ADDRESSING THE ADVERSITY
Byline: Arthur Friedman / Leonard McCants
NEW YORK — It’s not a pretty picture — some say it’s the ugliest ever.
Faced with one of the bleakest scenarios in years, ready-to-wear executives are using terms such as “scared to death,” “the toughest time in my career” and “navigating in the perfect storm,” to describe their feelings on the state of business and their forecast for the months ahead.
Every aspect of business is being examined, from sourcing and costing to advertising and distribution, as firms look for new ways to be efficient. Greater attention to customer service and target marketing are being stressed, while expansion plans are being curtailed.
While dresses and suits have historically had the advantage over sportswear separates for their single-ticket value, particularly in times of tight purse strings, they are still seen as a luxury purchase that can easily be put off in favor of buying something with an immediate need. This is true of the one category on the plus side of the ledger — special-occasion clothes — which are always a priority, and combined with surveys that have shown that the insecure public is looking to commit to marriages and weddings at a higher rate, given the country’s precarious situation.
“We’re playing it very conservative for 2002, but we’re also very positive,” said Kathleen McFeeters, chief executive officer of Donna Morgan. “The situation is clearly presenting a challenge we’ve never seen before. The stores are playing a wait-and-see attitude, and nobody, including us, wants to be in a stock position.”
McFeeters said since Donna Morgan’s manufacturing is done exclusively in the Orient, it makes fabric projecting and production planning difficult. At the same time, the bottom line is being squeezed by tighter margins, McFeeters said.
“We’re booked through the first quarter,” McFeeters said. “We’re behind last year, but not as bad as could be expected.”
She noted that the Bergdorf Goodman and Neiman Marcus spring catalogs look “new and fresh” and that specialty store business overall has been healthier than department stores, “which are always decreasing prices,” further squeezing margins. On the plus side, McFeeters is expecting a robust special-occasion and bridal party business.
“People are feeling down,” McFeeters said. “For spring, we think women are going to want to feel good and look pretty. Romantic looks are going to be important for spring.”
Donna Morgan is focusing its spring advertising on more limited resources, McFeeters said, “studying what is the best way to reach the customer.”
Jeffry Aronsson, ceo of Oscar de la Renta, said: “The overall outlook is one of uncertainty. Different vendors and businesses will be impacted in different ways. Given the challenges our retailer customers face, forecasting has become like navigating the chaotic seas of a perfect storm.
“Furthermore, the larger the scale of the business, the greater potential for negative impact. Intense focus on improvement to our core competencies, coupled with flexibility and innovation, are necessary. For us, that means continued focus on the timely execution and delivery of Mr. de la Renta’s designs backed by proactive service.”
While orders from New York stores are down, Aronsson said business elsewhere in the country has registered gains to date when compared to resort and spring bookings last year.
“This period in the history of our business renders a telling challenge to the strength of our relationships and test of the professionalism of our team,” Aronsson added.
Bud Konheim, president and ceo of Nicole Miller, said: “I don’t see daylight until March. The rest of this year and the early part of next year are going to be highly promotional. But spring is always the best time for dresses and February deliveries will be key.”
Konheim noted that in his 46 years in the industry, he has never seen such an unpredictable business climate, so “it’s hard to say when things will normalize.”
“With that said and amid all the death and disaster, the fashion business will still be about making something the consumer will think is incredible and will want to spend money on,” Konheim said.
A major change that has evolved in recent years at Nicole Miller has been how pricing has become part of the design process, he said.
“Part of it is consumer pragmatism, part is the 10-year cycle of deflation in apparel prices and part of it is more fashion available at lower price points,” he said. “The consumer doesn’t want cheaper-made goods, she just wants it to be more affordable. This has altered sourcing strategies, but for us it doesn’t mean going offshore because we still want the control and availability.”
