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Better and casual lifestyle companies are spurring orders by adding that little something extra.
This story first appeared in the August 26, 2002 issue of WWD. Subscribe Today.
Better and casual lifestyle vendors are striving to offer more unusual, eye-catching items customers can’t say no to —even if they are on a tight budget.
And no wonder. Most executives felt consumer confidence levels are still down — perhaps at rock bottom. With the recent corporate scandals and plummeting stock reports, most people feel too worried about their retirement plans to shop.
“Consumers are being far more selective about what they’re buying,” said Tasha Polizzi, designer of the eponymous Great Barrington, Mass.-based weekend wear line.
“The big test will be for holiday this year,” she said. “If we can get people back into the stores and start to recover, that will be key.”
In the meantime, vendors are adopting an attitude that could be summarized as follows: Tough times call for tough measures. They are paying close attention to extraneous expenses, cutting back on advertising and hiring budgets and setting more stringent standards for shipping to clients who haven’t paid their bills.
As for the casual lifestyle category, having the right product in the right niche has helped companies insulate themselves from the bad economy.
For example, Dreamsacks, a casual separates and sleepwear company based in Ashland, Ore., reported sales are up 15 percent over this time last year. When Dreamsacks was founded seven years ago, it made its name selling sack-like silk sheets and pillowcases customers can use to cover hotel bedding.
“People are interested in creating a cozy environment for themselves, a nice home away from home,” said Nancy Morgan, president and owner of Dreamsacks. Since then, sales of coordinating pajamas and lightweight, packable travel clothes have taken off as well, Morgan said. “We’re growing pretty rapidly because women have an interest in clothing they can adapt to different situations, especially travel. My experience is, people are still buying if they are excited about new products.”
Doc Porter, sales and marketing director at Longmont, Colo.-based casual knitwear company Icelandic Designs, believes companies like his that offer novelty-driven impulse buys will survive. But he’s less optimistic about companies that offer basic staples like suits and coats. “People are making judgments about their wardrobe. They’re dressing more simply and cutting back on extravagant purchases,” he said. “Women are dressing down because they feel they belong in the workplace, so they’re not trying to impress anybody with a power suit anymore.”
Still, he believes the economy is slowly rebuilding. “I think it’s slightly better,” he said. “The world has been quiet and all of the corporate nonsense has quieted down.”
“Shopping is kind of an escape from reality that doesn’t cost too much,” said designer Sigrid Olsen.
Olsen said the Wakefield, Mass.-based better company that bears her name is about 15 percent ahead of last year’s sales at this point. She thinks it’s because her bright, happy prints are attracting customers who normally pay higher prices for their clothing.
“We’re getting bridge shoppers that are shopping in the better market,” Olsen said. “They’re finding the quality and some of the same looks, but at a better price point.”
The New York-based better vendor Harvé Benard also is holding steady, with bookings on a par with this time last year, said Bernard Holtzman, president and design director. He is trying to offer his career-minded customers a few special pieces, such as a sexy pencil skirt and black microfiber trousers with a great fit. Instead of covering the basics, Holtzman believes customers are searching for a certain “feel good” quality.
“You have to have something really new looking, something that looks great on people,” Holtzman said. “If you make that kind of product, then you’ll survive anything.”
To make up for a “pretty horrendous spring,” Tasha Polizzi and her husband, Jack, president of the better company, are putting a similar emphasis on the product itself.
“People feel their customer is more apt to spend money on specialty items, not basics,” said Jack Polizzi. “So Tasha’s designs for fall are a bit different and more whimsical.”
While these companies are putting all of their resources into innovative designs, many are engaging in some serious belt-tightening in other areas — just in case the economy takes longer than expected to turn around.
“We’re not spending as much on advertising,” Olsen said. “We’re just being more conservative.”
Likewise, Tasha Polizzi decided not to hire a new employee, as originally planned, to run the company’s Web site. The company also trimmed its advertising budget. “We’ve just been really careful,” Jack Polizzi said. “We’re watching our expenses.”
The company is also paying closer attention to the credit history of its retail clients. “We had some companies that closed owing us money,” Jack Polizzi said. “So our bad debt was higher than usual.”
Marty Fishman, ceo of the Dallas-based European better sportswear company St. Maarten, said he’s not concerned because the apparel industry goes through this type of purging process every five years or so.
“You need a combination of a passion for fashion and business acumen to be a retailer,” Fishman said. “If you are lacking in either area, you are setting up an equation for failure.”
During the profitable period we just emerged from, he said, anyone could make money.
“Now, it’s more of a challenge,” said Fishman.
But St. Maarten appears to be rising to that challenge — the company boasts a minor amount of bad debt: $3,700. That’s because the owners have set stringent credit requirements for retailers who want to purchase their products.
“We don’t ship to people who can’t pay,” Fishman said. “Instead of a sale, that’s what you call a donation.”
St. Maarten also has increased its sales volume 100 percent over last year, he said.
Sales at Icelandic Designs have held steady — something few companies have experienced over the past year. Icelandic Designs, which has been in business 20 years, offers hand-knit sweaters at approximately $200 retail.
