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Manufacturers come to WWDMAGIC optimistic that they have the right products to attract buyers.
This story first appeared in the February 12, 2008 issue of WWD. Subscribe Today.
There aren’t many places that are as sunny as Las Vegas in February. But with talk of recession and a pullback in consumer spending looming on the horizon, it’s fair to say this month’s WWDMAGIC might well be shadowed by some ominous-looking clouds.
“My customers are very scared,” said Stephanie Heflin, owner of Atlanta-based contemporary line Troo Designs, which specializes in casual activewear and novelty Ts. “I get panicky calls weekly from retailers wondering how my accounts are doing in other parts of the country. No one wants to admit business is down, but let’s call a spade a spade.”
Sandy Dombroski, sales and marketing director for Vancouver-based International Fashions Ltd., which owns misses’ brands Kersh and Press, admitted that she has heard some horror stories. “But for us, it’s so far, so good. We haven’t had any cancellations, we don’t have credit holds or anything like that going on. But I think we are just one of the lucky ones,” she said.
So far, retailers’ trepidation about the economy has manifested itself primarily in their preference for ordering close to season, said vendors surveyed recently by WWD.
“Sales of immediate goods have tripled,” said Heflin. “People are waiting day by day to see what they can afford to buy.”
Carolina Amato, owner and designer of the eponymous New York-based accessories firm, which specializes in gloves, wraps and scarves, agreed. “People are buying much closer to season,” she said. “Because we have to make our commitments to factories six months in advance, we have to have much stronger crystal balls in terms of what we think will sell.”
Even bigger players are holding back from placing orders.
“A large department store in the States asked me to put certain goods on hold in November, and I literally just got the purchase order yesterday,” said Dombroski.
She, too, acknowledges the challenges of close-to-season buying.
“If you’re exporting, where you’re looking at 90 days in production and a couple weeks on the water, it can be really hard to turn things around in time. Unless you can carry inventory, it can be tricky for a lot of people to grow their businesses.”
Heflin at Troo Designs does her best to ease the burden on retailers by stretching order deadlines to the max.
“We are trying to be lenient with delivery dates for the last-minute customers who have dollars to spend,” said Heflin. “We try to find ways to squeeze them in so they can get the goods.”
She also keeps all goods at a four- to six-week turnaround time. “Then the store doesn’t have to predict what they are doing in six months, which is a lifetime now, with everything being so volatile.”
All three vendors cited novelty items and careful pricing as ways to recession-proof their offerings.
“I try to keep plenty of fast-moving pieces at moderate prices on hand,” said Heflin. “A girl can get four or five moderately priced fun Ts or hoodies that go back to denim, and get five different looks for the same price a pair of premium jeans would cost.” So she’s stocking grab-and-go novelty Ts that function like an impulse buy. “Even in tough times, people will still drop that $50 they shouldn’t on something fun and stylish,” she said. “We’ve all done it.”
Kersh’s Dombroski is another believer in the power of the $50 impulse buy to get vendors past lean times.
“Everyone’s looking for that $35 to $50 fashionable item that looks like it cost $100 and that you can just live in,” she said. “For example, we have these cute little dresses for $35 that you can pair with leggings and flats in winter and flip-flops in summer. Our customer could easily buy four of them.”
Dombroski expects that the introduction of the company’s newest misses’ collection, Press, a sister line to Kersh, is also particularly well timed to coincide with the tightening of consumer wallets. It’s founded on the same principles as Kersh — wearable but trend-right fashion at surprisingly low prices — but aimed at an older breed of misses’ customers (Kersh focuses on an 18- to 39-year-old demographic).
“We’re targeting the 45- to 65-year-old [who] still looks great, and who wants to look fashionable and cool at a reasonable price,” said Dombroski, adding that the line is intended to fill the gap created by misses’ companies who tend to offer the same silhouettes year after year, only in different colors. She expects that Kersh’s success — triple-digit gains since its debut in 2006 — will pave the way for Press, which will be carried in 1,500 stores by year’s end.
At Carolina Amato, the introduction of new lines also correlates well with what’s happening on the economic front. This season, she will offer a moderately priced glove line — with an average price of $36 per pair — composed of fairly basic styles in not-so-basic colors, such as fuchsia, lime green, bright yellow and orange. On the flip side, there is also a new luxury line, with prices topping out at $800 retail for a pair of strappy leather elbow-length gloves embellished with studs and fur or snakeskin trim.
“Our European factories have all gone up in price by 25 percent, so we thought we’d just ride with that and come up with an ultraluxurious line,” said Amato.
Vendors may be bracing for the impact of a sluggish U.S. market, but the outlook for overseas business is decidedly rosier. All reported increases in foreign volume over the past few years, and given the dollar’s downward trend, they don’t expect to see gains reversed anytime soon.
Dombroski noted that the recent Bread & Butter show in Barcelona was super busy, with many European retailers on the prowl for American labels. “They think it’s a great time to take advantage of the price of the American dollar,” she said.
Amato estimates that foreign retailers will account for 70 percent of her business in 2008, up from 50 percent two years ago. “There is such an interest in American culture overseas, thanks to the reach of our entertainment industry,” she said. “I see that, coupled with the weak dollar, as being responsible for the increased interest from retailers abroad.”
It’s a perspective with which Heflin readily agrees. “Buyers from overseas tend to be very interested in buying my most Americana-oriented looks, anything they think the trendiest Americans are wearing or that you’d see at Fred Segal,” she said. “On the flip side, they are also often catering to American tourists, as well.”
Specifically, her foreign accounts are snapping up T-shirts (wholesaling for $36 to $42) with green-friendly slogans silk-screened on them, such as “Green is the new black,” or one embroidered with an Earth fashioned out of Swarovski crystals. She’s seen orders from foreign buyers visiting her booths at WWDMAGIC and Coterie rise approximately 20 percent over the past few years.
Whether it’s at home or abroad, vendors agreed, now is not the time to play it too safe, stylistically speaking, in the face of the gloomy reports crowding the business page. After all, people need newness as a reason to buy.
“Retailers are having a tough time now,” said Amato. “We vendors have to continue to create newness and beautiful things to lure them and their customers in. We can’t just sit back and be crybabies.”
“Sometimes it’s hard to see your way out of the nightmare, and the tendency is to want to pull back and go back to what you know instead of moving forward,” said Kersh’s Dombroski. “But when times are tough, it’s all a matter of offering great fashion at the right price.”