NEW YORK — There seems to be no easy answer to the promotional climate in lingerie departments at major stores.It’s become a volatile situation that is irritating scores of manufacturing executives, as well as department store retailers, who acknowledge that price promotions on branded bras have spiraled out of control, but are reluctant to take a hit on top-line volume.
This story first appeared in the June 24, 2002 issue of WWD. Subscribe Today.
Marathon sales have become such a problem that deeply discounted bras account for as much as 60 to 75 percent of total bra business at major department stores and specialty chains, according to industry estimates. Suggested retail prices are routinely slashed 25 to 40 percent, and there appears to be no end to special deals, which range from “Buy Two, Get Two Free” offers to an astounding “Buy Six, Get Seven” free offer.
A number of innerwear executives generally believe the fault lies equally in the retailing and manufacturing camps. Some placed the blame on retailers for relentlessly pressuring producers for special deals, while others said manufacturers wanted more real estate at stores and suggested the idea to merchants.
Some industry observers suggested that the promotional frenzy could dilute the integrity of the brands. It’s become an issue of price, not a vehicle for quality, fit or fashion appeal.
Another negative factor that has impacted the bra business is competition from other channels of distribution offering the same brands or doing similar sales, such as Kohl’s and Victoria’s Secret, as well as mass merchants Wal-Mart, Target and Kmart, which also are aggressively promoting bras. There’s also frustration over the expansion of private label merchandise that competes with brands when it comes to styling and price.
Solutions suggested by merchants and vendors include:Marketing and advertising campaigns that reflect lifestyle attitudes and enhance the aesthetics, quality and value of a brand.
More innovation and newness.
No more coupons.
Making the shopping experience at department stores more enjoyable, with better personalized service and service-oriented events such as bra-fitting work shops.
A return to traditional semiannual clearance sales in June and January. A main complaint has been that the discounted price of a bra actually is the manufacturer’s cost of making the bra, thus more units are sold, but less volume is generated.
Several senior retail executives did not want to be identified for this article. But they generally agreed that promotional activity is out of control and major changes need to be made to return to regular-price business. According to industry sources, intimate apparel averages about 5 percent of total department store business, mainly generated by bras, underwear and shapers.
“Department stores need to bite the bullet and eliminate the daily promotions,” said one retailer at a national chain. “Bras are a commodity item, and although there will be a period of adjustment, slowly reducing the number of promotions will eventually wean customers off of them.”A department store executive said: “Every retailer in America is challenged right now on how to make changes. Manufacturers want us to back out of this promotional dilemma, but retailers are forced to anniversary figures every year. Nobody really wants to stop it. They don’t want to watch their business drop like a rock.
“Our challenge is to be the place to go day-in and day-out for fashion and at the same time be well stocked in basics. Because of that attitude, my promotional bra business isn’t that great, but my designer bra business is making up for it.”
Another department store executive complained: “It’s all about making numbers. Orders from upper management are to make sales plan, and the way to do that is to promote deeply. I think a lot of stores have been stuck with the Buy Two, Get Two Free deals. The truth of the matter is: The average customer doesn’t want four bras at one time.“We definitely have to stop the promotions, and one way would be to run ads that say ‘excludes’ any best-selling brand-name item. But in a lot of cases, we’re not allowed to exclude because upper management wants to send an entire stock message.”
A buyer noted: “We’ve made minute corrections, but as long as business is tough to come by, you have to do what you have to do to stay in business, and if that means…lowering your price, you do it.”
From a vendor perspective, James Mogan, president of the intimate apparel division at Kellwood Co., said: “I truly believe the Buy Two, Get Two Free promotions have created havoc at stores. We are showering the consumer with free merchandise. A woman doesn’t need to return to a store for a year. It behooves the retailer and the manufacturer to realize that bras are a no-growth business.”
Backing up Mogan’s point, retail bra sales in 2001 were $4.5 billion compared with $4.6 billion in 2000, according to NPD Fashionworld. According to NPD, overall apparel sales in 2001 across channels was $166 billion.
Tom Ward, president and chief executive officer of Maidenform Inc., said: “This promotional situation is very tough to change, and you can’t do it overnight because everybody wants to protect their volume goals. I think we need to do things differently. One solution could be to create a lifestyle approach to consumers, an attitude created through visuals like a beautiful spa setting or a wonderful bedroom, not a woman just wearing a bra.”Norman Katz, a veteran of the innerwear industry for over 40 years, said: “Stores thought they could get out of the promotional circus with private label. But they’re now stuck in the same situation with private label. It’s almost just as bad at discounters.
“Whether a consumer buys $20 bras or $10 bras, she’ll ask, ‘Why can’t I also get the Buy Two, Get Two free bra deal at Wal-Mart?’ Department store retailers have to make up their minds and make changes. It’s the only way to show customers that they stand for something.”
Michael Fitzgerald, president and ceo of Delta USA, said: “Promotions have become an addiction to the consumer, and the retailer uses it for foot traffic. There’s no incentive to go to Macy’s other than the Macy’s Thanksgiving Day parade or Macy’s flower show.
“The only way to break the cycle is through innovation. Target is a good example of innovation. Their TV ads are very clever and bring consumers into the stores.”
Tom Garson, president and ceo of Lovable World Trading Co., said: “Manufacturers can work to help change the whole climate because they just don’t have to promote. National brands take on less importance if they are always promoted. Part of being a respected brand is not always being on sale.”