TACTICS FOR TOUGH TIMES
Byline: HOLLY HABER
DALLAS — To cope with the tough retail climate, Texas merchants are slashing inventories, scrutinizing expenses and buying conservatively to match their customers’ wants.
The tactics are working for independent specialty stores, which are eking out more profit on sales that are flat or only slightly ahead.
Spring’s fitted suits, narrow pants and citrus colors are selling well, and merchants hope women have decided they’ve waited long enough to add to their wardrobes.
“We’ve had a very good December, January and February, and I’m carefully optimistic,” said Mickey Rosmarin, owner of Houston-based Tootsies, which has five stores in Houston, Dallas, San Antonio and Atlanta. “Our volume is up a little bit, but our markdowns are less and expenses are less. The key is to pay close attention to the customer and not be too experimental.”
Rosmarin cut promotions and reduced inventory 20 percent, emphasizing top-performing designer collections and contemporary lines while curtailing bridge merchandise.
“That middle bridge market is not here,” Rosmarin said. “The customer is going for either really good, expensive quality or fun, contemporary high fashion.”
Top-performing designer collections at Tootsies include YSL Encore, Thierry Mugler, Rena Lange and Herve Leger. In contemporary, the biggest resources are Nicole Miller and Laundry.
“I feel that spring merchandise looks good, the customer is ready for new styles and we’re having good reactions,” Rosmarin noted. “I’d be happy with a 10 percent increase this year, but it will probably be 5. Last year was flat.”
The Cotton Club, with two contemporary stores in Houston, also experienced gains late last year and early this year. It managed to boost profits by reducing inventory, cutting staff and switching to cheaper medical insurance.
“It’s not easy — it’s really difficult,” asserted Pam Singer, who owns and operates the stores with her sister, Lisa Spain. “The thing that makes our business different is that my husband, my sister and myself are here all the time. We deliver to people’s homes or offices if they need it. Customer service is why people come and spend money. They like going to people who know their names, and where they know the owners.”
Another ploy that has worked is a frequent-buyer club managed through the store’s credit card. A customer who spends $1,000 gets a gift certificate for $50.
Cotton Club also offers extra incentives to salespeople: If an associate sells 10 percent more in a month than in the same month the previous year, he or she gets a bonus.
The store is doing well this spring with shift dresses, jumpers, long skirts and skorts by such labels as Tessuto, Nanette Lapore and Ghost, plus denim by Diesel, Big Star and Joseph’s.
“It seems like very feminine things are selling,” Singer observed. “We’re doing a lot better for spring this year because the clothes are a lot better. If customers don’t like things, they just don’t shop. People who didn’t buy last year are now buying early.”
Lester Melnick, who owns three stores in Dallas under the names Lester Melnick and Leslie’s, has gotten a strong response to dressy-casual lines from bridge sportswear companies, including Dana B and Karen from Dana Buchman and Company by Ellen Tracy.
They meet the demand for casual clothing and are priced below the flagship collections.
“I think we’ll be selling less dollars to more people because prices will be lower, but there will be more people who can shop at those prices,” Melnick reflected. “We have to go to work harder to maintain our volume. It’s just a matter of controlling expenses and being as innovative as we can.”
Narrow pants and short, shaped jackets by LaurAl and Emanuel plus bright silk sportswear by Ann May are doing well. Other hot lines: sportswear by Howard Wolf and Harlan; Steve Fabrikant knit ready-to-wear, and Bicci and Teri Jon suits.
“The one common thread through the clothes this season is color,” Melnick observed.
He’s hoping for a sales increase of 5 to 10 percent this year, but expects that will come from adding two new departments: bridesmaids and large sizes.
“I hope we can hold volume levels in the other departments and then add $250,000 in bridesmaid and $500,000 in large sizes,” he said.
Despite the activity, Melnick pointed out that women have changed their attitude about clothing and seem unwilling to spend freely for fashion.
“All the baby boomers are turning 50, and when people get to that age, they start looking at IRAs and investments,” he reasoned. “Why is the stock market experiencing all these huge gains? I think people may be taking a portion of the income they spent for clothing and putting it into mutual funds. That’s where a lot of the money is going.”
Lilly Dodson’s customers are so wealthy that retirement isn’t a big concern, and perhaps that’s part of the reason business is unusually good for the designer specialty store.
With an adjacent Escada boutique that does mind-boggling trunk shows of $1 million-plus, Lilly Dodson in Dallas achieved a 22 percent sales jump last year and is planning at least a 10 percent gain for this year, according to Bill Dodson, president.
“We have been on a momentum for the past two years,” Dodson said. “I don’t know why, because everything I read and everybody I talk to is doom and gloom. We’re swimming upstream.”
A big key to Dodson’s business is special events staged in the store. Last year, Lilly Dodson hosted 36 trunk shows, 10 runway shows, six receptions, six fashion clinics, five parties, four personal appearances, four brunches, two luncheons, one art show and one wine-tasting.
“We worked with 17 different charity organizations during the year, so we are running with our tongues hanging out,” Dodson said. “It probably contributes to our growth more than anything else that we do — that community involvement. A lot of the things are done in-house and aren’t that expensive, except for the big tent runway show we do for Escada. It’s been a good year, profitwise.”
Judging from the 18 spring trunk shows that Dodson has held, women are buying lots of pantsuits and traditional suits. “Amazingly, we’re selling two trousers to every skirt in trunk shows, which is just astounding to me,” he pointed out.
Suits by Jacques Fath, Christian Lacroix and Genny have done especially well. The store is reaching out to a younger clientele in their 20s and 30s with such lines as Elements by Escada, Laurel, Byblos and Badgley Mischka.
Stanley Korshak here is also focusing more intently on the high end.
“We want to be the Bergdorf Goodman of the Southwest,” asserted Crawford Brock, president. “We’ve focused on inventory management in the past 18 months, and as a result, our operating profit is the highest it’s ever been.”
By buying less and more precisely, Korshak was able to boost gross margins to 42 percent last year, Brock asserted. He analyzed sales per square foot, clearing out duds and devoting more space to top sellers.
“The idea is to increase sales per square foot while maintaining margins,” he noted. “I went into December with $1.5 million less [inventory] than a year ago, and I clearly made my numbers without markdowns. We brought in spring in January, and my margin in the first quarter is already 19 points higher than last year’s.”
Kay Glatter, vice president of women’s ready-to-wear at Korshak, said color has been the common denominator in spring selling across designer and bridge collections.
“Color is nice to see, but you buy it with trepidation,” Glatter said. “But it is truly selling — orange, bright yellow and chartreuse, which traditionally have not been great selling colors, and the whole blue family.”
Korshak is doing well with Claude Montana’s narrow pants and fitted jackets, Kenzo’s brightly colored sportswear and shifts, and Alberto Biani’s jackets and skirts.
“Shantung is selling and we’re all very glad of that,” Glatter continued. “It takes color beautifully and is a real Dallas fabric — cool, clean and pretty for year-round.”
Glatter said women have become much more savvy customers who know exactly what they want. “They build wardrobes,” she said. “They treat it as a serious business, not a frivolous purchase. Clothes are so expensive, it is an investment, and they take that very seriously. There is no foolish buying anymore.”