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While department store better floors sputter because of the recession — even losing space to moderate lines — companies hope a stream of launches and relaunches, plus lower prices, will help jump-start the sector.
This story first appeared in the April 15, 2009 issue of WWD. Subscribe Today.
Although observers agree the pricier better market has been especially hard hit — with orders depressed by 20 to 30 percent — particularly in February, March started to deliver bright spots. The key is delivering the better customer what she wants: items instead of collections, multipurpose career-to-casual pieces, seasonless fabrics, higher value at sharper price points, upbeat colors, tops more than bottoms, slenderizing technology and professional tailored looks.
“Throughout 2008 we saw a lack of sales growth in better, so we reacted and planned those businesses down accordingly [by the same percent of previous decrease] in the fourth quarter and into 2008,” said Tony Buccina, vice chairman and president of merchandising at The Bon-Ton Stores Inc. “But we did see some increases in moderate price points, and we moved our investment to those areas in 2009 — that’s where we’re seeing the business move until the market corrects.”
Belk saw a similar trend of moderate outperforming better. “The whole better category has been challenged, as the higher price points have been a challenge,” said McKay Belk, president and chief merchandising officer of Belk Inc., adding the better department’s modern offerings were outselling traditional.
“Clearly sportswear has been difficult for some time now, but it’s showing relative signs of life this quarter,” said Lord & Taylor chief executive officer Brendan Hoffman. “As spring deliveries hit the floor with brighter colors, lines like Lauren and Kenneth Cole are looking bright and customers are responding.”
Meanwhile, better brands — from Calvin Klein to Nine West to Rafaella and Kenneth Cole New York — are trying to compete in this economic environment by lowering their prices, or at least their opening price points, by 10 to 30 percent. “Everyday value” items that are on the low end of the price range even without promotions are frequent bestsellers.
Hoffman said the promotional level was still higher than he’d like to see for spring, but “inventory levels are more in line than they were in holiday, so it’s less about trying to work down the inventories and more about working around customers’ expectations — everyone wants to know they are getting a value.”
“Better is probably struggling a little more than moderate because this customer has really been hit harder than anyone else,” said Andrea Goldreyer, better analyst for the Doneger Group. “But the better market for fall has worked to address what’s happening in the real world by going after items rather than collections.”
Goldreyer said even brands normally focused on collections have shifted to having key items make up 45 to 60 percent of their overall assortment. Adrienne Vittadini, which relaunched for fall 2008, is an example, shifting from collection mode to key-item mentality for fall 2009.
“Even if the economy hadn’t been so tough, it would have been tough for us because we weren’t on the right track,” said Mary Gleason, president of Adrienne Vittadini. “We started the relaunch with head-to-toe dressing, but for fall we really want to shift to modern separates. We’re hearing from retailers that they want separates. We’re now making great pieces, so if a customer comes in and sees an outfit on a mannequin, they can just buy a piece to add to their existing wardrobe.”
The better business is “very top-driven,” Goldreyer added, with knits, blouses, cut-and-sew tops and jackets (particularly versatile versions of the motorcycle and boyfriend jackets) ranking as top sellers. Tailored looks have also been key. Color and prints — which will be updated to dramatic hues, plaids and animal prints for fall — are also inciting emotional buys. To appeal to the value-mindedness of customers, lines are pushing seasonless fabrics and day-to-night pieces.
Retailers report the biggest bright spot is Liz Claiborne, which Isaac Mizrahi started designing for spring. Five years after dropping the brand, Lord & Taylor is picking it up in several doors this spring and then launching it “in a big way” this fall, according to Hoffman. At Bon-Ton, Liz Claiborne is performing “as good, if not better, than anything else in the company,” according to Buccina. Macy Inc.’s chief merchandising officer Jeff Gennette said the brand is exceeding plan, and Belk said the new product is performing decidedly better than the pre-Mizrahi product.
Of the approximately 1,000 doors Liz Claiborne is carried in, the company has installed nearly 30 shop-in-shops so far and by the end of April, 50 are scheduled to be completed. In-store events with Mizrahi kicked off at Macy’s in New York, followed by Chicago, Charlotte, N.C., and then the West Coast.
“Noticably there’s the most traction in the doors where we’ve done the most,” said Dave McTague, executive vice president of partnered brands at Liz Claiborne Inc., adding both the brand’s classics and fashion were selling and that increased sales in smaller sizes reflect a new fashion-focused customer joining the brand.
Although less high-profile, Calvin Klein white label’s spring relaunch with new licensee G-III Apparel Group Ltd., following Kellwood Co., has also been well received. Not only has volume increased by about 40 percent, as the brand expanded into 250 from 150 doors, but the regular-priced sell-through rate has also doubled, according to Calvin Klein Inc. ceo Tom Murry. He attributed the success both to improved product — citing improved synergy across the better line, as G-III already held the label’s outerwear and suits licenses — and to lowering prices by 30 percent. “Before we were priced a little above the competition, which is never a good thing, particularly in this economy,” said Murry.
For the beginning of spring, only half the Calvin Klein white label sportswear is from G-III (the other half is left over from when Kellwood held the license), but the line will be completely made by G-III for fall.
The Rafaella Group’s Ellavie better-priced line also entered about 110 doors this spring, and Rafaella Group ceo Christa Michalaros said she expects to maintain that store count for the remainder of the year. “We remain conservative about the size of the business as we navigate through the state of the economy,” said Michalaros.
The relaunches join a cast of better introductions and reintroductions from fall 2008, which in turn followed the shuttering of Nautica, Sigrid Olsen and O Oscar. DKNYC launched in 275 doors (it’s holding steady at that number for 2009, according to a spokeswoman); Adrienne Vittadini relaunched in nearly 400 doors (it’s adding more than 100 doors this fall, though tightening its collection, and Gleason projects it will maintain its $15 million to $18 million wholesale volume); Tommy Hilfiger relaunched exclusively at Macy’s (where it added about 100 doors to total 570 for spring as it increased sales to be Macy’s best-performing better brand), and the Rafaella brand relaunched in 1,300 doors. For fall 2009, Nine West is relaunching its sportswear with a new designer, and the company predicts it will go from its current 350 doors to double that by next year.
Rafaella’s namesake better business is off low-single digits for spring after a “somewhat challenging” February, Michalaros admitted. To deal with the economy, Rafaella lowered its prices and narrowed the product assortment. For fall, Rafaella is focusing on its Ergo Fit slimming technology (a big trend in the mainstream sportswear world), its five-piece interview kit that is discounted when all pieces are bought together and marketing “pants that work.”
“Rafaella has always stood for amazing value and quality; however, we also want to be relevant to what she needs to spend money on now,” said Michalaros. “Therefore, we are tapping into her new-found need for the interview wardrobe, the perfect fitting pant, and looking and feeling slim has spawned our three big ideas this season.”
Kenneth Cole New York has also seen its customers gravitate to tailored looks, such as the jacket, as sales are up double digits for spring, said Kenneth Cole Productions Inc. ceo Jill Granoff. The brand, which Hoffman said was one of Lord & Taylor’s top two sellers in the better arena, has added opening price points that are 10 to 20 percent lower across all categories, while maintaining the top price points for the most innovative product. That makes the retail price range $50 to $300 (the company declined to quote wholesale prices), and it is carried in about 400 doors.
“Despite the economy, our business is trending up,” said Granoff. “We were ahead of the curve in offering well-priced designer fashion, which is very attractive to consumers in this economic environment.”
• Slenderizing technology
• Novelty knits
Forecasted fall trends
• Tailored looks
• Skinny pants
• Animal prints