Speeding to a Slow Recovery

NEW YORK — It will take some concessions and cutbacks, but accessories makers are confident they’re on the road to recovery — albeit a long and winding one — next year.<br><br>Like most retail categories, the accessories...

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NEW YORK — It will take some concessions and cutbacks, but accessories makers are confident they’re on the road to recovery — albeit a long and winding one — next year.

This story first appeared in the December 2, 2002 issue of WWD.  Subscribe Today.

Like most retail categories, the accessories business, which is estimated to have annual sales of about $28 billion, has been challenged by retail consolidation, a downturn in consumer spending and earlier-than-usual markdowns for the past two years.

But many claimed that over the past few months, accessories have fared better than other soft-goods sectors. Retailers, from mass chains to specialty and department stores, are stepping up their focus on the category. Executives said they are hopeful that this will help boost sales and many are projecting single-digit to low-double-digit percentage increases for 2003.

That said, they know they have work to do, as the retail climate, particularly at department stores, continues to be tough, many claimed.

“[Stores] are cautious and confused about how to commit,” said Steven Roberts, co-president at Echo Design Group. “Many are waiting for the holiday period to be over.”

Carolee Friedlander, president and chief executive officer of Carolee Designs, said: “The major problem in retail today is the mind-set that we have trained the consumer to buy promotional merchandise. That is a worry, because the consumer is waiting longer and longer [to buy].”

For 2003, a main focus for many will be to combat this consumer trend by implementing several new strategies. Among them:

Stepping up the fashion assortment over basics to boost early impulse purchases.

Increasing deliveries to create a constant flow of fresh merchandise on the selling floor.

Shortening the supply chain by keeping raw goods at factory level and delivering by air.

Introducing promotional schemes such as gift-with-purchase rather than traditional early markdowns.

“The biggest challenge next year will be to continue to give the consumer a reason to buy during nonpromotional time periods,” said Brett Stone, president of Koltov Inc., which manufactures handbags, small leather goods and cosmetic bags under license to the Sag Harbor division of Kellwood Co.

To that end, many manufacturers are introducing new lines or adding more fashion styles to their assortment to spark consumer interest early in each season next year.

“Having consistent new deliveries with freshness and softer bags with appropriate color and detail is really what’s driving the consumer,” said Matt Rubel, chairman and ceo of Cole Haan. “They are looking for a reason to buy.”

Friedlander at Carolee noted that, more than ever, it is important to stand out in the competitive retail environment. “We have been able to work with people who are able to cut semiprecious stones to our specifications,” she said. “It gives us exclusivity of product so that we stand out from the crowd.”

Watches, which were launched exclusively to Carolee boutiques in September, will be an area of growth next year, as the company is starting to wholesale them to existing retail partners for spring. In 2003, Carolee will also step up the circulation of its direct-mail catalog, Carolee Style, by at least 25 percent, because, she said, “it’s been terrific for brand awareness.”

The company continues on its retail expansion track, and this spring, units will open in Las Vegas, Scottsdale, Ariz. and Bellevue, Wash., which will bring its total number of stores to 18.

David P. Vander Schaaf, executive vice president at Riviera, which manufactures licensed sunglasses and hats for Nine West, said: “One of the biggest challenges is wowing the customer. It takes a little extra now to convince the consumer to buy, from design and merchandising points of view.”

This spring, Riviera is shipping its newly licensed hat collection for Nine West, which launched during the August market. The line includes a wide range of products, such as floppy styles, denim looks and straw hats with shell and wood accents.

The company also recently signed a handbag license with Roots, the Canadian sports retail chain. Riviera will be launching the line in time for back-to-school business, with utilitarian nylon, canvas and jersey bags at wholesale prices of $15 to $40. Vander Schaaf declined to give sales projections for the line.

Dooney & Bourke is adding 20 new silhouettes to its signature line, including short shoulder bags, hobos, backpacks and crescent bags in 10 colors, from black and mushroom to yellow, orange, pink and turquoise. The firm is updating its image with new product designs and an ad campaign launched this fall that skews toward a younger customer.

“We are pretty bullish about next year,” said Gary Dembart, Dooney & Bourke’s executive vice president. “We are projecting high-double-digit increases.”

Ed Bucciarelli, president of the Liz Claiborne Accessory Group, said that besides the firm’s core businesses, he is banking on new initiatives to drive sales next year. Among them is the new Liz & Co. handbag line, which is launching at better department stores this spring. Claiborne is also launching handbags for its Sigrid Olsen division and a bridal costume jewelry collection for its Monet unit.

“That will give us some nice growth potential,” Bucciarelli said. “We are forecasting to have low-double-digit growth next year.”

Meanwhile, some firms are looking overseas for expansion. Handbag and accessories firm Rafé New York recently signed a distribution agreement with Japanese distributor Eternal Inc. and industrial development firm Mitsui & Co., Ltd. to expand its business in the Japanese market.

“Despite the current recession, our challenge is to expand our market penetration, domestic and international,” said Tesa Totengco, vice president and sales director at Rafé New York. “We have been pursued in the past by other companies. We never felt it was right for us and now it is. We have the the structure, the production capabilities and an organization to back up international sales. Now that we are more solidified financially and structurally, we can do it.”

As part of the plan, the company will open a sales showroom and, eventually, in-store concepts, as well as a freestanding Rafé boutique, in Tokyo.

At Accessory Network, chairman and ceo Abe Chehebar said: “Our order position for spring 2003 is a little ahead of 2002. We are looking at flat to 2 to 3 percent increases for 2003, mostly from new initiatives.”

Next fall, Accessory Network is launching the licensed So Patricia! by Patricia Underwood bridge collection, which includes hats, gloves, mittens, mufflers, scarves, earmuffs, handbags, totes and small leather goods targeting midtier retailers. First-year volume is projected at $3 million.

Chehebar added that inventory management remains a primary challenge as stores buy closer to need. To speed the supply chain, Accessory Network is storing raw goods at factory level.

“Usually, we need to wait 120 days to get the goods because it takes about 30 to 40 days to get the materials,” he noted. “By keeping raw goods at factory level, you save about 30 to 40 days. Then, if it’s a really hot trend and we are able to absorb the extra cost, we distribute the goods by air, which saves another 30 days.”

Riviera will also be flying its merchandise rather than sending goods by freight or boat, which Vander Schaaf said adds about 30 to 40 percent to the cost price.

“We are looking at a shorter margin as a result,” he said. “We will tighten the purse string a little and watch the other costs around the company.

“We are seeing retailers holding back longer and longer to their plans and their orders,” continued Vander Schaaf. “They are waiting as far as they can before committing, which is putting increased pressure on us vendors to either stock merchandise without a firm commitment or speed up the supply chain.”

Georgia Grant, vice president at Tumi, added: “Retailers are cautious, but that isn’t necessarily a bad thing. It’s a way of staying healthy and lean with their inventories, which will prevent them from having to send goods into the promotional spiral.”


Coral and mother-of-pearl pendant necklaces.

Cylindrical lenses for sunglasses.

Beads and stones such as lapis,garnet and amethyst.

Clutch bags, wristlets and mini versions of large handbags.

Long scarves, especially styles with fringe that can be worn

around the waist.

Soft, slouchy leather hobos.

Flower appliqués and bright colors.

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