Look closely — there are signs of hope emerging in the beleaguered specialty store world.
After business dried to a drip in the fall of 2008 and continued that way through most of last year, men’s specialty stores experienced a slight rebound in the fourth quarter, providing some hope for the future. Those that managed to survive did so by drastically reducing inventories — some as much as 30 percent — cutting expenses, seeking lower-priced merchandise options to appeal to price-conscious consumers and running more promotions.
But according to stores shopping the New York market last week, a minor uptick in sales is still not enough to make them return to the old ways of doing business. Inventories may inch up a bit but will still be down from two years ago, sportswear will continue to gain at the expense of tailored clothing, whose sales have been lackluster at best, and incentives will still have to be offered to lure shoppers.
Some of these strategies are counterintuitive for independents, many of whom have cut their teeth on clothing and have always managed to hold firm against promotional pricing. But 2010 is a new year and necessitates an entirely new way of doing business, retailers report, and they’re prepared to do whatever it takes to stay in business.
For Bob Benkert, chief executive officer of the upscale Claymore Shop in the Detroit suburb of Birmingham, Mich., he’s been forced to play the promotional game.
“We had a nice increase in the fourth quarter — 22 percent,” he said. “But we’re not back to where we used to be. And I have to promote now. We’re doing buy-one-get-one-free or 20 percent off on custom orders.” In order to offer these deals, Benkert has found a Chinese manufacturer to produce his private label suits at a low price. This allows him to sell at high margins and, in turn, discount without too much margin erosion.
“We’re in the epicenter of the recession here in Detroit,” he said, “So offering a whole different way of merchandising is the only way I can survive. Polo Blue Label sport coats at $1,395 just won’t cut it anymore.”
Benkert said that while “business has gotten better, I need another Christmas. The first quarter will tell the tale for the future. Discounting is not my forte, but that’s what you have to do today.”
David Rubenstein, co-owner of Rubensteins in New Orleans, said he was pleased with holiday business, but that it came at the last minute. “It was late, but at least it came,” he said. “I think spring will still be tough, but I do see the clotheshorse coming out again. This is his dope, and he needs his fix.”
Rubenstein said he expected to marginally increase his order size since he actually ran out of goods over the holidays. The store had sliced inventories by around 30 percent, he said. “And manufacturers are very short of goods and every warehouse was clean, so we couldn’t reorder. I’m finding that’s the hardest thing now, to try and project what we’re going to need.”
Steven Giles of the eponymous store in Oklahoma City, said December sales were “outstanding — of course this is tempered because the prior year was so off, but we’re bolstered by the activity.”
In fact, Giles said he was “pumped” at the prospects for 2010. “Everybody needs to get their chin up, get on down the road and make this happen.”
Like Rubenstein, he said he “left a little business on the table last fall” after cutting his buys in anticipation of soft sales. As a result, he expected to marginally increase his orders for this fall. The store, which has a sartorial bent, sees an opportunity to increase sales in dressy sportswear pieces such as hybrid jackets that can double as both sportswear and tailored.
Sportswear has been a standout at Puritan Clothing, which has four units on Cape Cod. According to Rick Penn, the third generation to run the store, the fourth quarter saw jeans and “great sport shirts” leading the way. He attributed the uptick in part to a new spa that was added to the company’s Hyannis, Mass., location. Noting he is keeping a positive outlook about 2010, Penn said his inventories are “in much better shape than they were in 2009. It’s a good thing if the consumer has the attitude that if they don’t buy it now, it won’t be here next week.”
Mike Zack of Circa 2000 in Plano, Tex., looked at 2009 as a “learning experience — we changed the way we did things. We pushed out deliveries and we weren’t overloaded. Business was off but we still found ways to generate sales. If you have the right merchandise at the right price, they still come in.”
A quest for unique product was front of mind for him at the New York market. “We have an appetite to buy new.” But he’s not buying as much up front. Although he admitted he may have missed some sales due to lack of inventory, he said: “I’m OK with that because I’m in a better position now. Retail is not an exact science.” For fall, he expects sportswear to continue to perform, especially pieces that can double as sport coats or outerwear. He was also investing in knitwear and casual shirts — “the new shirt and tie.”
Craig DeLongy of John Craig, a six-unit chain based in Winter Park, Fla., said: “We didn’t see the light until the fourth quarter, but December was encouraging. And through the first half of January, the stores are also up. I think we’ll be profitable in [fiscal] 2009.” This is up against significant double-digit drops last year at this time.
Also helping his outlook is the fact that inventories are down as much as 37 percent in the stores. “Whatever fluff we had is gone,” he said.
Although he did run out of some hot sellers such as sport coats and sweaters, he’s OK with that since “we don’t have the markdowns now.”
And the assortment has shifted a bit as well. “We’re not doing Etro or Zegna shirts at $295 now; our most expensive is $250.”
For fall, DeLongy said that while he is “scared to death about clothing,” he was buying “aggressively in areas where I’m confident I can make [business] happen. You can’t be a cowboy on every classification, but our inventories are such that we’re in a position to make good decisions and get the business back.”
Butch Blum of the Seattle-based specialty store of the same name, noted: “The best thing I can say about last year is that it’s over. But we managed our business well and went back to basics. Our inventories are in line and we made money doing less business. We’re hopeful now that we’ll be far healthier this year. Our women’s business had a strong fourth quarter and men’s tends to follow that.”
Calling himself a “glass half full kind of guy,” Blum said he feels good about 2010 and although he’s not spending his entire season’s open-to-buy up front, if he finds something great, he’s ready to buy.
The clothing business continues to be “really tough” he said, and sportswear is stealing the show. “Men that are spending money on clothing would rather buy made-to-measure,” he said, “which leads you to ask yourself: at which point are you hanging sleeves for no reason. The corporate culture today is dress-down.”
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