MODERATE BRANCHING OUT
Byline: Anne D’Innocenzio
NEW YORK — Faced with an increasingly difficult climate at retail, moderate resources are embracing a variety of strategies for next year. Among them: trading up to better fabrics, updating computer systems and branching out with new lines.
With a wide range of retailers scrambling to attract more moderate shoppers, several manufacturers said their efforts are being pushed into overdrive.
While Wal-Mart, J.C. Penney Co., Target and the new player on the block, The Gap’s Old Navy Clothing Co., are tapping into the moderate market, some department stores such as Mercantile and Carson Pirie Scott aim to stay competitive by downplaying their traditional moderate businesses and playing up the low better zone.
“It isn’t just that the moderate business is getting harder,” said Norton Sperling, president of Norton McNaughton. “With all these department store consolidations, the whole moderate area is getting smaller.”
As part of its strategy to increase sales and accommodate retailers, Norton McNaughton has improved shipping, updated its computer system and implemented EDI, Sperling said.
“We have to do more for the stores,” he added.
Norton McNaughton is also offering retailers more options aside from its core business. NS Studio, its knitwear line, which debuted at retail last month, is doing well, according to Sperling. First-year sales are expected to hit $15 million.
DPS New York, the company’s new casual sportswear collection, is scheduled to hit stores this spring. The line, which features washed twill pants and denim dresses, is expected to exceed $15 million in sales in its first year, Sperling said.
Sperling also noted that he has reduced wholesale prices by at least 10 percent for spring goods. As of January, the average wholesale price is $30, compared with $36 a year ago.
The company has managed to reduce prices by cutting overhead expenses and working closely with mills each season to avoid overruns.
At Karnold, a moderate resource for separates, business is running 5 percent behind last year’s levels due to light traffic in the stores, reported Harold Glauber, vice president of sales.
“Business is a lot weaker. Stores are very late in placing their spring orders, because they’re waiting to see how the holiday season goes,” he said. “And the holiday season doesn’t look too bright at the moment.”
Despite the current retail climate, Glauber said he expects spring sales to be anywhere from flat to 5 percent ahead of last year due to the company’s latest efforts.
In September, Karnold relocated to a showroom three times larger than its previous one in order to merchandise all of its offerings in an adequate space, he said.
To meet the requests of several major retailers, Karnold is unveiling a four-piece collection of woven stretch silk and spandex blouses for spring. Available in four styles, the blouses will wholesale from $16 to $18.
In addition, the company is updating its computer system to allow employees to check inventory at least twice a week as opposed to weekly, Glauber said.
Another moderate manufacturer is taking a different route.
Ellen Figg’s strategy to pump up sales is to offer better fabrics like Tencel and high-twist rayons, which should account for about 40 percent of the line going forward. In the past, the company primarily used a nontextured polyester rayon blend.
“We’re not getting out of the moderate zone,” said Barry Cohen, executive vice president of Ellen Figg. “Department stores are trading up, and we have to trade up with them.”
As a result of this new strategy, the average wholesale price is now $35 as opposed to $27.50 a year ago, he said.
Despite the higher prices, Cohen is bullish about his business and expects sales to increase by more than 35 percent in the next six months.
Sag Harbor, a division of Kellwood Co. that specializes in traditional separates, is also bucking the retail trends. For the fiscal year that ends April 3, 1996, the company expects sales to nearly double to $300 million, according to Harvey Solomon, president.
Some stores have pared down their offerings for moderate coordinates that have not been selling well in favor of moderate separates such as those by Sag Harbor, he said.
“We’ve seen an increase in real estate at department stores,” Solomon said. With wholesale prices ranging from $10 to $15, soft dressing in such fabrics as polyester and rayon has been a key component in the company’s strategy, he said. In addition, the company now offers 20 styles — twice as many as last year.
A couple of executives said they anticipate a shakeout among the fringe department store resources following the Christmas season.
“Department stores are paring down their resources and focusing on the bigger names,” Sperling said. “The big players will become stronger and the smaller ones are going to have a difficult time.”