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Afflicted by recession and consumer behavior ranging from frenzied to dismal, Southeast retailers are scrambling to stay afloat.
This story first appeared in the January 22, 2009 issue of WWD. Subscribe Today.
Store owners are adopting various tactics, like adjusting spring budgets and buying strategies, bolstering customer service, managing inventory more carefully and, in some cases, assuming financial losses and fine-tuning core business in hopes of recovery.
Seth Adams, owner of Village Sportswear, a multigenerational specialty store with locations in Birmingham and Decatur, Ala., already slashed his spring budget 20 percent and wrote orders in New York for half his seasonal inventory.
“I’m coming to the Atlanta show with my checkbook open and ready to go. I’m looking for immediates, but nothing specific. The merchandise really has to be special and jump out at me,” he said.
Adams’ fall business was steady through December, but January proved tougher. To cope with the austere economy, Adams cut his staff, offered deeper discounts on fall merchandise and has completely transitioned into spring.
“[This month] I’ve had merchandise coming in that I couldn’t pay for, so I had to mark it down and get it out,” he said. “I had 75 percent less merchandise at the end of fall this year than I had this time last year.”
Although customers are buying less per visit, the staff at Village Sportswear is upping its service quotient, making follow-up calls to alert shoppers of new product and promotions to reel them back in.
“People aren’t spending $6,000 at a time like they used to, but they are spending $600 per visit. As long as we can get them to do that 15 times between January and May, we’re OK,” said Adams. “Is business anything like what it used to be? No. Will it ever be? Probably not, but we have to adjust.”
Adams credits vendors for developing closer relationships with buyers, offering discounts on shipping, trading out goods that don’t sell and being more lenient with billing.
For spring, Adams is focusing on core lines such as Lafayette 148 and Milly, but is anxious to bring in new resources like Adam Lippes. Adams is also focused on special occasion, pushing buy-now, wear-now dresses from lines like Marisa Baratelli.
Dana Spinola, owner of Fab’rik, a contemporary shop with two Atlanta locations, is cutting her spring budget by 10 percent and plans to scour AmericasMart for immediates with plaid and fringe detailing, geometric prints, rugged denim and short skirts.
“I’ll be sticking to lines I know that are tried and true,” said Spinola. “I have to love the fit and the price point and have a relationship with the vendor so there are no surprises. Retail is tough right now, but I believe spring fever will bring a new perspective.”
For some retailers, spring survival is all about refocusing on core business. Blue Genes, a 7,500-square-foot premium denim boutique in Atlanta, filed for bankruptcy in December amid declining sales and rising costs.
The store, which opened in August 2001 in Buckhead, was doing $7 million in annual sales at its peak in 2005 but projects $3 million this year.
“This was our last resort,” said Jane Sims, who owns the store with sisters Jennifer and Julie Arrendale. “We took cost-cutting measures in store size, staff, packaging materials and utilities, but the challenges were too big.”
Sims attributed the problems to a $200,000 wholesale loss in inventory due to a series of local robberies by street gangs dubbed the “Blue Jean Bandits” and increased competition from new stores including True Religion, Miss Sixty and Diesel at Lenox Square, and Juicy Couture and Barneys Co-Op at Phipps Plaza.
The store eliminated children’s goods and will cut back collections and accessories to focus on premium denim. “We’re going back to our core strengths,” said Sims, who expects the bankruptcy status to last at least a year.
Camille Wright, owner of Kaleidoscope, a high-end denim boutique in Decatur, an up-and-coming neighborhood near Atlanta, hired a consulting agency last April to help with her buying strategy. As a result, Wright is canceling $6,400 in denim orders for spring, slashing her entire denim inventory by almost two-thirds and cutting or scaling back core lines like Rock & Republic and William Rast and high-end sportswear resources like Milly.
“I’m expecting to do $10,000 less during the first quarter of 2009 than the same time last year,” said Wright. “I’ve made huge cuts in my spring budget and have made appointments to see only a couple of lines at the Atlanta show.”
Wright plans to scour MAGIC and Los Angeles markets as well for lower-priced tops and dresses, citing demand from customers.
“It’s hard now to convince my shoppers that a jersey top should cost $200 just because it says Rachel Pally on it,” she said.
Wright continues to offer deep discounts on premium denim and is still getting her footing after sales of just $5,400 in the first 14 days of January. She expects a warehouse sale this weekend to bolster business, citing the success of the pre-sale, which started last Friday.