Fear Factor

Vendors look for innovative ways to combat a shaky economy.

View Slideshow

Vendors look for innovative ways to combat a shaky economy.

This story first appeared in the February 12, 2008 issue of WWD.  Subscribe Today.

The threat of recession and a frenzied retail climate are perpetuating uncertainty in apparel, but contemporary and young contemporary manufacturers are digging in their heels and using innovative product, international business growth and reorders as a hedge against a shaky economy. Meanwhile, other companies are launching divisions to attract new customers or cutting back offerings and costs to offset unpredictable markets.

After a difficult holiday season and consequent buyer reluctance, the National Retail Federation projects that retail sales will rise 3.5 percent in 2008, almost flat against a 3.7 percent increase last year. However, industry rumblings that consumers could get a boost in spending power have been heard recently, as a result of the Bush administration’s proposed economic stimulus package and lower interest rates on variable debt. To lure potential spenders, manufacturers are upping the design ante with special, must-have items that feature lots of color and architectural interest.

“Current buyer behavior has been cautious but overall optimistic, at least with our company,” said Single designer and owner Galina Sobolev. “Majors were experiencing a slowdown at the end of the year, but I feel that innovative specialty stores always shine in tough times and come through because they take more risks, try new merchandise and are willing to test really new and exciting product.”

Sobolev said the Los Angeles-based company did $15 million in volume last year, due largely to expansion in international markets because of the weak

dollar. London, Russia and Dubai are among the fastest growing areas, she said. Volume for 2008 is expected to increase 20 percent.

“Our customer still has to go to dinner, on a date, to an art gallery or to a cocktail party, and no matter how tough the financial climate, if she is excited by the product that she sees she will buy it,” Sobolev said.

To entice customers, Single offers shift dresses in prints and jacquard, fitted jackets and men’s wear-inspired trousers for fall, trending toward cleaner silhouettes and closer fits. Wholesale prices run $58 to $92, and Single’s new cocktail dress division, After Eight, is priced $168 to $242.

Los Angeles-based 213 Industry is downsizing for fall, cutting its offerings by about half and using less fabric and simpler bodies, said company president Michelle Kim.

“The market is so slow, people are getting more cautious. We’re cutting down on dresses, and that was 80 percent of our business at one point….We very, very recently started using less fabric,” said Kim, adding that seasonless silk and chiffon will be key in penetrating regions with erratic weather patterns.

Economic uncertainty at trade shows is evident, according to Kim, as retailers are relying on immediates and sticking to tighter budgets.

“Some [buyers] have been bouncing checks and holding payments. It’s been really, really bad,” she said. Of fall offerings, Kim expects cropped jackets and short, printed tunics wholesale priced from $55 to $150, to perform the best.

Looking to break into better department stores, 213 Industry, which sells to more than 200 specialty doors, launched MK2K last year, a label that offers contemporary knitwear priced between $45 and $150 wholesale.

Similarly eager to bring in new customers, XCVI Wearables has added four divisions — three women’s and one men’s — to its 12-year-old umbrella in the past year, including Maze, a line of high-end contemporary bottoms, and M Line, a group of handmade, one-of-a-kind T-shirts that feature original artwork. The collection works back to the bottoms division, and styles come in six bodies and a variety of colors and abstract graphics.

Having already established a strong presence in major department stores with XCVI, the Los Angeles company’s expansion reflects its desire to augment its specialty store business. “Maze and M Line sell well in specialty boutiques such as Fred Segal, but XCVI didn’t really fit into that,” said Daniela Zeltzer, director of marketing and communication.

Typically known for its garment-dyed modern misses’ basics, XCVI is bolstering its fall offerings with trendy novelty tops, chunky sweater tunics and high-waisted pants, as well as using environmentally friendly bamboo fabrics.

No stranger to the green movement, Seattle-based Lizzie Parker is exercising fabric caution this fall in order to keep costs down.

“Keep yourself two seasons ahead but keep it seasonless. Those who don’t will go under,” said company designer and namesake Lizzie Parker. “I buy [organic fabrics] in huge increments and I only run two per season. Plus, everything’s garment-dyed so [each piece] is all one color.”

Parker’s young contemporary line of mostly knit tops, dresses and skirts launched in spring 2006, and so far, the focus on unique design has proven successful.

“Lots of [the offerings] can go multiple ways. When you’re a small designer you’re not the target price point so the product has to be special….It can’t look like it came from a mass merchandiser,” said Parker.

The line currently sells to some 50 independent boutiques, and though the fit isn’t true contemporary, the pieces are still modern enough to appeal to young contemporary buyers, said Parker.

Other relatively new lines such as Nay-ked are also faced with the challenge of building their businesses in unstable economic conditions.

“You’d have to be blind, deaf and dumb to not respond to what’s going on in the economy,” said Bert Bogomolny, spokesman for the two-year-old contemporary brand of dresses, tops and pants. “The market is demanding a lot lower price points.”

Although the company’s core prices will stay the same — $19 to $60 — Bogomolny said a new group of knitwear for fall wholesales for under $30 and was developed strictly to address that demand.

Nay-ked, a division of Los Angeles-based Nataya, currently sells to some 200 boutiques. “Specialty stores are the lifeline right now. We’re not going after department stores,” said Bogomolny.

View Slideshow