KSA SURVEY SEES 5% SALES GAIN FOR SOFT GOODS RETAILERS IN 1995
NEW YORK — With maintaining margins the top concern, soft goods retailers are headed for a dollar sales gain of 5 percent in 1995, while women’s apparel will show unit growth of 4 percent.
These projections are part of the annual “Soft Goods Outlook” from consulting firm Kurt Salmon Associates. The outlook features a survey of 304 retailers and manufacturers, including 26 European companies and 16 from Asia, giving the study a global view.
The 5 percent gain in retail sales, says KSA, should be easy to beat, as it includes an inflation factor of around 2 percent. Nevertheless, KSA says generally that the makers and retailers are optimistic about 1995, although many expect that rising material costs will squeeze profit margins. Among retailers, maintaining margins ranked as the leading concern for 1995, the same as it did in 1994.
Among the apparel manufacturers, the ability to respond faster was rated the number-one concern, moving up from the fourth spot in 1994.
Two-thirds of all the survey’s respondents said they expect profit gains next year of more than 5 percent, versus 49 percent who said that a year ago. However, KSA points out, the pressure on retail margins with growing competition in the price/value sector and the difficulties in passing through higher material costs “will make those profits forecasts harder to meet.”
The study adds that the “ability to manage inventories will weigh even more heavily on profits at every level of soft goods supply chains.”
The explosion of stockkeeping units — with new products and new distribution options — puts a growing premium on inventory management, sales forecasting, service and information technology, KSA says.
“Retail consolidation will further aggravate persistent inventory problems in soft goods,” the study continues. “Wal-Mart, Kmart and other multibillion-dollar retailers now dwarf the companies supplying them. Their growth has changed the balance of power that once prevailed in soft goods, when large fiber, textiles and chain store companies dominated the industry. Most suppliers in this system are just beginning to adjust to their new roles as keepers of their customers’ inventories.”