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Trunk Shows: is Price too High for Fast Buck?

NEW YORK -- Success has its price.<BR><BR>At a time when designer trunk shows have been ringing up record results at stores across the country, some people on SA have become concerned that the numbers are being achieved at the expense of stock...

NEW YORK — Success has its price.

At a time when designer trunk shows have been ringing up record results at stores across the country, some people on SA have become concerned that the numbers are being achieved at the expense of stock business and at a higher cost to the manufacturer.

There’s also some consternation over the sheer number of trunk shows, as more stores and smaller designer firms join the game. Some executives at designer ready-to-wear houses worry that trunk shows are reaching a saturation point.

Upscale rtw firms and high-end stores, however, agree that affluent women shopping for top-priced clothes prefer the trunk show format because it has a sense of intimacy, immediacy, excitement and exclusivity. These executives also concur that trunk shows will continue to be the major strategy in future seasons.

In the past couple of months, fall trunk shows around the country have recorded some impressive numbers:

  • A three-day Chanel show at Bergdorf Goodman here hit $1.5 million.
  • A record-breaking two-day Giorgio Armani show at Saks Fifth Avenue here generated more than $1 million in sales of Armani’s Black Label collection.
  • Bill Blass’s five-day run at Saks, which brought in $750,000, was followed by a four-day show at Bergdorf’s that garnered another $350,000.
  • Donna Karan’s three-day show at BG rang up $650,000.
Concerned over the long-term implications of what seems to be the growing reliance on trunk shows for volume, vendors argue that the shows shift much of the responsibility for retail selling from the store onto the manufacturer.

Manufacturers have to send out representatives to assist in the selling effort, and they are forced to hold piece goods until orders are placed instead of producing in advance for stock deliveries. Producing in this manner is more costly, makers say, because it requires small and inconsistent production lots, and more fragmented invoicing.

“Trunk shows used to be the icing on the cake,” said Michael Pellegrino, president of Carolina Herrera Ltd. “Today, in the designer end of the market, trunk shows are more and more the main focus of the business.

“Retailers’ budgets are limited, and trunk shows are a pre-sold mechanism,” Pellegrino said. “The open-to-buys of the big stores are dictated by financial people. We still want large stock orders, and are concerned with sell-throughs. But right now, the results are there at the trunk shows, so we’re playing to that.”

Trunk show sales for Herrera’s signature collection are up 15 to 20 percent this season, he noted, but at the same time, stock business is up 10 percent.

Herrera has started a new strategy, using trunk show elements to lift stock business this fall, Pellegrino said. The company has placed a full sample collection at its in-store boutique at the Saks flagship, and customers are able to place special orders through the store.

“It gives customers an early look at the collection, and a complete look, since the store doesn’t necessarily buy the entire line,” Pellegrino said. “The results have been extremely positive.”

For the trunk show circuit, Herrera now has three traveling lines that make the rounds, with 45 planned this year, compared with 35 last year. Trunk shows should account for 40 percent of overall business this year, Pellegrino noted, about 10 percent more than last year.

Oscar de la Renta is having a “very successful trunk show season,” with increases of 20 to 25 percent over last year, said Hank Waeckerle, director of sales.

“But it is true that there is only so much pie to go around. We would prefer to do more stock business,” he said.

Waeckerle further noted, “Stores feel they need to cut back on their stock position as a cost-saving measure.” Still, he added, “Right now, the trunk show business is very strong, so we’re going with that strategy as long as it keeps working.”

Vincent Knoll, a Saks vice president who oversees the store’s trunk shows, argued, however, that they actually help to build stock business for the designers. When women come back to try on and buy their special-order outfits, he said, they often buy stock merchandise to round out their wardrobes.

He further contended that a cutback in trunk shows would not increase business in stock orders, simply because the designer customers prefer the format.

