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Despite an undeniably tough economy, retailers managed to keep sales momentum going through much of the summer, thanks to help from the last of the government’s stimulus checks. While discount retailers reaped most of the consumer spending rewards, the National Retail Federation reports that other retailers enjoyed some trickle benefits, as well.
This story first appeared in the August 25, 2008 issue of WWD. Subscribe Today.
Many retail categories, such as clothing and clothing accessories, reported strong gains in July. Stores’ sales increased 0.2 percent seasonally adjusted from June and rose 3.1 percent unadjusted year-over-year, according to the NRF.
However, uncertainty lies ahead for retailers, since these temporary hikes in spending likely will dwindle now that most of the stimulus checks have been distributed.
“Retailers will face increased challenges generating sales in the months ahead,” said NRF chief economist Rosalind Wells, in a report released Aug. 13.
While retailers and manufacturers are reluctant to mention the word “recession,” contemporary and young contemporary business is getting tougher and companies are pulling out all the stops, from offering inventive, bold product to cutting superfluous costs and fabric to abandoning now-antiquated season-specific collections.
“Trends change so quickly in contemporary and young contemporary that if you buy six months out, the trend is over by the time it gets to the shelf,” said Charlie Brown, owner and president of Karlie, a Dallas-based young contemporary line. “It’s all about speed to market and nobody at MAGIC is talking about that. Stores have got to be sharper than ever.”
Priced $20 to $49 at wholesale, Dallas-based Karlie heads to its third WWDMAGIC showing novelty tops, tunics and jackets, lightweight sweaters and mini- and maxidresses. The five-year-old brand will start shipping about a week after WWDMAGIC because “people in our market are a buy-now, wear-now generation,” said Brown. “We are absolutely coming off the old tradition of buying six to eight months ahead of time.”
Value, according to Brown, is dictating the contemporary and young contemporary markets right now, with moderate to better specialty stores mixing in young contemporary merchandise to offer customers more options. “People want a Mercedes look at a Chevrolet price,” he said.
Karlie currently sells to about 400 specialty accounts. Brown declined to comment on sales projections.
Like Karlie, Los Angeles line Voom by Joy Han is cranking out new, exciting product in hopes of reeling in reluctant buyers whose budgets continue to shrink, but the contemporary line of quirky, colorful dresses, tops and jackets also relies on its celebrity following to keep the brand afloat.
“[Business] is definitely slower than before,” said Jane Yim, sales director. “Buyers are more conservative in their buying. The items in demand are the ones that usually have been seen in a magazine or one that has been worn by a celebrity.”
Voom, which sells to more than 600 retailers and ships about 30 new styles monthly, is also banking on international expansion and new divisions to boost sales. The recent launch of a second line, VaVa by Joy Han, and the 2009 launch of an unnamed third line, according to Yim, will increase Voom’s presence in the market.
Voom did $8 million in volume last year and projects $12 million by the end of 2009.
Other companies, such as Zova LA, are taking a slightly more conservative approach to recession, hoping to weather the rocky economic climate by cutting costs. Deanna Hodges, president of the seven-year-old eco-friendly line, admits that it’s financially stressful to produce an organic line domestically, but has no plans to seek overseas production.
“People say that you can double your profit if you manufacture in China, but it’s not about that to me. Yeah, I want to make money, but I don’t want to do it overseas. You just lose so much control and I like being able to create jobs [in the U.S.],” said Hodges.
To keep costs down, especially with expensive fabrics such as soy, Modal and hemp, Hodges works closely with a local fabric supplier and factory, and keeps overhead low by maintaining a small staff. Hodges also cut the spring collection to about 55 pieces, down from fall’s 88 units.
“In the [contemporary] market, you’ve got the super, super cheap and then you’ve got the higher-end offerings. The [brands] in the middle are the ones who suffer. The gap keeps getting broader and broader,” said Hodges.
The Orange County-based line, priced mostly from $30 to $90 wholesale, sells to about 100 boutiques.
BCBG Max Azria Group is also addressing the gap between high-end contemporary and fast-fashion chains with its newest brand, BCBGeneration, which is the result of merging of the BCBGirls and To the Max lines.
“We noticed a void within the contemporary marketplace for a designer brand geared toward a younger audience,” said Max Azria, founder, designer, chairman and chief executive officer. “In today’s volatile market, BCBGeneration meets the needs of both the retailer and the consumer. The retailers are aware that they need to tap into this customer as they have lost her to specialty chain stores and recognize the buying power she has.”
Labeling the lifestyle division’s target customer “The Millennial Girl,” Azria describes her as having limited funds and time, but a keen sense of trend.
BCBGeneration will unveil its full fall offerings at WWDMAGIC, including matte jersey and knit tops and dresses, denim, jackets and sweaters. Wholesale prices run from $18 to $48. The line is currently sold in retailers such as Nordstrom, Bloomingdale’s, Macy’s and Dillard’s. Up next for the ever-expanding BCBG Max Azria Group empire are international freestanding BCBGeneration stores, which will coincide with the line’s domestic launch this fall.
Azria declined to comment on sales figures.
Still, some lines say recession and difficulty at retail hasn’t affected business. Anama, a Miami-based young contemporary brand, reports a doubling in sales for each of the past four seasons. Although sales director Boaz Rubinovitz declined to provide exact numbers, he said that the line expands its offerings by 20 to 30 percent each season.
Two-year-old Anama comes to WWDMAGIC for the fifth time with tops, denim, cargo pants, hoodies and T-shirts, done in Modal and cotton, priced from $22 to $45 wholesale. The company said it will focus on immediate fall and holiday deliveries at the show. Cognizant of the buy-now, wear-now trend, Rubinovitz said he won’t introduce spring until October and plans on shipping three fall deliveries.
While Anama still designs in terms of major seasons, Rubinovitz said the company has increased deliveries in order to keep up with buyer demand for quick, fresh product.