LOS ANGELES — Teens might represent the sizzle in the fashion industry today, but the moderate market is still where apparel players can find the steak.
That’s the consensus among more than a dozen observers interviewed, who are noting a new vigor in the segment with updated, hipper looks and a broadening age range of customers.
But merchants and makers are finding while price is important, that’s not the only critical factor driving the market. They must compete with style and service, too, to capture a customer whose priorities might not be focused on clothes.
Although vendors and retailers might debate the exact definition of the moderate customer, typically she is between the ages of 35 and 55 and shops at price points from $35 to $75 retail per piece.
“So much attention is being paid to the upper end of the market that sometimes the industry loses focus on where the real dollars are being spent,” said Marshal Cohen, senior industry analyst at research firm NPD Group.
NPD tracked moderate shoppers’ apparel expenditures for the last six months, and found the group accounted for $22.7 billion of the estimated $82.7 billion in total women’s apparel sales, or roughly a fourth of all women’s sales. NPD said moderate retail prices were defined as less than $100 per item. Compare that with teens, who spent $6 billion in the same period.
As retailers seek ways out of the current fashion ennui, they’re finding moderate shoppers have an appetite for younger and hipper fashion. Think bold prints, asymmetric hemlines and revealing necklines, albeit in forgiving cuts and sizes.
This combination of spending power and fashion possibilities are opportunities vendors and retailers can’t afford to ignore, say observers.
“If you can keep up with the maturing demographics and still offer a contemporary fashion flair, yes, that’s the place to be,” said Ilse Metchek, executive director of the California Fashion Association. “It’s the only way to do business today.”
Durand Guion, women’s fashion director for the 141 stores of Macy’s West, said the category is closely following contemporary trends, with denim bottoms, utility novelty tops and printed mesh tops driving business at retail price points in the $30 to $75 range. Gloria Vanderbilt, Style & Co. and Emma James are among the brands checking well.“This customer really is requiring what we would offer the bridge customer,” Guion said. “We’re only looking at her as different in terms of price sensitivity but that’s it. She is no less savvy and no less demanding.”
The strength of the market is not lost on Kohl’s. The chain doubled the size of its moderate misses’ department in 28 stores unveiled in Southern California in March. Kohl’s declined to be interviewedfor this article, but on store floors it’s clear there are more updated items, like flat-front striped capri pants, sleeveless blouses and long skirts around $40.
Inventory problems recently caused the Menomonee, Wisc.-based Kohl’s to cut its second-quarter sales forecast, but merchandising strategies like these prompted Jeffrey Klinefelter at US Bancorp Piper Jaffray to portray the chain as “the winning team everyone wants to unseat.” Overall sales in the first quarter ended May 3 increased 13.2 percent while same-store sales in June rose 10.7 percent.
Kohl’s is known for its aggressive pricing and for offering customers convenience, with centralized checkouts, wide aisles and clear signage. But where service is concerned, some retailers insist on an even more personal approach with this consumer.
“I think the moderate customer is a throwback,” said Jim Famalette, chief executive of Gottschalks, which has 65 department stores and 12 specialty stores catering almost exclusively to the moderate base. “She wants some of that service that she remembers in stores years ago. And she lets us know when we’re not meeting that expectation.”
Sales associates at the Fresno, Calif., retailer focus on one-on-one contact and present shoppers with complete outfits, including accessories.
Though Gottschalks posted a 6 percent decrease in total sales during the first quarter, partially due to closing seven doors in the Pacific Northwest, Famalette said remaining stores posted a comp-store sales increase, and attributed it to the level of service at the stores.
“Customers are only loyal if you give them quality, value and service,” he said. “I don’t think you can attract them just by doing one or the other.”
This market requires specific service, too. For example, Chico’s FAS, one of the few specialty chains serving Baby Boomers and older Gen-Xers, requires sales associates to attend two-week training programs focusing on body types, fashion styles and loyalty attitudes among these customers. Chico’s small-sounding sizes — 0 to 3, or the equivalent of sizes 6 to 16 — certainly resonate. Styles are loose and forgiving, with jackets, pants and skirts utilizing elastic and less clingy fabrics like acetate. No such thing as mirrors hanging in the dressing rooms, either. Mirrors are on the selling floor, so sales associates can attend to consumers better.The 412-unit firm, also operating stores under the Pazo nameplate, admittedly targets Baby Boomers more than the general moderate customer. “Our best customers earn north of $75,000 a year,” said chief financial officer Charlie Kleman.
But above service, Kleman partially attributes the Fort Myers, Fla., company’s bottom line to little specialty store competition in catering to the older crowd. Chico’s marked seven straight years of comp-store sales increases in June, when same-store sales shot up 16.5 percent. In the first quarter ended May 3, the chain posted a 29.5 percent jump in sales.
