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Women’s Fashion Sales Face Challenges

The flagging women’s apparel business is primed for a jolt.

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NEW YORK — As designers gather at tonight’s CFDA Awards at Lincoln Center, the women’s fashion business is at a crossroads and creativity has never been needed more.

The flagging women’s apparel business is primed for a jolt.

It’s accepted fact that shoes and bags have lit up the industry for several years now, and that’s not expected to change anytime soon. Too much stuff with too little imagination has women’s apparel pretty much adrift in a sea of sameness. Women’s wear sales have been dragging since well before the recession. Of equal concern is that there appears to be no easy answer to fixing the problem.

Even as retailers appear to be crawling back with improved profits and sales and growing cash reserves, women’s apparel has not been leading the way. Instead, accessories such as shoes and handbags are now the star performers — and are likely to remain so for the foreseeable future. And if the malaise in women’s apparel remains prolonged, it will have a huge impact on what and how much stores buy, the space they devote to apparel and the ability of new designers to break through into the spotlight.

“Fine apparel is particularly challenging right now,” Neiman Marcus president and chief executive officer Karen Katz told WWD last week, just after the luxury chain reported a 35 percent profit gain in the last quarter. “For us, this was really the first quarter where we experienced a change. It’s not a price issue.  There are lifestyle changes. Customers have been very discerning. They want something very unique, very fashionable, something lasting for her wardrobe.”

Designer labels that read a bit more casual are doing well, Katz  added. However, “We have to rethink how we edit the designer collections.”

“Certain areas of women’s apparel, contemporary, sexy and flirty are doing extremely well. Certain areas with classic brands aren’t doing as well,” Saks Fifth Avenue chairman and ceo Stephen I. Sadove said in an interview. “Overall, the women’s business is healthy, but it’s being driven more by fashion — where it’s more contemporary. Some brands are more suited. More formal may not be the way people are dressing. That is a change in taste.”

Even designers admit women are increasingly finding it tough to find clothing they want to wear, since they now are looking for clothes that can as easily go from work through dinner.

“It’s really important to realize that today, women have one wardrobe. Years ago, they would have a wardrobe for work and a wardrobe for weekend clothes,” said Gary Muto, president of Loft.

The bulk of the business — designer apparel, classic and traditional sportswear, suits and tailored looks, outerwear, basics, misses’ and juniors — has been in the doldrums for some time, although contemporary sportswear, dresses, knitwear, skinny jeans and colored denim experienced good gains. Statistically, there’s little question that women’s apparel overall lost ground, or had minimal growth in the past year. According to The NPD Group market research firm, women’s apparel in the U.S. rose just 2.9 percent to $80.16 billion last year, a figure that includes inflation, which distorts real growth, and is low compared with mid-to-high-single-digit gains retailers posted for their entire businesses.

In 2011, dresses rose 17 percent to $10.9 billion, though suits were down 17.9 percent to $1.02 billion; jackets slipped 0.1 percent to about $1.7 billion; pants dropped 0.6 percent to $2.97 billion; jeans declined almost 3.3 percent to $7.79 billion, and coats fell 3.4 percent to $2.07 billion. Women’s accessories did better, rising 3 percent to $34.92 billion and sweaters rose 5.6 percent to $11.05 billion. Women’s footwear was up just 0.5 percent to $25.04 billion.

“The volume areas for business in women’s apparel are failing in relationship to other areas,” said Marshal Cohen, chief industry analyst for NPD Group. “Women have dramatically changed how they perceive the importance of sportswear. They’re buying across a much wider range of products. The fashion industry has been out-fashioned by every single other industry where consumers spend money. There’s more fashion in food than apparel.”

For several seasons, Nordstrom Inc. has been unhappy with its women’s apparel business. Pete Nordstrom, president of merchandising, said this spring some “pockets” in women’s performed better than others and cited the modern and casual sides and “good growth” in activewear and lingerie, which in many cases are getting increased space on Nordstrom’s selling floors. He also said by the next conference call the company will have hired a new general merchandise manager in women’s to succeed Loretta Soffe, who quietly left in January, reflecting the difficulties.

Moderate chains are also challenged, like J.C. Penney Co. Inc., which is reinventing and has been plagued by basics that don’t sell. Gap Inc., which has been enduring multiyear turnaround efforts, showed some life this spring by capitalizing on the bright color trend but needs to find a new identity. Sears Holdings Corp. remains prosaic and requires a fashion overhaul. The Bon-Ton Stores Inc. is trying to find the right balance between updated and traditional. Wal-Mart Stores Inc. perennially has problems selling anything but basics in apparel. The Talbots Inc., which was just sold to private equity firm Sycamore Partners, thereby escaping a potential bankruptcy, needs to find a contemporary look to reclaim its mature clients that defected to Chico’s FAS and elsewhere. Amongst the younger set, Urban Outfitters Inc. and the nation’s slew of youth chains seem to be cannibalizing each other.

