As reports constantly remind consumers and manufacturers that retail sales are down and items once regarded as staples are no longer in big demand, it should come as no surprise that established brands are looking for a way up and out.
For many, the junior category offers salvation. The market is swift, numbers are on the rise, denim is still a sure thing and the target customer is relatively unaffected by high gas prices and a cooling housing market. Teens are spending their own money, earned either from jobs or from the generous hands of mom and dad, and studies show that the age group still spends readily and on a regular basis.
What's more, this year's hike in California's minimum wage, to $7.50 from $6.75, has provided teen customers in the most populous U.S. state with even more money to spend. Without a mortgage to worry about, teens seem unaffected by financial pressure, hitting the mall with the same frequency and determination as ever before. This is good news for the apparel manufacturers exhibiting in the junior sector at WWDMAGIC.
"The teenagers seem to somehow get the money they need to get what they want," said Gloria Brandes, president of BB Dakota. Brandes said that, as a result, business for the Irvine, Calif.-based junior line has been very good.
To keep in step with fast-fashion chains like Forever 21 and H&M, BB Dakota produces an entirely new grouping every two months. Brandes said business has been so good that it has not felt pressure to reduce prices as an incentive for teens to buy. Wholesale prices range from $29 to $79 for the spring collection and from $29 to $130 for the holiday offering. This year, the company is looking for a 25 percent increase in sales over last year, Brandes said, though she declined to provide specific figures. "If it is fashion-right and something they are looking for, they will buy it," she said.
It is bullish growth like this that has made the junior market that much more attractive to outside manufacturers. Seana Pedelaborde spent six years in the accessories market with her A Mano Trading Company line, and made the jump into the junior category this year in collaboration with designer Sergio Alcalá, who has been hailed by Elle magazine as the "Jean Paul Gaultier of Mexico." Under her Babylon label, Pedelaborde reinvented her accessories line into a new brand called Sergio Alcalá for Babylon.Pedelaborde anticipates that lower price points from lines manufactured in China will be big competition for Babylon. "Bigger corporate entities that are able to bring it at lower price points will be a challenge," she said, noting that her wholesale prices run between $20 and $30. "[Babylon] is more of a boutique line and much of the work is hand-done, but it will be worth it."
Unlike other categories, some trends in the junior market really are timeless, like the classic jeans and a T-shirt. As a result, lines specializing in one of the basics are not only able to survive in the junior market, but thrive.
One such line is Los Angeles' Realitee, which specializes in T-shirts wholesaling from $6 to $25. Shanna Viola, Realitee's head of sales, isn't worried about rapid trends affecting the T-shirt business. "We've heard that business has been slow for some, but ours hasn't been," Viola said. "If a girl is going to buy a T-shirt...she's going to buy a T-shirt."
Los Angeles-based denim line YMI Jeanswear is also a firm believer in denim, despite reports that jean sales in the overall women's category decreased in 2006 from the previous year.
Michael Godigian, vice president of sales and design, said YMI's sales increased 30 percent from last year, and predicted growth of 40 percent in the upcoming year. Wholesale prices range from $20 to $100.
At Los Angeles' Hot Kiss Inc., dresses have helped save the day amid disappointing denim sales, said vice president of sales Ben Kaczor. "The denim business as a whole has been soft at retail," he said.
Even with slumps and uncertainties, Kaczor is still hoping for the best. Hot Kiss will expand beyond its sportswear offerings, and feature nine additional licenses, including Hot Kiss Handbags by Amiee Lynn Inc. and Hot Kiss Swimwear by Manhattan Beachwear. The lines will show at WWDMAGIC in individual booths. "We are definitely anticipating a good show," Kaczor said.
Unfortunately, not every junior line is experiencing booming sales and high growth. Sugar & Rox owner Louis Diamond is a dissenter in the ranks claiming prosperity. While he applauded the recent minimum wage hike in California, he said business is not booming because teens have less spending money than in previous seasons."The gas prices and the other stuff is definitely affecting business," said Diamond. Moreover, the junior business has stiffer competition than it did before. Founded two years ago, Los Angeles-based Sugar & Rox wholesales from $9 to $30.
"Rookies come in and saturate the market," said Diamond, who added that major buyers are less likely now to accept new companies than ever before.
At Los Angeles' A Fine Mess, sales coordinator Sara Armstrong agreed with Diamond. "A lot of open-to-buy has closed up a bit," she said. According to Armstrong, buyers are less likely to take chances and are sticking with proven sellers from established companies, as well as demanding a shorter period between orders and deliveries. A Fine Mess is keeping up by maintaining its wholesale prices between $7 and $16 and running an extremely tight turnaround schedule of 70 days, she said.
Apparel manufacturers aren't the only ones noticing shifts in the junior market.
The NPD Group, the Port Washington, N.Y., market research firm, said the junior market grows at a rate of more than twice that of overall retail. Nonetheless, Marshal Cohen, NPD's chief industry analyst, sounded a cautionary note.
"Growth at that rate doesn't come without great risk," he said. The peril, he noted, has two huge contributing factors: the swift pace and fickle nature of the fashion industry. One day you're in and the next day you're out, he said.
"The market will continue to prosper until something new comes out as a distraction," Cohen said. "We're overdue for some new electronic device to come in and captivate."
But the second and more important factor is that the junior market not only targets, but also depends upon, 7 to 11 percent of the total consumer population for its business.
"You're asking a small percentage of the population to warrant 14 to 17 percent of sales," Cohen said. Although he doesn't predict that growth of the junior market will cease altogether, he forecasted that it will increase annually by only 2 to 4 percent. "You can't keep asking such a small percentage to drive a bigger piece of the pie," he said. — co-written by Brindey Weber
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