NEW YORK — “Slower and tougher” was how Jay Meltzer, managing director of LJR Redbook Research, described industry conditions for 1997. Speaking at Mahoney, Cohen, Rashba & Pokart’s first apparel and textile breakfast seminar, he offered that “Christmas should be OK,” quickly adding, “but let’s not get carried away.”
Projecting an increase in retail sales of 5.5 percent for 1996, Meltzer estimated a decline in growth to 5 percent for 1997, adding that it will be a tough market-share game for all segments of the industry. “We are still overstored and overproduced, notwithstanding consolidations and closings,” he stated.
“In turn, this has kept a lid on pricing, and bankruptcies are escalating, as are reserves for doubtful accounts. Finally, much of the current retail strength may merely reflect easy comparisons and may well evaporate in next year’s first quarter.”
Similar somber observations were made at last Wednesday’s seminar by Marvin Traub, senior adviser to Financo Inc. and president of his own firm, and Sharon Spector, senior executive vice president for the CIT Group/Commercial Services.
Traub predicted a respectable Christmas season, with comparable-store gains of 4 to 5 percent, but is concerned about the pace of economic growth, and expects 1997 to be a “difficult” year for the industry.
Stating that a “quiet revolution is occurring,” Traub went on to explain seven key trends: the over-storing of America, resulting in bankruptcies and failures; rising consumer debt (11 percent in 1996 versus 3 percent in 1995); consolidation and “de-conglomeration” (the shedding of non-core businesses to focus on what one does best); the return of excitement and authority to the department stores; the increasing strength and growth in the luxury markets; the growing emphasis on globalization, and the increasing power of brands, particularly the “mega-nichers” (defined by WWD as brands associated with lifestyles, and pervading several product and market categories).
Concurring on the brand and globalization trends, Meltzer stated that “one way to escape” the tough industry situation was to “take old brands and make them mega-niche brands.” About globalization, he said, “We learned how to source worldwide. The next great challenge is to market worldwide.”
Spector said survivors in this over-stored environment will have to differentiate, add value and service, cut costs, find and know their niche and make shopping easier and more convenient. And they must think globally.
Asked what effect the reelection of Bill Clinton as president will have on the industry, Meltzer responded, “You can expect four more years of the same.”