NEW YORK — It doesn’t take a crystal ball to predict continued consolidation in the moderate and better sportswear scene next year.
The better-priced segment will also see intense competition from a recent spate of brand launches. At the center of the activity will be the major players, including Jones Apparel Group, Liz Claiborne Inc. and Kellwood Co.
In addition to scooping up smaller, growing brands as the industry’s key consolidators, these powerhouses have been rolling out new lines and tweaking existing offerings to maintain and grow their market share.
The total women’s sportswear market is a $38 billion behemoth, with the moderate and better markets making up a sizable chunk, according to a reading by STS Market Research of the 12 months ending in September. That represented a 3 percent falloff from a year ago.
After a couple of tough years, fashion executives are somewhat comforted by some recent good news on the economic front. The U.S. economy grew at a clip of 7.2 percent during the third quarter, up from 3.3 percent during the second, according to the Department of Commerce.
Looking at their own businesses, though, industry executives are generally not seeing such a rapid upswing, but rather signs of a consumer that is just beginning to regain her footing.
“We feel cautiously optimistic about the consumer, certainly the new interest in better will create a lot of excitement for her,” said Susan Metzger, group president of Jones New York, referring to the several new launches at better prices set to hit stores in spring.
The biggest factor shaping 2004 will be global market conditions, she said.
“Our businesses have been pretty good,” she said. “We’ve been pleased with the results that we’re getting so far in the fourth quarter.”
The large vendors are expanding their reach by acquiring new brands and tapping into new customer bases. A prime example of this is the drive to pick up urban brands.
Claiborne last month agreed to acquire the fast-growing Enyce brand for $114 million from Fila. Kellwood, too, has been getting into the game. This summer, the firm signed licensing deals for Def Jam University and Run Athletics with Russell Simmons, founder and chief executive officer of Phat Fashions Inc. Sources have indicated that Kellwood is considering an acquisition of Phat Fashions. (For more on the acquisitiveness of the industry, see story, this page).Just how strong the 2003 holiday selling season will be, though, and how much momentum the sportswear market will carry into 2004 remains to be seen, although apparel got off to a good start over Thanksgiving weekend.
Inventory control during the holiday season will help set a tone for the year. Any excess merchandise will have to be cleared promotionally and could weigh down the beginning of the year, executives said. On the other hand, clean inventories would provide a clean slate for stronger performance.
All eyes in 2004 will be focused on better-priced sportswear, where a gaggle of new lines and relaunches will juice up the consumer’s shopping experience and make for a fierce battle for market share. The department stores have called for newness and differentiation for some time now and better is the natural place for it since the more moderate national chains, including Kohl’s Corp., have been successful at capturing sales of lower-priced goods.
Among those squaring off on the better sales floor in 2004 will be the relaunched Lauren by Ralph Lauren line, now produced by Polo Ralph Lauren Corp., and the Jones New York Signature line by Jones. In one of the most dramatic and litigious shifts of 2003, Polo took back control of the Lauren line from Jones, which launched and produced the line under license.
Liz Claiborne Inc. moved to speed up the launch of its new line, Realities, to meet the market opportunity. The firm is also launching Intuitions this spring at better price points exclusively at Dillard’s.
Other players aiming to take advantage of the transition include Kellwood Co. with a lower-priced Calvin Klein line, and Tommy Hilfiger Corp., which will launch its revamped H Hilfiger collection exclusively in Federated Department Stores doors. Designer Michael Kors is also preparing a better line for 2004.
“What we’re going to find is a very hungry consumer [in better],” said Elissa Skala Bromer, president of Perry Ellis women’s sportswear, a division of Public Clothing Co.
The Perry Ellis better women’s line that Bromer oversees will have a fresh look for spring, thanks to its new designer, Patrick Robinson.
“There’s been a lot of duplication at retail,” said Bromer. “There’s very little newness and many of the brands that are currently out there are a little stale. We’re playing in a very difficult arena, but we’re forced to do the best we can. It’s very competitive, very political. Perry Ellis women’s wear is finding its niche with great items. We’ll be a new silhouette in the better arena.”So, the battle for better begins in spring and the consensus is that, by the end of 2004, the consumer will have cast her vote and made clear which lines are destined for greatness and which will fade.
Claiborne’s Intuitions and H Hilfiger are examples of another trend sweeping through the sportswear business in department stores: exclusives. Department stores increasingly want to stand out from the crowd in both the better and moderate arenas.
For instance, 22 to 23 percent of Federated’s inventory is exclusive, including private brands, joint ventures and exclusives from vendors. Over time, president and ceo Terry Lundgren wants exclusives to make up to 50 to 60 percent of the business.
While better is lined up to be the center of sportswear attention in 2004, moderate faces its own challenges.
“What moderate is struggling with right now is the proper balance of traditional and update, and how fashion forward we can take that customer,” said Kathy Bradley-Riley, senior vice president of merchandising at The Doneger Group buying and consulting firm. “As a general statement, some of the more fashion things are not working.”
While moderate vendors tweak their stylings, career styles have also reappeared on the scene after lying dormant during the casual days of the late Nineties.
“The customer is dressing up again for work, she is buying jackets,” Bradley-Riley said. “As we move into fall of next year, we should be better able to capitalize on that trend —that alone could up the average retail of a department.”
John Henderson, president of Kellwood’s moderate Sag Harbor division, whose career business has improved, wondered how the category would be merchandised differently from its previous incarnations.
“I think the horse is coming in my direction and I’m ecstatic,” Henderson said. “If all this press is true, I should have a great season because I should double my jacket business.”
Hank Sinkel, executive vice president of sales and marketing at moderate knit firm Hampshire Designer Originals, said, “I don’t think moderate is on the radar screen for growth in the department stores.”
That doesn’t mean Sinkel is pessimistic.“The stores have come to us and they’re very happy with our performance for the fall season,” he said. “That usually translates into positive results going forward. We’re looking forward to a very positive fall 2004.”
Hampshire is taking a slow and steady outlook.
“We don’t go out for giant increases and I don’t think the stores are planning any giant increase,” Sinkel said.
With all the excitement in the better zone, the firm is moving to produce some product that can sell at higher price points, he said, but Hampshire will for the most part stay in the m0oderate zone.
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