EUROPE BRACED FOR TOUGH YEAR

Byline: Melissa Drier / Samantha Conti / James Fallon / Katherine Weisman

Despite a few bright spots here and there, the European textile and apparel outlook for 1996 is not pretty. Following are reports from Germany, Italy, the UK and France.

BERLIN — The German women’s apparel industry has braced itself for what appears to be another tough year. Major manufacturers and retailers are projecting zero growth as the market tries to come to grips with continued economic uncertainty, changing buying habits at wholesale and retail and consumer disinterest and confusion over the fashion assortment.
This pessimism follows a difficult 1995, when retail sales took a 5 to 6 percent dip for the second year in a row, while manufacturing losses fell about 6 percent.
“One of the most decisive factors affecting the market has been the lack of understandable and trend-oriented fashion for a wider public,” observed August MUller, director of the German Retailers Association in Cologne. “Women have felt they could get away with wearing last year’s wardrobe, or refresh their look by buying one to two little pieces.”
Germany’s largest apparel manufacturer, Klaus Steilmann, concurred: “There’s been too little excitement for the consumer, and at the same time, much too broad a selection. The biggest consumer complaint is that they don’t know what fashion is.”
The rhythm of ordering is also changing in Germany, the emphasis shifting from earlier deliveries to having “the right merchandise at the right time.” Retailers carrying collections that deliver 10 to 12 times a year will continue to fare best, MUller stressed.
Although high-end designer fashion and hot items have met little price resistance from the consumer here, aggressive price marketing and a flood of cheap imports have led to lower average prices in the market. It’s estimated that 1 percent of 1995’s retail downturn could be attributed to this.
“Quality at a price is everybody’s offer of the hour,” said Jurgen Winter, managing director of the Betty Barclay group. “We’re expecting a hard year and a tough fall season and will go forward with clearer and more focused collections.” “It may be a little easier in some Asian countries like Korea and Taiwan, but I think all of Europe is going to be a tough market for fall,” said Fidelius von Rehbinder, director of international sales for the Mondi group. “It’s definitely going to be difficult here in Germany. Every day you hear how many millions of people are unemployed and how businesses are closing, and that doesn’t give people confidence.” Moreover, consumer behavior is changing as fashion loses ground to other priorities, like travel.
Not everyone is so glum.

MILAN — Italian industry-watchers are divided as to whether sales of Italian clothing will rise or remain sluggish this year. Some say disappointing sales in January are a harbinger of bad things to come, while others are looking forward to an upswing.
“We expect 1996 to be the year the textile and apparel industry improves radically,” said Carlo Pambianco, president of the consulting firm in Milan that bears his name.
Pambianco said one reason for the expected upswing is that many Italian clothing and textile manufacturers have taken advantage of the recession years to streamline their operations, making their companies more cost-efficient and service-oriented.
“We are very optimistic about the fall-winter season and foresee an average 15 percent increase in our Italian sales budget,” said Massimo Ferretti, chairman of Aeffe, the Italian manufacturer that produces the Alberta Ferretti, Moschino, Rifat Ozbek and Jean Paul Gaultier ready-to-wear collections. “We began selling our designers’ second lines at the end of January, and so far we have seen very good results. The Italian market in general is very slow, but there is a process of selection going on, and I think Aeffe will be rewarded by that process.”
But others are pessimistic. Simona Segre, a senior consultant at GPF & Associati, a market research firm in Milan, said her clients — which include a major Italian department store chain — are already complaining about slow January sales despite hefty winter markdowns.
“I don’t think this year is going to be a good one,” Segre said. “I have already had complaints that sales are slow, especially in mid-market merchandise.”
“Sales have not been spectacular for the past few years, and it’s difficult to predict what will happen for fall,” said a spokesman for Rinascente, Italy’s largest department store chain. “To stimulate sales, we are increasingly using catalogs, which come out eight to 10 times a year and twice during fall. We have found that one catalog can reach many customers, and help [synthesize] what we have to offer. But, in this kind of climate you need a crystal ball.”

