Forget the ebb and flow of consumer confidence or Wall Street undulations. It's the mercury rising at the wrong time of year that really makes retailers sweat.
After last season's record high temperatures and resulting rash of coat markdowns and returns to vendors, merchants are skittish and have planned fall-winter coat orders conservatively, up a couple of points at most. However, they're bundling up on fashion coats over basics, which means shorter lengths, lighter weights, bigger collars, details, trenches and innovative technical fabrics that breathe. They're also taking other new tacks to enliven the selling floor as they seek to insulate their outerwear departments from the impact of weather.
"I've seen the coat market and it's never looked better," said Jane Elfers, president and chief executive officer of Lord & Taylor. "The manufacturers have infused their assortments with so much fashion."
She raved about vintage looks from Marella by MaxMara and George Simonton's coats with fur trims and bolder collars. She also cited trenchcoats, with softer metallic fabrics, and flatter, lighter puffers as key trends.
With coats all over the runways in New York and Milan, "the real opportunity is in novelty outerwear," said Joseph Boitano, senior vice president and general merchandise manager of women's and children's at Saks Fifth Avenue. "Today, what really makes a person buy a new outerwear piece is fashion that is new and fits into their lifestyle. The traditional classic long coat is not such an important part of a lot of people's lives."
Boitano said Saks had a good coat season, with sales strongest in the third quarter and late second quarter. Key brands were Burberry, particularly the classic raincoats and newer fur-trimmed coats, and Mackage and Searle. The fourth quarter was kept "very controlled and liquid."
"We can't depend on weather. Coats really have to be like any ready-to-wear business," Boitano said. "They must be driven by fashion."
Saks has been positioning some outerwear within congruent departments, including some younger contemporary outerwear in the contemporary department. The move is an experiment to see if it could also be a merchandising strategy for designer and petite areas.Loft, a division of AnnTaylor Stores Corp., will be putting greater emphasis on seasonless fabrics and synthetic tops in its coats, as opposed to being overly reliant on wool, for September and October. "Our strategy needs to [address] more seasonless product in the store and how…[to] build up a gifting assortment" that is also more seasonless and less susceptible to weather changes, said Kay Krill, president and ceo of Ann Taylor Stores, during a conference call.
"To some degree, we are going to make changes," admitted Frank Doroff, senior executive vice president and gmm of women's at Bloomingdale's. "We had an outstanding early last fall, December was disappointing, but we ended up making our plan for the season." He declined to cite any new strategies.
"Everybody is planning to do at least as well, if not a little better, than last year. They have planned as though business is going to be good again," said Steve Blatt, ceo of Searle, the coat manufacturer and retailer. "I've been in the coat business almost 50 years and I know there is no way you can predict what can happen."
At department stores, there's always compulsion to bring coats in early, around August, and get out of the category by Jan. 31. Saks tends to be an exception, receiving fall coats around June and spring coats in January. Store executives believe coats can be a year-round business.
Industry-wide, plans and buys for the coat floors are largely set for fall-winter, though there's still time to tweak. Coats are generally among the most basic and boring areas at stores, yet also among the most profitable, abetted by manufacturers' willingness to take back unsold goods from retailers. Margins in coats can hit around 50 percent, say department store executives. Coats and furs for men, women and children, as well as cold-weather accessories, can constitute about 15 percent of total December sales for many fashion specialty chains; for a traditional department store selling hard and soft goods, the figure is around 10 percent. Sweaters of all kinds, which can be weather-sensitive, can account for another 10 percent of the month's business.
With the wacky weather last season, "most stores eliminated their stocks as quickly as possible, either marked it 30 to 50 percent off or tried to return to vendors," Blatt said. "Everybody ended up with a decent season, but they could have had a great season. It's just that nobody is prepared to wait any longer. Nowadays, no one wants to have any inventory by Jan. 31, but if you take that attitude, you're never going to maximize the coat business.""Today, retailers have to hedge their bets and so do the manufacturers, if there is going to be a trend toward global warming," said Arnold Aronson, managing director of retail strategies at Kurt Salmon Associates. "I think coat manufacturers can't risk going through too many seasons like the last one, when stores were shouting 50 to 70 percent off.
"The coat business has to be uncommodified and made into more of a fashion or fast-fashion business," Aronson continued. "There are really opportunities to emulate the sportswear business. The traditional coat industry could lose major floor space and open-to-buy unless they start to develop merchandising assortments and delivery timing techniques with new fashion, much the way the sportswear and dress businesses have evolved. Instead of two or three deliveries, make it maybe five or six."
Last December was the warmest in the U.S. in 10 years, according to Planalytics, a business weather intelligence firm that assists retailers in planning inventories. In New York City, the mean temperature was 45 degrees, which was 7 degrees higher than normal. In Chicago, the mean was 34 degrees, or 5 degrees higher than normal. Consequently, "Retailers are nervous and have a right to be," said Scott Bernhardt, senior vice president of Planalytics. "I am sensing a little bit of overcaution."
Stores, Bernhardt said, should base their coat buys based on results over the last few years, rather than just the last year. "You don't want to plan December based on last December's sales, because if you do, you're assuming last year's weather is going to repeat itself and it's not."
As one retailer said "If I did a million [dollars] in coat sales in December 2005, and dropped to $500,000 in 2006, what do I plan for in 2007? That's a good question. A retailer could definitely go either way."
"The fashion consumer doesn't care about the weather," said Elisa Dahan, a designer at Mackage, a Montreal-based coat manufacturer geared to contemporary customers. "The key is not having only commodity coats, but having fashion coats. Women want to look sexy even when they are covered up. Retailers also need to carry more transitional coats. They need that great trenchcoat, which is often missing. It's not as warm, but it's great for the rain and great for keeping you a little warmer when it does get cooler."She suggested shifting delivery dates so transitional items arrive in August and warmer coats, which often arrive at stores in August, start selling in October and November instead. The Mackage collection is known for its luxury details, puffy sleeves, pintuck and leather detailing and sexier fits, and sells to Nordstrom, Bloomingdale's and New York Look, among other chains. Mackage offers washed-leather jackets with rib detailing for $638, and a $550 trench in cotton that's water-resistant.
"People are so scared to change the whole way of doing business, but they are definitely making changes," Dahan said.
Roseanne Morrison, fashion director of The Doneger Group, suggested stores stock thick puffers that are fashionable and light and still warm; lightly padded down jackets; more technical fabrics, layering; chunky sweater coats, and sweaters and sweater coats with hollow core yarns that look heavy but are light. "There are things out there that people will buy early, but wear-now is such an overriding strategy with the customers, they are not shopping and buying for three months later. They are buying to wear the next day," said Morrison.
Blueprint to Lift Coat Sales
- Shorter, lighter jackets with more fashion; fewer basics.
- Layering options.
- Outerwear that allows for a sweater or blazer to be worn underneath.
- Lighter-weight fabrics, microfibers, tropical wool and wool viscose blends that are "seasonless and breathe" and can be worn eight or nine months instead of four.
- Linings and hoods that are detachable.
- Coats with performance styling geared for winter sports.
- Double-exposing some coats beyond traditional coat areas to contemporary areas to highlight vendors and romance fashion outerwear.
- Reorchestrating deliveries for smaller, frequent loads to refresh selling floors every few weeks.
- Placing accessories and other "giftable" goods in the outerwear department for greater visibility.
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