Large publicly traded retailers weren’t the only ones clobbered by the tough fall and holiday season. Independent specialty stores also felt the impact of the recession and consumers’ reluctance to spend. The difference is that smaller merchants don’t have the large-store luxury of receiving markdown money from vendors. And so now, when the bills come due, many face another hurdle — how to pay for goods that didn’t sell while pondering their shopping lists for next fall.
That’s the backdrop for many retailers heading to New York for market. Although most stores surveyed by WWDWWDWWD are still planning to make the trip to shop The Collective, Blue, Project and the men’s wear showrooms, they’re significantly cutting back on their open-to-buys for the season, some by as much as 50 percent.
As Ellen Levy, co-owner of Levy’s in Nashville, put it: “Everything has to be cut back, but I’m not worried. There’s no shortage of inventory.”
Nevertheless, retailers realize that, to get customers into stores, they need to find fresh, exciting merchandise to whet their appetites. Although this quest is nothing new, it’s even more important this year since the same tried-and-true basics are not enough to lure shoppers living in the worst economic downturn in a generation.
David Rubenstein of Rubenstein’s in New Orleans said he’s planning to shop the New York market, although he won’t be staying as long as he has in the past.
“But we’ll be there,” he said. “We’ve still got to buy things.”
In Rubenstein’s case, that buying will be scaled back this season. “Our open-to-buy is about 50 percent of what it was last year,” he said. “And we are not adding any resources until we get a better feel for spring.”
In New York, he will be filling holes in his tailored clothing inventory, he said, and looking at sportswear. But for the latter, he’s waiting to see if business turns around in March or April before adding a lot of inventory. He plans go back into the market to freshen the store before Father’s Day.
“We will play it conservatively,” he said.
Rubenstein also plans to trim the dollars spent on luxury-level goods. “Medium-price sold well, but luxury is taking the biggest hit,” he said. He pointed to the more-moderately priced Jack Victor as an example of a suit vendor that has connected with customers. The same holds true for other categories. In furnishings, shirts retailing for $150 to $200 are outperforming those in the $300-to-$400 range. And so, the former will be on his abbreviated shopping list next week.
“With sweaters and jackets, if we sell through, we’ll fill in,” he said.
Still, Rubenstein added he believes “business will level off” soon. “I don’t think it will go down from here,” he said.
Rubenstein, like many other specialty stores, said the tough economic climate is forcing him to turn his focus back to the basics of retailing. “It’s like starting over again, like it’s our first day in business,” he said. “Before, life was easy and we didn’t have to make the tough decisions, but then the bell rang. Now, we really have to look at our overhead. But that’s how people got started.”
Ken Giddon, president of Rothmans in New York City, agreed. “Many of us confused brains with a bull market,” he said. “Now we have to think about expenses, our vendor structure and our personnel costs.”
Christmas sales were “very bad,” he admitted, “and it’s tough to do 2004 revenues with 2008 expenses. But the challenge going ahead is to remain upbeat and really become businessmen and women again. It’s intimidating to be forced to deal with it, but it’s also invigorating.”
For those companies whose balance sheets have remained strong, there are possibilities that will pay dividends after the recession ends. “This is this generation’s opportunity to acquire assets in a distressed environment, and will probably only happen once in our lifetimes. There’s going to be a lot of real estate available, and if an opportunity came along, we would consider [opening another store],” Giddon said. “We’re strong, we have no debt and we’ll be looking. But right now, the consumer is still on strike.”
As a result, his visit to vendors this month will morph into something other than a buying trip. “We’re excited about going to market,” he said. “We want to see who our friends are. We’ve been a good customer for many years and we’re going to see who’s really our partner. When wholesalers say they feel our pain, I wonder if they do. We’re paying them full price and marking things down 50 percent. That doesn’t seem like a partnership to me.”
Giddon said he’ll be “looking for a level playing field. If department stores are getting markdown money, I want it too. We pay with the same money they do.”
He plans to attend The Collective and Project, but without preconceived notions of what he needs to buy. “We’ll be thinking outside the box in all categories,” he said. “I’m going to market with more of an open mind than I ever have. I’m going under the assumption that things will get better and I’ll be looking at the lines with the best chance of making me money. And I’m going to avoid anything that is 80 percent off at Saks.”
Hill Stockton, owner of Norman Stockton in Winston-Salem, N.C., also acknowledged "Christmas wasn’t really very good.”
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