Retailers, consultants and designers queried over the past year said the apparel industry is beset by too much inventory, insufficient innovation, sameness and a failure to keep up with the changing lifestyles of women. Most apparel, they said, lacks the right stuff, which boils down to value, quality that lasts, and versatility, meaning looks that are equally suitable for work or dinner afterward, or as wearable for weekday or weekend occasions. It helps when products are tied to social, environmental or health awareness causes.

“There’s an enormous amount of distribution. Everyone is carrying apparel, including sporting goods chains and drugstores,” observed Janet Grove, who was chairman and ceo of Macy’s Merchandising Group from 1999 to 2009. “With the resurgence in dresses, sportswear gets diminished.  The biggest thing that affects the success of sportswear is to react quickly to selling. It’s the Zara model. The more structured careerwear has kind of gone away. All these things go through cycles.”

Fashion experts also said money once spent by consumers on ready-to-wear and sportswear is shifting to accessories and shoes, two categories increasingly associated with fashion, status and innovation. Dresses, too, for the last four years have been on a run because they’re simpler and easier to put on than suits or sportswear outfits, and it’s a look that can be easily enhanced with cardigans, status handbags and shoes. But last fall, over lunch at the start of New York Fashion Week, a veteran fashion director lamented the women’s fashion business, summing up what seems to be an industry malaise. Shopping the women’s market, said the fashion director, “is just not so much fun anymore. There’s not that much creativity.”

Allen Questrom, the stylish former chairman and ceo of Penney’s, Federated Department Stores Inc. and Barneys New York, echoed the sentiment. “I don’t see much out there that’s new and different. There’s a lot of stuff. If something is new and different, people will buy it. When the iPod came out, nobody asked about the price. They lined up to buy it.”

“I shopped all the major stores in New York last week. There was a ton of merchandise and it was singularly unimpressive,” said Gregor   Simmons, a New York-based buying consultant for retailers. “Contemporary apparel really drives the women’s business. It takes inspiration from designer, gives you fashion, and it’s not a luxury price point.” Otherwise, “a big chunk” of women’s apparel is in the doldrums. “There’s an overassortment of labels that tend to copy each other.”

“I think the preoccupation by many manufacturers and designers to cost-engineer to make up for big price increases in raw materials and labor has resulted in a reduction in innovation and creative product development,” observed Arnold Aronson, managing director of retail strategy at Kurt Salmon Associates. Sucking costs out of apparel production, more often the case in moderate merchandise rather than high-end apparel, leads to less detail, like fewer buttons, and less interest from consumers, Aronson said.

Some see women trading down by shopping stores like Forever 21, Uniqlo and Zara that provide alternatives and could be taking sales away from traditional department stores and older specialty chains.
However, Express ceo Michael Weiss said, “I don’t believe women trade down in quality but do want to spend less. They might buy fewer Christian Louboutin shoes but will still buy them.”

In terms of square footage, women’s remains the most important category occupying more square footage than any other, though stores have been adding square footage in accessories and shoes. “There’s been a real shift to accessories for many women shoppers. They realize they can update a wardrobe through shoes and handbags. Shoes are becoming more and more distinctive in design and style,” said consultant Robert Burke.

“I still believe the only way to be successful in apparel is to be successful in women’s wear,” said Lisa Schultz, executive vice president of apparel design at Sears, taking a somewhat different take.

In an era of cross-shopping, with consumers not particularly loyal to one retail tier, the price spectrum of brands that continue to do well shows the challenge faced by department and specialty stores. At one end are labels like Balenciaga, Prada, Oscar de la Renta, Versace Collection, Armani Collezione and Akris Punto, while Milly, Lafayette 148, J. Crew, Diane von Furstenberg, Tory Burch, Valentino Red, Helmut Lang, Moschino Cheap & Chic, BluGirl Bluemarine and Eileen Fisher are among those doing well in contemporary. Then there are the standouts among the mass or casualwear end, including Lululemon, Land’s End, and Joe Fresh. The private-label business is growing, with stores like Macy’s, Belk and Saks increasing the presence of in-house brands.

“The customer is voting on newness,” said Kathy Bradley-Riley, senior vice president and general merchandise manager at Doneger Group. “Merchandise that is close to something she owns or is reminiscent of last year, she chooses to pass on.” But there are definitely bright spots, Bradley-Riley noted, citing printed sheer tops, dresses that are increasingly visible amid sportswear collections, shapes that seem new such as uneven hemlines and lace and crochet trims. “She is reacting to anything that is feminine, and buying a lot of modern fashion-right product. Traditional, classic has been more challenging.” Regardless of the shopper’s age, “she is definitely thinking younger.”

“The business in women’s rtw is more uneven than accessories, jewelry, men’s and home,” acknowledged William Taubman, chief operating officer of Taubman Centers Inc. “There are entire theories revolving around why this is happening, but I would say customers are reaching an age where they’re buying less clothing and lifestyles are changing.” For many retail tenants in the malls, core sku’s have been declining because of lifestyle changes, Taubman noted. “The suit used to be a basic, and when women were wearing suits, the handbag took a backseat. If you take the suit away and don’t have to wear it, the handbag can be more of a statement.

“It’s been really difficult for some operations to restructure their core offerings.”

 

 

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