Contemporary Takes Cautious Approach to 2009

Firms tighten inventories, lower prices and focus on quality and value.

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As the economic crisis deepens and shoppers significantly cut back spending, contemporary firms are working hard to push their businesses forward. Faced with major challenges, many brands are tightening their inventories, lowering prices, cutting back where they can and looking at new, creative marketing strategies in order to keep a close eye on the bottom line. The most important issue across the board is clear — pull back on growth and concentrate on offering quality and value.

This story first appeared in the December 4, 2008 issue of WWD.  Subscribe Today.

The good news lies in the product: After seasons of retailers stressing the need for more innovation in contemporary, for spring, it’s evident.

“They are more innovative for spring,” said Scott Schramm, senior vice president and general merchandise manager of Henri Bendel Inc. “As retailers, a lot of the heat is on us now to merchandise it — it’s all about how we tell the stories in the store and hope that customers will be drawn to it.”

But as a whole, companies in the contemporary category are moving ahead into spring with extreme cautiousness.

“We are keeping everything really lean, we are less focused on growth and more focused on product and keeping inventory really tight,” said Alice + Olivia owner and designer Stacey Bendet. “[We are also] offering special pieces in our stores and exclusives for department stores.”

For the coming months, Bendet said she is highly focused on making sure each delivery has a mix of items at a range of price points, as retailers have been pushing her to do.

“They are definitely into the idea of dresses and novelty items in the under $300 range,” she said. “Where we can, we’ve tried to lower prices on certain items, although only when we are sure we can maintain quality.”

Shoshanna Lonstein Gruss, owner and designer of Shoshanna, said she, too, is moving forward with caution.

“We are tightening our belt and being more cautious about how we spend our money,” she said, noting that instead of spending money on traditional advertising, she is using word-of-mouth marketing, such as dressing celebrities and promoting her brand on Facebook. “We are editing the line and really focusing in on delivering a quality product to the consumer. We want to give the customer the best possible product at the best price,” said Gruss.

Amy Smilovic, owner and creative head at Tibi, is bracing for a tough year ahead.

“We are assuming there will be fallout, so we are simply cutting to order and not buying any excess inventory,” she said. “We are trying to be as realistic as possible.”

That said, Smilovic, who opened Tibi in 1997, said she has a healthy business, bringing in about $27 million in annual wholesale volume. And, she said, the company is still growing. In the spring Tibi will open business in Japan and is looking at growing quickly in Tokyo, with stores and shop-in-shops planned. Smilovic said she is also considering new marketing strategies for the first time and taking the first steps toward opening a Tibi.com online store.

“We are still planning a runway show, but I have been thinking a lot about whether we should take advantage of the quieter marketplace and step up our marketing,” she said. “We are not planning to overextend ourselves, but it could be a good time to make some noise.”

On the trend side, Smilovic said she expects her spring line to draw in customers at retail.

“We did a lot of evening items for spring, since there will still be spring and summer weddings and bar mitzvahs that our girls attend,” she said. “Also, the more extreme and crazy the print is, the better. We don’t have a print for print’s sake. Each one has to have impact.”

Smilovic said she is also taking note of the price sensitivity at retail, and while she has not lowered her prices yet, she is noticing that stores are gravitating toward the lower-priced items within her collection. It’s this sensitivity that led Dallin Chase owner and designer Jason Cauchi to take a long, hard look at his prices, and going forward, he will lower them by 20 percent, bringing his wholesale range down to $52 for a top and $128 for a dress.

“The idea is to increase our volume by allowing our accounts to buy deeper into the collection,” he said, noting stores such as Neiman Marcus, Nordstrom and Shopbop.com have already been receptive to the lower prices. “We see it as a really good move going forward.”

Cauchi said he is also looking to extend his product categories, hoping to launch a full knitwear and outerwear line in the first half of 2009. He’s also working on launching children’s wear, and within the next two months, hopes to find a location to open a freestanding store in New York.

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