30.”
Lida Orzeck, ceo of Hanky Panky, said, “The most significant thing we did was to not do something. Last year, we let all of our retailers know that we would be increasing the price of our basic thong in 2009. Our last price increase had taken place in 2004. We rolled out an informational campaign so that all of our stores could prepare. But late in the year, we yielded to the collapsing economy and rescinded our plan to raise prices, much to the delight of our retailers.”
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