The sweaters are for sale at 1,000 specialty boutiques, Nordstroms and catalogs like Coldwater Creek. Icelandic Designs offers different styles only once a season, so the sweaters have become must-have collectibles for the company’s wealthy clientele.
“We like to think of them as wearable art,” said Porter. “A sweater makes you feel warm and fuzzy and safe. Our customers can’t resist the impulse to buy something that makes them feel better and look good.”
Business has been good, Porter said, but Icelandic Designs still is concerned about wavering consumer confidence.
“There’s hesitation and a lack of confidence in the market,” he said. “Some of our biggest accounts just didn’t order as much. They decided to chase the product and see if we still have it when they need it.”
That likely will not be the case, however, because Icelandic Designs executives are being more conservative and keeping less inventory in stock. “We’re a lot leaner than we were,” Porter said.
Even across the border, Canadian companies like the Montreal-based French Dressing Jeanswear are not insulated from the economic bad times. French Dressing, which is in the casual lifestyle category, does approximately 45 percent of its business with retailers in the United States, said company president Leonard Miller.
“Canada is doing better, but our biggest trading partner is the United States,” Miller said. “If the U.S. sneezes, we get a cold.”
Like their American counterparts, French Dressing executives decided to watch their pennies just in case. Despite a 27 percent increase in sales volume over last year, they are being financially conservative.
“We are rationalizing all of our expenses,” Miller said.
At the same time, French Dressing is expanding in strategic areas. For example, they decided to get more aggressive about marketing and advertising.
“We’re putting more salespeople out there, and we’re putting out new product earlier,” he said.
They are using a system of jeans that fit three body types as the focal points of their marketing efforts.
The company only sells the pants to specialty boutiques, where sales staff will spend time helping customers find the best fit.
“When a lady puts on our garment and it feels good, it’s usually a multiple purchase,” noted Miller.
Avalon blu, a Los Angeles-based casual lifestyle company, is facing a less-than-dynamic market with a head-on, bullish approach.
“When other people pull their horns in, we’re going to seize the opportunities,” said Raoul Gruenberg, vice president of sales.
“When the market is at its worst, that’s when you should be getting into it.”
So, in the face of adversity, the company is increasing distribution and developing more items in more categories.
One of Avalon blu’s biggest retail clients was Jacobson’s, the Southwestern department store chain that recently went out of business. However, Avalon blu rallied by making several key clients a top priority — and those clients have been in a major growth mode. One company doubled the size of its assortment.
Another department store chain, which Gruenberg declined to name, did a test order in November and decided to roll out Avalon blu’s products in all of its stores for spring and fall.
“We’re being more aggressive with our product line, and we’re going after customers,” Gruenberg said. “As a result, we are up 30 percent over last year.”
Rousso Apparel Group, a casual lifestyle company based in New York, also believes in being aggressive — even during tough times. A new contract as the licensee for Oleg Cassini activewear automatically boosted the company’s bottom line — their sales volume has doubled over last year, said company president Jack Rousso.
After Sept. 11, many retailers were weeded out of the market, Rousso said. Those that survived did so by cutting way back on their inventory.
Now, as the survivors are starting to restock their bare shelves, Rousso is poised to capture that business. In the 15 years that Rousso Apparel Group has been in the casual activewear business, the company has built up a solid reputation, Rousso said.
“When our customers came back, they came back to us first,” he said. “Even as the economy goes down, there still are tremendous opportunities for companies in niche markets with the right products and the right prices.”
The Los Angeles-based Blue Cult, a casual lifestyle firm, also is experiencing growth despite the flagging economy. The three-year-old company just had its first million-dollar-sales month and is up over this time last year, reported Carolyn Athias, co-founder and design director.
To keep the profits coming in, Blue Cult also is putting the emphasis on the product.
“When clients come to our booth, they’re looking for what’s new, so we’re creating new designs all the time,” Athias said. They also are putting resources into extra training for the sales staff. “We make sure our salespeople are very informed about our styles and the fit,” she said. “I think the clients like that.”
The New York-based Sangam, which has been around for 30 years, also is in a position to benefit from the recent economic changes. Sangam, a casual lifestyle line, is poised to help retailers keep their shelves full when other companies have nothing left to offer. “We have always been a stock house,” said president Ashok Nanda.
“People know they can come to us for goods, and we offer same-day shipping.” Sangam offers a selection of sportswear for career women who want something that can work for both casual and dressy situations, Nanda said.
Compared with last year, business is up slightly, Nanda said. While the company has lost some accounts that were casualties of the economy, others have become more reliable customers. “The retailers we have retained are buying the lines in more depth,” Nanda said. “They’re reordering faster, and they know we’ll back them up with inventory.”
As for consumer confidence, Nanda believes it has not yet improved. “We hear a lot of horror stories from retailers who have never seen it so bad,” he said. “Consumers are looking for bargains, and they are not buying as deep or impulsively as they used to.”
To cope, Sangam has added new colors, fabrics and styles to keep its line fresh.
“We want to spur them to buy a little more,” Nanda said. Since store owners are not putting in as many orders, companies in the better and casual lifestyle category have to work harder to attract additional clients.
“It affects all of us,” Nanda said. “We have to do a lot more shows and have a lot more contact with the retailers than we’ve had in the past.”