Nicole Miller will end the year with 30 signature boutiques, including 16 that are company owned and 14 that are licensed franchises. The latest openings came in Northbrook, Ill., and Plano, Tex. Konheim said no further openings are on tap for 2002 because of the uncertain economy. He noted that the firm’s store in SoHo is “coming back slowly” after shopping in the neighborhood was severely curtailed after Sept. 11.
Gregg Marks, president of the Kasper wholesale division, said the company is working with its retailers to decrease inventory as the new season approaches and has endeavored to move suits away from dresses and into sportswear and tailored clothing departments.
“Our overall outlook is better than most,” Marks said, noting projections will be flat to slightly above last year. “The part that is hard is that television swings people’s moods so quickly [with news about anthrax, war and terrorism]. Before you could figure the economic situation, but now you’re dealing with uncertainty. The best-laid plans could be upended with another attack.”
One way that Kasper is compensating for the uncertain conditions is by keeping inventory at low levels and asking producers and suppliers to lower their costs.
“We’re working very closely with our suppliers to be a partner with us in these difficult times,” Marks said.
In the works for 2003 is an Albert Nipon boutique on Madison Avenue and a group of Kasper stores in downtown commercial districts.
Tom Puls, president of dress manufacturer Donna Ricco, said he, too, will hold back inventory for the first half, but is looking at a flat season, or a moderate increase in bookings. Still, Puls predicted 2002 will be strong for the dress business.
“I see that in the way that stores are planning their dress business,” he said.
Automation and inventory control will also help keep costs down and maintain profit margins that have been diminishing for several years.
For designer Steve Fabrikant, it’s back to his old formula.
“I’m like Mick Jagger, still rockin’ after all these years,” Fabrikant said. “I’ve been reinventing myself, as the saying goes, over the last year or so, by going back on the road. I’m doing lots of trunk shows and PAs, after going away from that, and it’s reinvigorated the business.”
Fabrikant said he’s also started doing shows at the Plaza Hotel for selling directly to the consumer, and they have proven successful.
“At times like this, I think customer service becomes more important,” said Fabrikant, whose focus continues to be in high-end knit dresses, suits and separates. “I just came back from a show in St. Louis and the customers were buying again. I’ve been pulling out a lot of the old classics and giving them a twist.”
He said he feels things will pick up for spring, barring any other events that might hamper a comeback in consumer confidence.
“In tough times, the weak companies are hurt the most and the cream rises,” Fabrikant added. “It reminds me of 10 years ago [the last time the country was in recession], when all the talk was about how vendors and stores had to do a better job of working together. It happened to a certain degree, and needs to happen in an even bigger way now.”
Douglas Hannant will unveil a new men’s collection produced in-house during fashion week in February. The new line jibes with his optimistic sense about the beginning of the new year.
“I think the economy will get better,” Hannant said. “It’s such an emotional recession. I want to make big steps, push things forward, and I’m leading my life like that.”
Looking at the spring selling season, Frederick Anderson, president of Douglas Hannant, said business projections are flat with last year, but an increased trunk show schedule that might stretch into February “probably will push us ahead.”
Future marketing and advertising initiatives will focus on cooperative ads with stores, with a strong presence in Bergdorf’s spring magazine. The new men’s collection will also get a hard push.
“That will make people much more aware of the women’s line,” Hannant said. “They’ll see that we’re expanding into men’s and see that we have a fuller vision.”
But while the general outlook is pretty bleak, the aforementioned bright spot in rtw remains the special-occasion market. People will still get married, go to Sweet 16 or anniversary parties, and celebrate other milestones — perhaps now more than ever.
For example, Glenn Schlossberg, president and ceo of Jump Apparel/Oynx Nite, characterized the prom business as close to “recession proof.”
“Every girl in every school has to buy a new prom dress,” he said, projecting a 12 percent increase over 2001.
Key to that upswing is keeping on top of trends and being able to produce goods quickly. He said an order can be made in as little as 17 days.
Schlossberg predicted a certain consolidation within the industry and said he is actively seeking companies that fit within his business plan.