VALUE VIES WITH PRICE
Byline: Jennifer Owens
WASHINGTON — In the dicey world of moderate women’s apparel, marketing is still a price-driven game for most manufacturers, although some say they now look to add value to win more volume.
Even though government statistics show wholesale prices of women’s apparel have increased slightly — less than 1 percent — in the last four months, that growth has not trickled down to the moderate market, manufacturers say.
And yet, moderate consumers want more than low prices this season, according to Martin Coleman, chief executive officer and owner of Ellen Figg in New York. They want value.
“It’s a whole different attitude,” said Coleman. “The buyers at the retail level are getting information from the retail customer that says they’re willing to pay for the right thing.”
At Ellen Figg, “the right thing,” includes better fabrics — from ottoman crepe to moleskin — which the moderate sportswear manufacturer added for the first time this fall. Such fabrics now make up about half the company’s business.
Better fabrics don’t come cheaply, Coleman said, estimating Ellen Figg’s new materials have raised the average price of each piece by 40 percent since last year, when the company was mostly price-driven and used primarily commodity fabrics such as high-twist rayon, linen blends and polyester. Blazers, for example, have gone from $15 to $21.
While the increased materials costs are passed along to the retailer, Coleman says his own profit margins remain the same. What has changed, however, is Ellen Figg’s volume: According to Coleman, the company expects $20 million in sales for 1997, up from $15 million last year.
“It seems to me that in the moderate market, they’re willing to pay for value and newness. Granted, price is important,” he said, but so is quality, fit and performance. “Now the customer is looking at the garment….And when they’re really happy, they’re willing to pay for it.”
At Notations, in Huntingdon Valley, Pa., ceo Kurt Erman said his prices are locked in by current consumer culture.
“With our company being in the moderate zone, they will pay only a certain amount,” he said. “We’re in a marketing area that’s price-driven.”
In response, he said, value has become increasingly important to Notations’ bottom line. With everything from lace to pearls to specialized prints, the company strives to add what Erman calls “perceived value” to its garments, while keeping its overhead steady.
That approach — combined with a shrinking field of moderate manufacturers and Notations’ computerized distribution system — has helped the company increase sales 25 percent, he said. In fact, even though Notation’s margins haven’t changed, the company is having its best year since 1993. Erman declined to specify volume projections for 1997.
At K Arnold Inc. in New York, vice president Harold Glauber said his company is now coating its assortment of silk shells and shirts with Teflon, so spills roll right off. The Teflon process lasts for six cleanings on a silk shirt. Called “Miracle Silk,” the coating adds about 15 percent to the garment’s cost, which brings the retail price to $25. The new merchandise will ship in the next few weeks, he said.
“We’re trying it because we think it will be a volume item,” Glauber said. “The profit picture is the same. We use the same [pricing] format.”
In its other lines, Glauber added, K Arnold plans to keep prices steady.
“We find that in order to keep our customers happy, we try to keep everything in line and everything the same, even though it may cut down a little bit on our profit picture,” he said.
To do that, K Arnold manufactures its entire assortment in China.
“We know where our price niche is, and we’re trying to keep with it, because we’re trying to keep our market,” Glauber said.
“Once it gains a little momentum, we’ll think about raising our prices a bit. But until then, we’ll take our lumps. We’ll just have to watch the market and play it by ear.”
Requirements vice president Marc Abramson said he is watching commodity prices, and wool is the first to show some easing. Noting how important price is, he said he expects margins on wool garments to shrink in reaction to increased wool prices in the coming months.
“It’s still a very price-conscious business,” he said. “But no one ever went out of business making a small profit.”
To generate profits, Requirements has worked to lower sourcing and manufacturing costs, while maintaining quality.
“The only way to work at a higher markup is to have something no one else has,” Abramson said. But, he cautioned, this solution can be short-lived as competitors jump on the fashion trend and push prices down.
Not all moderate manufacturers can rely on innovation or increased volume to pad bottom lines. At Hampshire Designers, for example, president and ceo Gene Warsaw said his company — known for its Designer Originals classic mock turtleneck zippered sweater — is already at full capacity, knitting around the clock.
Instead, Warsaw said Hampshire is diversifying, adding an import division and a men’s wear group. Warsaw said he plans to add to his men’s wear area in the coming weeks, but wouldn’t give details. In moderate women’s wear, Warsaw — who’s made the same sweater since 1956 — said he finds price pressure greater than it has ever been.
“We’re scared to death to get it over $29 retail. We’re struggling with it,” he said, adding later, “I don’t think you can go in there and just raise prices, especially in the moderate business, unless it’s really an embellished sweater. It’s hard to sell sweaters for over $30 in the moderate department.”
That doesn’t mean, however, that the moderate customer doesn’t want value for her $30.
“You’ve got to give them value,” Warsaw said. “If a lady has $30 to spend, she cares where she spends it.”