THE FIGHT FOR VALUE
Byline: Anne D’Innocenzio
NEW YORK — Moderate- and better-price sportswear makers continue to be under pressure from retailers, who are demanding sharper prices and more fashion for fall.
Here are some of the headaches:
Escalating prices of raw fibers, making it difficult for vendors to maintain prices.
Consumers’ continued lackluster appetite for apparel.
Retail consolidation and the increasing importance of the matrix as well as stores’ recommended resource list.
Department stores’ aggressive push into private label.
The scene isn’t entirely dreary. Some manufacturers are staking out new opportunities in the face of weak apparel demand. The biggest opportunity, manufacturers and industry consultants say, is a new emerging category called corporate casual. The look is gaining ground as an increasing number of corporations are relaxing their dress codes. The latest was IBM, which announced last week that it would allow its employees to dress more casually during the week. That move, say industry observers, should accelerate the casual office wear trend further. Confused consumers will be turning to apparel manufacturers and retailers for a new wardrobe, predicts R. Fulton MacDonald, an industry consultant. Already, outdoor retailer Eddie Bauer has announced the launching of separate lines that cater to a more casual office code, while more structured apparel firms, like Pendleton Inc., are loosening up their suited image.
While there may be no overwhelming fashion trend they see turning on their particular consumers, moderate-price and better-price firms also point to a number of categories and looks that they say should pump up volume for early fall season. They include:
Rompers, especially in denim.
Retro Forties looks, like belted pantsuits.
Based on interviews with more than a dozen manufacturers, the biggest challenge is maintaining prices, especially given the escalating prices of raw fibers, like cotton and wool. As of late January, the price of cotton was up 28 percent over a year ago, while wool prices have jumped 62 percent.
To offset such increases turning up in fabrics, many vendors said that they are expanding their sourcing networks. They are also negotiating better with mills. Some also noted that they would have to absorb the costs by taking a smaller markup on their merchandise.
“We are working with our contractors to try to get the best prices,” said Robert Benner, president of women’s wear at Ruff Hewn, a better-priced sportswear firm, High Point, N.C. With 90 percent of the line in cotton, maintaining prices is a major challenge, he said. The average wholesale price for a Ruff Hewn product is $32. Ruff Hewn, which hired a sourcing director six months ago for the first time, reversed its sourcing mix in favor of overseas sourcing. Now, about 65 percent of the merchandise is sourced overseas in such countries as Turkey, the Philippines and India. In the past, Ruff Hewn’s foreign sourcing had primarily focused on Hong Kong.
“We are addressing the pressure on prices by sourcing globally,” said Bob Tandler, president at San Francisco-based Fritzi California, which makes moderate-priced junior and misses’ clothing. He said that he is concerned about the price of cotton, which makes up a “substantial part” of its line.
The $130 million sportswear firm, which markets its clothes under the labels Fritzi, You Babes, My Michelle, Jaclyn T. and Jaclyn Bene, has expanded its sourcing network to include Mexico, South America and the Orient over the past year.
Norty Sperling, president of Norton McNaughton, a moderate-price sportswear firm, said that he expects a minor price increase in his line for mid-fall selling, though he will absorb most of the increased costs. “We use mostly polyester/rayon blends, as well as wool,” he said.
In addition to pricing pressures, vendors also have to contend with department stores’ dependency on the matrix and recommended resource list. Given a bleak holiday season at retail, some retail buyers have pared down some of their lackluster performers, opting to do bigger businesses with the better-performing vendors. To stay in the matrix game, vendors are scrambling to deliver the right fashion looks, like knitwear.
Sperling noted that Norton McNaughton, which is a dominant resource in department stores, is further developing its knit business. Knitwear accounts for 30 percent of the company’s line for fall selling, he said. The sportswear firm will also be turning out a separate knitwear line under its own label, to be in stores by early next year. It is expected to generate $10 million to $15 million in the first year.
Benner of Ruff Hewn said that the firm will be increasing its knitwear offerings to 25 percent of the line by holiday.
Ruff Hewn has also expanded into novelty tops, which account for 50 percent of early fall bookings. The remainder is the collection part of the line, which includes knits and cut-and-sewn wovens.
“We’ve always been primarily a bottoms-driven company; we never had enough stuff to work with basic bottoms, like denim jeans,” said Benner.
Calling it Ruff Stuff, a trademarked name, the line includes denim vests, tartan plaid shirts and solid T-shirts. So far, Benner said the reception from retailers has been strong. To pump up sales, Robert Stock has narrowed its merchandise to focus on stand-alone items, instead of on related separates. Key categories include activewear, outerwear and blouses. Silk will continue to account for about 70 percent of the mix, with the remainder in cotton. As part of the strategy, bottoms will become less important, said a company spokeswoman.