LONDON — British apparel manufacturers and retailers are finding that hope is no longer enough.
Industry executives have been waiting for a consumer upturn for 18 months and believed that this year would at last provide it. But they now believe the first half is likely to be at least as tough as the final months of 1995, and that things won’t get much better this fall.
“People are being cautious with their orders for fall; there remains great uncertainty out there,” said George Fairweather, finance director of knitwear manufacturer Dawson International PLC.
For manufacturers, part of the problem is that export markets are equally suffering, especially the U.S., Germany and France. Fairweather said U.S. retailers continue to keep strict controls over their inventories, especially with such seasonal merchandise as knitwear and thermal underwear.
Neville Bain, group chief executive at Coats Viyella PLC, one of Europe’s largest textile and apparel manufacturers, said its UK apparel operations continued to suffer from the unusually warm weather last winter. Other industry executives said retailers remain cautious in ordering for next fall for that reason.
Their caution comes despite bullishness by Kenneth Clark, the British chancellor of the exchequer, and economic consultants concerning the prospects for consumer spending. Falling interest rates, tax cuts that take effect in April, a refund from the national electricity company and the coming to maturity of 7 billion pounds in tax-free savings accounts will flood consumers with cash that they will rush out and spend, these forecasters believe.
But other analysts said any additional consumer spending is no longer heading for retail. While the retail environment in Britain remains as tough as it is in the rest of the world, consumers are spending on such things as vacations and restaurant meals, analysts say. This won’t change, no matter how much extra money they may receive.

PARIS — In January, INSEE, France’s national statistics office, declared that the French were suffering their most significant crisis in consumer confidence since 1987. This phenomenon continues, and on the heels of what was a miserable second half last year, French manufacturers and retailers are gun-shy about this fall.
The general perception is that retailers, worried about accumulating stocks, will postpone their fall buying until closer to the season. This will oblige manufacturers to be extremely efficient. There is also concern that retailers will reduce their open-to-buy or shift their buying habits.
Gerard Roudine, managing director of the French women’s rtw federation, said makers of traditional women’s fashion are in a holding pattern. Consumption is down, while the power of sales and mid-season price promotions is growing. Meanwhile, French households are shifting their purchases from clothes to other areas like travel.
“There are two categories of apparel makers now. Those who export are in an optimistic wait-and-see mood, and those who don’t export, who are in a pessimistic wait-and-see mood,” Roudine noted.
Maria Louisa Poumaillou, owner of the upscale Maria Louisa shop on Paris’s Rue Cambon, noted that in such a difficult economic climate, critical buying is key.
“There are too many names on the market that all look the same. It’s useless to waste your time on these resources,” she explained, citing brands like Et Vous, Kookao and APC. “I won’t buy anything unless I really love it. I started this about a year and a half ago, and given the current circumstances, I am even more convinced. Now, there is no place for mediocrity or the little idea that will last two days.”
Not everyone, however, is pessimistic.
“In France, you can’t grow the market. But we will take share from others. We expect our fall orders to be up 7 to 8 percent compared with fall 1995,” said GArard Darel, president and an owner of the sportswear firm that bears his name. “Thanks to our advertising, the brand-awareness of our name has improved. Our 15 wholly owned stores help us test our products before they are fully rolled out, and we have implemented a system of store corners in department stores, which helps everyone — the retailer and us — benefit.”
While manufacturers are worried about how their retail clients will buy, the big stores don’t foresee major changes in their buying.
“Stock is less of a problem for us, since we installed a new information system over a year ago,” noted Galeries Lafayette chairman Georges Meyer. “Now we have a better way of managing stock, and in fact, we are buying less at the beginning of each season.”
But Galeries isn’t going to sit pretty. While Meyer would not get specific, he said the department store chain is planning a major promotional effort next fall with “very important” investments in advertising.
Of course, there are exceptions, mainly seen at companies creating products in response to changes in consumer buying habits, be they jeans lines or bridge collections. At Thierry Mugler, president Didier Grumbach is openly optimistic, thanks mainly to the designer’s new sporty bridge line, Trademark, which is presenting its first complete collection for fall.
“We moved in a new direction at the same time that there is a new need in the market,” Grumbach said. “Now, we are offering three different price points inside one store, inside one consumer’s wardrobe, all over the world.”

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