The challenge among vendors is striking that delicate balance of offering current fashion that’s not too forward.
“Everyone is trying to find out who the woman shopping their stores is,” said Lisa Minardo, president of Biyaycda, based here. (The store name stands for “believe in yourself and you can do anything.) “When we work with retailers, we find they have different opinions. Some think the customer is younger and others think she’s older.”
It’s an issue that helps explain why the sector often projects a confused point of view. Age is actually less of a factor than attitude, meaning even though some of the customers are a bit older, they might still wear a shorter skirt or show more skin.
Age also plays to her spending inclination. If she skews older, she’s not as apt as younger customers to splurge for impulse clothing buys.
“In moderate, clearly her priorities aren’t her clothing, so you have to give her a reason to buy, and something adorable will give her that reason,” said Kathy Bradley-Ridley, divisional merchandise manager of sportswear at the Doneger Group buying office in New York.
Biyaycda has found its stride in cropped embroidered pants and chiffon dresses with Asian-inspired and tropical prints, wholesaling between $20 and $40. The dresses’ V-necks, scoop-backs and hi-low hems convey a youthful attitude without skimping on size.
“We’re a bit more forward than dumb-dumb misses’ — we add details to make it newer,” she said. That newness helped the company log a 20 percent increase year to date in business compared with last year, when it did about $40 million in sales.The push toward updated clothing has only fueled sales at Los Angeles-based Jonathan Martin Studio, which produces dresses and sportswear. In the last year, the company has added Marshall Field’s; Federated Department Stores divisions Rich’s-Macy’s and Lazarus, and Davenport, Iowa,-based Von Maur, a chain of 18 stores. “Sales through May equal the total volume shipped last year,” said Karen Hampton, Jonathan Martin Studio’s senior sales executive.
Key styles include peasant tops, twin-print blouses and geometric-print sundresses. For holiday, silk velvet burnout skirts and kimono-style tops have had strong bookings. Shorter, “flippier” skirts and pencil skirts are on the horizon, but Hampton said there are still some boundaries that can’t be crossed: “If you go too forward or too short, the moderate customer doesn’t get it. You have to be careful.”
Observers say one element missing from the sales success formula is branding, especially for smaller companies who haven’t connected viscerally with customers.
Some makers believe they have to tread a little too carefully. At Byer California in San Francisco, the AGB misses’ brand sold to Federated divisions, Belk’s and Dillard’s and has dropped wholesale prices by 10 to 15 percent in the last year to meet retailer expectations. “There’s been an emphasis on hitting target prices as opposed to developing fashion trends that has been counterproductive to the industry,” said Byer vice president Joel Feldman. “We need to find the magic again to revive the sector.”
Large vendors often excel at the connection. Liz Claiborne Inc. manages a portfolio of some 30 lines, mostly in the moderate sector, but creates differentiation among each one, notably for its newest launch, J.H. Collectibles, a line of easy-dressing styles succeeding with bold colors in tape yarn sweaters, flowing skirts and comfortable jackets and pants.
The strategy is distributing “different brands to different accounts and developing a distinct personality and niche for each of the brands,” said Denise Johnston, president of J.H. Collectibles. For example, the company’s line, Crazy Horse, sells only at J.C. Penney; First Issue is exclusive to Sears, and Villager and Axcess sell at Kohl’s and Mervyn’s.Besides hiring a public relations firm, another avenue to exposure is licensing, a path Minardo is exploring and John Paul Richards in Calabasas, Calif., has taken with the opening of 30 licensed stores in China last fall. The seven-year-old firm, known for career dressing in tricotine separates and sportswear produced under the Studio JPR and Uniform JPR labels, is capitalizing on its name, but focusing on younger styles abroad.
Vendors also are making a concerted effort to forge stronger ties with retailers, who have increasingly turned into competitors. J.C. Penney is repositioning to offer more contemporary looks at moderate prices, bringing in the Bisou Bisou label and private label brand Mixit. This week, it also signed an exclusive deal with BCBG Max Azria’s Parallel line, as reported.
And offering customization services is a way both JPR and Biyaycda are creating better partnerships.
“We’ll create a color palette for just one store and that’s why we survive against $2 billion to $3 billion companies,” said JPR partner John Paul Beltran, noting that company sales are up 12 percent so far this year. For Biyaycda, bodies and prints may change from account to account.
While such exclusive deals can mean more work for vendors who are also trying to deliver in shorter lead times, the reality is there’s little choice. “Nobody wants something that’s in all stores, so we’re trying to help them out and make them look different,” Minardo said. “Otherwise, [the sameness is what] starts price wars.”
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