KEY PROBLEM: TOO MANY STORES

Byline: THOMAS J. RYAN

NEW YORK--Overstoring, too much concentration on moderately priced apparel and fickle customers are combining to keep the outlook difficult for apparel retailing.
This was the overriding view of four experts from Wall Street at a recent informal WWD forum dissecting the state of the industry.
Participants were:
Elizabeth M. Eveillard, a managing director at PaineWebber, a veteran of 22 years in corporate financing, specializing in mergers, acquisitions, refinancing and public offerings for retail and apparel firms.
Walter F. Loeb, head of Loeb Associates, the private consulting firm he started in 1990 after 16 years as senior retail analyst at Morgan Stanley and two decades in retailing.
Peter Schaeffer, apparel and textile retail analyst at Dillon Read & Co., who earlier spent 20 years in retail management, including such posts as general manager of Bloomingdale's flagship.
Peter J. Solomon, who heads the investment banking firm bearing his name, which he started in 1989. Active on the financial front for 35 years, he was also a managing partner at Lehman Bros. and its resident retail expert.
Getting to the heart of the matter, Schaeffer said the overstoring problem is being exacerbated by the department stores' retreat back to moderate prices and resurgences at J.C. Penney Co. and Sears, Roebuck, two giants who built their business on moderate pricing.
"The whole industry's margins will be squeezed by too many stores and almost every store chasing the moderately priced apparel market," said Schaeffer.
"Much of America in apparel is squeezing at the same segment," agreed Solomon.
The four also agreed the winners in this environment are those who best understand their customers, who have generally become diffident about shopping.
"The slogan before was 'Shop till you drop' but now it's 'Find it, buy it and get out," said Loeb. "The result is that there's less impulse shopping than in the past."
Added Eveillard: "If it was conspicuous in the Eighties, it's very conservative in the Nineties. I think in the Eighties consumers were saying 'I want it.' Now they're saying 'I want it but...' or 'I want something else more,' or, the worst thing for retailers, 'Do I really need it?"'
In addition, shoppers are showing greater appetites for home furnishings and electronics, which takes away discretionary spending from apparel.
"People want to make their home their castle," said Loeb.
Schaeffer said the trend toward casual dressing has lowered overall price points and crushed the market for dressier clothes. This could get worse as dress-down days at work increase. Eveillard said women are paying more attention to quality and durability in clothing with their expansion into the workforce.
Nonetheless, Loeb is optimistic about retail and apparel in spring and fall of 1995.
Too much fashion in 1994 wasn't as attractive as what customers already had in their closets, Loeb said, "but a new silhouette is being developed which causes more attention to the body and to the figure."
Loeb said the new look is reflected in the wild success of WonderBra last year and swimsuits with the same construction.
"If you have people coming into the store because there's new fashion, new excitement, new colors--which is all coming in the spring--I think it will be an exciting season," he said. Loeb, however, cautioned that overall consumer spending will wane if interest rates continue to rise.
With the consumer having so many choices of where to shop, the winning retailers in the Nineties will be the ones who best understand their shoppers, the four further noted.
Loeb cited Ann Taylor Stores as the leader among specialty stores because the company understands its customers' needs for clothes "to work as well as to play in." He pointed to Penney's and Sears as other "leaders for the Nineties," with Penney's benefiting from its focus on young women and children's apparel and Sears reworking its fashion image through its "Softer Side of Sears" advertising campaign.
Schaeffer said each store has to fulfill shoppers' expectations. For example, a superstore must offer the largest assortment of what the customer wants at the best prices, while a department store must provide a higher level of service, a vast amount of merchandise and fill the many needs of the entire family at one store.
"If you don't meet the demands of the consumer walking into a store, you fail," Schaeffer said.
"For 20 years we've been talking about too many stores and it actually happened," said Solomon. "There's too many people selling the same thing, whether it's in the apparel business or the discount business or the department store business. There's just too much square feet."--Fairchild News Service

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