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Outerwear Sales Holding Their Own

Tough climate accelerates need for promotions.

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As most categories struggle, outerwear sales are hanging tough because of markdowns, more limited distribution and new marketing tactics.

This story first appeared in the December 16, 2008 issue of WWD.  Subscribe Today.

Consumer spending is at the tightest levels in decades, and shoppers need prompting just to get into the stores — never mind to splurge on a big-ticket item like a coat. But in this heavily promoted selling season where 40 percent markdowns are common, consumers who do venture out are finding deals.

The heady pace for discounts and promotions set by department stores is forcing smaller stores to keep up and create expectations among consumers, said Rick Weinstein, director of sales and marketing for Searle in Manhattan. The situation has reached the point that when a customer was buying a coat recently in the company’s East 74th Street store, her 10-year-old daughter piped up, “What, no free shipping?”

“Everyone is programmed to get something,” Weinstein said. “I keep asking [our wholesale partners], ‘How do you propose to become a full-priced store again, given how you’ve trained the customers?’ And they say they don’t expect to anytime soon.”

This year has been mostly about efforts to keep sales volume levels up and making unit goals, not sales numbers, he said. As department stores have given away larger and larger pieces of their profits, the challenge has been heightened for smaller operators, he said.

Searle has been on what Weinstein called “a steady diet of e-mail blasts” to promote its coats, with as much as 60 percent discounts being offered for select styles. While fourth-quarter is a promotional time, the planned promotions have had to go deeper in some cases to keep the store and its brands competitive, he said, adding that some unspecified items are selling at full price. When Searle offered a free pair of shearling boots with any $1,000 or more purchase this month, consumers flocked to the stores, and Searle gave away more than 200 pairs of boots.

In addition, there was a low boot and high boot gift-with-purchase promotion for customers who spent $400 and $1,100 — the low boot with $400 worth of merchandise and the high boot with $1,100. The opening price point was eventually raised to $500 and $1,100. Four hundred pairs of boots were given away.

Searle is trying to create incentives. “What is amazing is we are making our numbers. Down is the new flat,” Weinstein said. “Given that, if you’re making numbers on anything…it’s an absolute triumph.”

As has been the case in recent winters, the outwear business is once again “all about the down coats,” he said. Long down coats in graphite or black have been the most popular, and Searle’s private label has done particularly well.

At Bloomingdale’s, fourth-quarter outerwear sales are running ahead of last year, even though November’s relatively mild temperatures got the category off to a slow start, said vice chairman Frank Doroff. Down coats are the most sought-after, especially styles with a shiny finish or fur trim, he said. The North Face, Burberry and Moncler are three top-selling labels at Bloomingdale’s.

Of course what goes up often causes something else to come down, as has been the case with the store’s wool coat business, which is “not as good,” Doroff said. While “compelling value” — which means double-digit discounts in some cases — is getting many shoppers into the stores, others are willing to pay full price for a “trend right item” and a wide assortment, he said. All in all, however, consumers are much more selective and discerning.

“Everyone is so value-oriented, even if they like something,” Doroff said. “The right thing, though, doesn’t have to be on sale.”

Moncler and Burberry are also driving coat sales at Saks Fifth Avenue, with down and novelty styles leading the charge, a company spokeswoman said. While much has been reported about the retailer’s decision to drastically mark down merchandise before Black Friday, a brief cold snap last month helped to drive customers to stores for their coat purchases, she said.

Lord & Taylor is aggressively promoting more merchandise and slow-moving styles. The retailer is playing up great values with great styles and special events such as those with a charitable component. Lavelle Olexa, senior vice president, public relations, at Lord & Taylor, said, “The most difficult aspect of doing business today is having to adjust to promotional strategies that would never have been necessary in the past. Product must be right, but the consumer must be enticed in new ways every day.”

An Ellen Tracy car coat in black or spice orange, a Calvin Klein down puffer in black or white, and a Hilary Radley red wool walker coat are bestsellers. Fourth-quarter outerwear sales are “a little slower” than last year, and Lord & Taylor adjusted its inventories in the past 12 months, Olexa said.

Neiman Marcus is having more of a one-hit season. “The trench continues to make a strong showing on many runways and has been the coat of choice with our customers this fall season,” said Ken Downing, senior vice president and fashion director.

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