Byline: David Moin
NEW YORK — Could it happen this spring?
At this week’s National Retail Federation convention, which drew a record crowd of more than 15,000 retailers, many executives lamented the dismal 1994 Christmas season and predicted another year of struggle, while a handful said spring could mark the start of a rebound in women’s apparel.
One of them was Allen I. Questrom, chairman and chief executive officer of Federated Department Stores, who believes women are responding to more shape, classic styles and such items as narrow belts and the Wonderbra. He said women seem willing to update wardrobes and dress up more for occasions, but he noted that while conditions seem to favor a spring surge, “until it happens, you really don’t know.”
“I see it turning now, and certainly as we get into the second half. We’ll have a strong surge,” said a positive-thinking Joseph Levy, chairman and ceo of Gottschalks, the Fresno, Calif.-based department store chain. He said “relaxed, country clothes” are spurring the business.
“Spring could be the beginning of a turnaround after the longest drought in women’s apparel since World War II,” added retail consultant Isaac Lagnado. “Color and new silhouettes are giving women a reason to buy.”
In a spot check of about two dozen retailers, interviewed in the Sheraton and Hilton Hotels between NRF sessions, executives held out hope for women’s fashions, perceiving a pent-up demand. However, they also painted a broader picture that looks rough for the industry. On the horizon: more consolidations and layoffs, the disappearance of some small or regional operators, slim sales gains and little margin movement. In short, another year of turbulence.
Upheavals in executive suites will also continue, but a tendency to recruit top talent from outside the organization — and even outside retailing — will be more noticeable at underperforming companies such as Kmart. According to Carl Carro, managing director of Executive Search Consultants, retailers will recruit top talent from consumer product, communications or distribution companies such as Sara Lee, AT&T or Federal Express. He sees corporate offices with “a mix of traditional merchants working with strategic managers who manage first and foremost to the bottom line, but not necessarily with strict financial backgrounds.” “Retailers are looking to 1995 with trepidation,” said Bernard Olsoff, chairman and ceo of Frederick Atkins Inc.
“I haven’t talked to anyone who even expressed cautious optimism,” he added, using the typical catchphrase at NRF conventions.
“I find the mood very strange,” said veteran consultant Marvin J. Rothenberg. “People keep talking about the same things over and over again. They’re saying that consumers want value, as if that’s the great discovery. Where have they been for the last 20 years?”
“I was not optimistic about Christmas, and I am less optimistic about the coming year,” said Rosalind Wells, president of Wells & Associates, a consumer research company. She cited rising interest rates and rising consumer credit.
“Soft goods have to pick up only because it’s been so depressed,” she said. “In total, however, consumers will tighten up.”
Mickey Moore, president of the Texas Retailers Association, admitted that apparel was “soft” in his state last year and that he didn’t see “any big change” on the horizon. But, he added, there’s an upbeat feeling in Texas and retailing in general is strong there.
He acknowledged that stores on the Mexican border are getting hit hard by the peso devaluation, adding, “They’ve learned to live and die by the peso.”
Across the nation, said Questrom, stores are trying to deal with “a highly competitive marketplace with more supply than demand.”
“The challenge,” he said, “is how to adjust effectively.”
Some of those adjustments are unsettling to vendors. In a session on consolidations, Jerome Chazen, chairman of Liz Claiborne, said, “I can’t say I’m pleased. I’m very concerned over the loss of a number of retail functions: visual merchandise managers, special events, fashion directors. People who were very careful about presentations. Those jobs no longer exist in almost every department store in the country. Department stores are looking to vendors to do more and more of those jobs.”
They’re also looking for less government regulation. Questrom, for example, urged retailers at a packed session on the economy to fight the movement for value-added taxes, but said higher minimum wages, which President Clinton is pressing for, while raising expenses, would put more disposable dollars into the pockets of consumers.
In another session, futurist Faith Popcorn asked retailers to consider that consumers are spending more time at home, fearful that crime in the malls is on the rise. “Cocooning continues strong through the decade,” she predicted, urging stores to focus more on “fantasy fragrances and other small indulgences, such as bath oils, candles, and ice cream at $4 a quart.” Consumers will be seeking “pleasure with a revenge,” Popcorn said.
But they didn’t, last Christmas, when sales fell below plan. That has dampened projections for this year, limiting predicted increases to the 3 to 5 percent range for sales overall.
“I’ll go along with that,” said David Nichols, chairman and ceo of Mercantile Stores.
“Everybody is looking at those kinds of gains, but they are not good enough,” said Tom Belk, president of Belk Stores. “We hope to do better than that. It really depends on the economy.”
“It’s a difficult struggle for every buck,” said Parisian ceo Donald Hess. Early spring goods are checking satisfactorily, he said, but he noted there’s typically an uptick when fresh goods arrive on the selling floors.