NEW YORK — The concluding day of the annual WWD Apparel/Retail CEO Summit covered a range of topics, including the urgent need to change the fashion system, building a hot brand, the outlook for holiday sales, evolving U.S. trade policy and how to get consumers to pay full price again.
This story first appeared in the November 11, 2009 issue of WWD. Subscribe Today.
Here, some highlights:
• Donna Karan’s decade-long argument for in-season deliveries is more relevant than ever. As for her solution to such a seemingly complicated problem: “This isn’t nuclear science,” said Karan. “Don’t deliver fall clothes until back-to-school, when the leaves start to change in September. It’s about to get cold out. When it’s cold, let’s warm the customer. When it’s hot, cool the customer.” As far as Karan’s concerned, shows are as ill-timed as deliveries. She suggested fashion take a cue from Hollywood: “They hype a movie when it’s hitting the theaters. People get excited; they go see it.”
• Sir Martin Sorrell, chief executive officer of WPP Group plc, advising against predicting an economic recovery too quickly: “Things aren’t getting better; they’re less worse. I will only declare a recovery when I can say our like-to-like revenues are up.”
• Because inventories are down 20 percent or more at many stores to be in line with weakened demand, retailers at the summit’s “town hall meeting” said the upcoming holiday season won’t see a replay of last year’s markdown madness. “We’ve got to get back to selling at regular price,” stated Karen Katz, president and ceo of Neiman Marcus Stores. “We’ve got to stop the markdown cycle and wean customers off the deal of the day. We can’t get back to the way it was. It was craziness.”
“I don’t think anyone has to be concerned about any abnormal events in the fourth quarter,” added Ron Frasch, president and chief merchandising officer of Saks Inc., which last year rattled the industry with steep markdowns including 70 percent off certain goods before Thanksgiving.
“It’s an absolute goal. We’ve got to get off that promotional cadence,” said Bonnie Brooks, president and ceo of The Bay, the Canadian department store chain. The chain has almost completely remerchandised over the past year. Of its 1,200 brands, 800 were dropped and 150 others were brought in, including “a lot that would not participate in the markdown cadence,” Brooks said.
The retail panel discussed their biggest opportunities and challenges. Mindy Meads, president and chief merchandising officer of Aéropostale Inc., said the biggest opportunity is in building a successful value proposition while the biggest challenge is to sustain the chain’s “incredible growth trajectory.”
“The greatest opportunity is how to you handle yourself online,” added Betsy McLaughlin, ceo of Hot Topic Inc. “How do you use the Web to drive traffic to brick-and-mortar? The challenge for us has been traffic and what can we do to our stores to keep up with the attention span” of its young customers.
• In a panel discussion entitled “Think Big, Act Small,” Christine M. Day, ceo of Lululemon Athletica Inc. described a successful retail experience. When Lululemon first enters a city, it organizes “yoga in the park” for 200 to 400 people. “We come into a city and find the best Pilates and yoga instructors, and we have those ambassadors be part of our business and we become part of theirs. We do it to drive their client base and ours,” she said.
Describing an “aha” retail moment, Susan Lyne, ceo of the Gilt Groupe, recalled: “I grew up in Boston, and Filene’s Basement was our mecca. My mom put me and my three sisters in leotards, because there were no dressing rooms. There would be hundreds of women, and we’d stand outside ecstatically awaiting the store opening. When I first saw Gilt, it brought that back to me…appointment shopping. The idea was that you didn’t know what would be inside of the store until it opened. It creates anticipation and excitement about shopping.”
“We have embraced social networking. We created a Web site called Wal-Mart Moms. Fourteen moms are self-selected and have a dialog. We brought them to Bentonville and they go out and talk to other moms,” said John Fleming, executive vice president and chief merchandising officer of Wal-Mart U.S.
• In a financial roundtable, Matthew Katz, managing director and leader, Global Retail Practice, AlixPartners; Erik Oken, managing director and co-head of Retail Investment Banking, J.P. Morgan Chase & Co., and Howard Tubin, director, equity research softlines, RBC Capital Markets doubted there would be a flurry of bankruptcies after the holiday season, but opportunities for buyers are likely to expand with the capital markets healthy. They also noted a generational shift in consumer shopping habits, one not likely to revert to the old ways once a turnaround is fully established. The panelists also sensed that, in the public markets, the challenge will be for public companies to create business models interesting enough to woo investors.
• Michael McNamara, vice president of MasterCard Advisors, reported sales of four categories tracked by his firm — specialty apparel, women’s specialty apparel, footwear and luxury — moved up in October, but all remained below their levels from two years ago, demonstrating the scope of the “epic downturn” the economy has undergone. He described recent improvements as “a statistical recovery, not a fundamental recovery.”