These are tough times to be in designer retailing.
This story first appeared in the April 29, 2008 issue of WWD. Subscribe Today.
Battling escalating prices for European collections and the shaky economy, American department and specialty stores are facing particular challenges with their designer business this spring. While stores say the designer business appears to be flat to slightly up so far this season versus a strong spring last year, they’re cognizant of the price-value relationship when bringing in collections and are scrutinizing prices more than ever.
Some admitted that even their loyal designer customers have experienced “sticker shock” when they’ve seen European prices that have increased by as much as 20 to 40 percent. A few said tourists are picking up some of the slack, given the weak dollar against the euro and the pound.
On top of all their economic and consumer concerns, retailers are grappling with designer delivery delays at several European houses. Among the prominent designer labels said to be arriving late are Chanel, Zegna, Nina Ricci, Roberto Cavalli and Prada.
“I would say it’s not across the board,” said Jim Gold, president and chief executive officer of Bergdorf Goodman. “There are plenty of designers who, season in, season out, ship like clockwork. Others, season in, season out, ship with great inconsistency. Shipments come in late in the window, probably a good week to 10 days, which can have a material effect on sales.”
Gold declined to specify brands shipping late. However, he did offer a possible explanation: “It could be perhaps due to the growth in China, the Middle East and Russia. That could be putting pressure on the supply chain.”
In addition, retailers said internal issues, such as warehousing and distribution changes, fabric innovations and restaffing of design teams, affect deliveries. “A change in a designer can wreak havoc,” said a retail source.
“This is nothing unusual,” said Ron Frasch, president and chief merchandising officer at Saks Fifth Avenue. “We haven’t had unusual delays. There are problems here and there, but there is no broad statement. This is not affecting business. What is affecting business is the economic climate.”
Several high-end stores are offering incentives to buy designer clothing, whether it be through points or discounts. Neiman Marcus, for example, ran an ad in The New York Times on April 23 offering consumers $200 toward a regular-priced item if they spent $500 anywhere in the store from April 23 to 26.
Overall, retailers said bright colors, prints, dresses and “anything really special” appears to be driving spring business.
WWD informally polled high-end department and specialty stores around the country to see how their designer businesses are faring this spring.