“At the New York store, we have shows in May and June because those women want to order the clothes, spend the summer in the Hamptons and have the outfits waiting for them when they come back in September,” Knoll said. “In the branch stores, July and August are the big months. There isn’t space to stock every single piece in the stores, so the shows let the customer see the entire collection. The women who want these clothes want to see everything and then do their own editing.”

Knoll feels there is no downside to trunk show business, and said the concept will continue to grow in the luxe rtw market.

Trunk shows, he said, are a “marvelous way to test the waters with new talent” without making a major commitment.

At Bill Blass Ltd., which through the years has been a leader in the trunk show business, Steven Porter, director of sales, said, “The figures so far this year have been tremendous. In the American market, if it wasn’t for trunk shows, there wouldn’t be a designer business.”

Despite the competition from a lot of new stores doing trunk shows for the first time and many young designers joining the field, Porter noted that Blass’s trunk show sales are up 15 to 20 percent this year.

“Some retailers are going six days a week with trunk shows, but hopefully the merchandise is all different,” Porter said. “The consumer is responding in a big way to the shows. They want the attention of a trunk show, with people on hand from the designer’s company to help with fitting and fabric information. With the retail economy the way it is, we’re all happy to continue doing business this way.”

Not everyone feels that way. Dede Shipman, president of Mary McFadden, said the waters were becoming too crowded.

“Trunk shows are becoming increasingly competitive,” she said. “Everybody is doing them, especially the single unit stores, and it’s reaching a critical number.”

The rtw company will do 40 fall trunk shows, and nearly 100 this year overall, Shipman said, an increase of about 10 percent over last year. Special-order business, mostly derived from trunk shows, will account for 50 percent of overall volume this year, a number that has grown incrementally each year, she said.

“The stores have pushed for more shows because it’s a clean sale,” Shipman said. “They take no inventory position, and yet it brings traffic into the stores. But you can only call the same customer to come back over and over again until they have no more need or desire to buy.”

As stores cut back on stock orders, Shipman said, ultimately the consumer will suffer because there will be less selection on hand for those customers who don’t attend the trunk shows.

One retail executive, speaking on condition of anonymity, acknowledged that designer firms have a valid point when they say that trunk shows make production a more difficult process. The executive noted that cancellation of special orders taken at trunk shows runs higher than stock merchandise returns, and pointed out that usually the manufacturer is stuck with the merchandise.

“For the retailers, it’s a wonderful way to do advance business, at very little cost to them,” the executive said. “Trunk shows give the retailer an opportunity to offer their customer a complete line, as opposed to an edited collection.”

The retailer pointed out that for many small upscale boutiques, holding shows is the only way to offer certain labels to their clientele, since they have limited budgets and space in their stores.

One of those stores is Harry B’s, a 5,000-square-foot shop in Nashville. Lisa Spiva, a partner in the shop with Betsy Caldwell, said trunk shows are increasingly becoming the major way to sell designer clothes.

She said Harry B’s is “enjoying a good early fall season,” thanks to a pickup in the local economy and “very wearable” fall collections.

Spiva said in the last two weeks, a two-day Calvin Klein trunk show registered $150,000 in sales, and a two-day Pamela Dennis show hit $140,000 in orders.

“We’ve experienced nice increases over last year, and we’re only about halfway through our trunk show season,” Spiva said. “Trunk shows have always been important to us, and get stronger every year. Eveningwear does particularly well.”

Spiva said the shows also allow for fresh exposure for young designers, citing good response to the store’s first-ever show this season for Victor Alfaro.

Knoll at Saks also agrees that the quality of the fall collections — along with the preparation of the store’s sales associates — are responsible for the “outstanding results” with trunk shows this season.

“We have 15 to 18 sales associates who make appointments with customers in advance of the shows. The days of just putting up a sign and having a show are over,” he noted.

Knoll also attributes the success of this year’s shows to a better consumer mood and improved economy.

“I’ve never seen this kind of season, and I’ve been doing this a long time,” Knoll said. “Last fall, there was a very somber mood. This year, there is no price resistance and more multiple sales. It tells me that the high-end customer is on track again and in a mood to spend money.”