THE LATEST TREND: A MORE PERSONAL TOUCH
Byline: Eric Wilson
NEW YORK — As uncertain as times may be, one thing designers can count on for 2002 is a wildly bumpy ride.
Layoffs along the lines of those initiated by the U.S. divisions of Gucci and Giorgio Armani and downward sales forecasts are expected to continue into the immediate future, as companies deal with a tenuous retail situation, particularly in the U.S.
This dramatically sour turn of events for the once high-flying luxury sector also comes at a time when many brands were gearing up for forays into new product categories or extensive expansions of their retail networks, leaving some to wonder whether the roadwork they’ve built thus far may have been a wasted effort.
But that’s not the case universally. Even as dismal retail sales for high-end apparel threaten to strangle some of the most established power brands of fashion, as well as the continually struggling up-and-comers, others are looking at the general retrenchment as an opportunity to move forward.
Also, several midsized luxury players, such as Burberry and Marc Jacobs, which have made great strides in establishing themselves as directional labels over the past decade, appear to be in a position to ride out this period relatively unscathed.
Meanwhile, the general mood in the luxury sector is as varied as are predictions for when the global economy might regain its sea legs and help restore consumer confidence.
Comments among designer firms varied from Cynthia Rowley’s observation that the “pace and frenzy of Seventh Avenue seems to have slowed down a bit,” as buildings that used to be busy on weekends now seem deserted, to Escada’s co-president Caryn Lerner’s assessment that the next six months will remain “difficult,” to Jill Stuart president Ron Curtis’s prediction that next year “will come down to what brands are really selling out there, versus which ones are just hype.”
One sentiment that seemed to ring true in a near-unanimous din was that designers will have to adapt to new retailing strategies in the coming year. Many fashion executives quoted Gucci Group’s Tom Ford, who remarked in Paris last month: “There will be a kinder, gentler fashion. There had already been a swing back to being more personal before Sept. 11, and what happened will accelerate that.”
Throughout the sector, companies will be making a dramatic customer service push in the coming year, as they try to lure consumers back into their stores.
“People have reoriented their priorities around family and friends,” said Eugenia Ulasewicz, president of Burberry USA. “We’re focusing on products that show the fun and lighthearted elements of our brand, and we’re focusing on products that relate to family values. How a client feels coming into the store is of critical importance — that has always been critical, but it’s going to become even more important.”
As the brand has expanded over the past few years to incorporate a wide range of products beyond cold-weather trenches and mufflers, Burberry will highlight and introduce a number of items that customers would logically associate with family and warm feelings.
Following the successful extension last year into children’s wear, Burberry this spring is launching a version of its fragrance called Baby Touch. Yes, it’s designed for babies, but it also can be worn by moms-to-be and even those mothers who care to recall the childbirth experience.
Swimwear also is expected to be a strong category for spring, as Ulasewicz expects customers will begin traveling in larger numbers in the coming months. While it remains to be seen whether their trips will be local or long distance, there’s likely to be a relaxing, sunbathing element to their destination, she believes.
“Overall, we feel the business environment has really been improving,” Ulasewicz said. “One of the strongest indications we’ve had of that is our store opening in Beverly Hills at the end of October, which has exceeded our expectations. Things are not as bad as we all thought they could be.”
Burberry also plans to continue with its retail rollout for 2002, which includes the remodeling of its New York flagship planned to open in the fall, as well as a SoHo store in March, one in San Jose, Calif.’s Santana Row in August and two new Florida locations, also in the fall.
Issey Miyake went ahead with plans to open a New York boutique this fall, but its performance hardly set any retail records, considering the TriBeCa location’s proximity to the former World Trade Center site.
“We find that customers are more cautious in the way they spend their money and we expect that the overall designer market will suffer over the next few months,” said a spokeswoman for Miyake. “But we are finding that accessories and the very special items continue to sell well.”
In recent weeks, Miyake sold out of a spun silk, handstitched coat and handstitched taffeta evening pieces, as well as expensive handloomed cashmere scarves, she said.
“As retail sales have been hit hard by the decline in the economy, we are hopeful for a rebound in the spring to boost sales,” she said, noting that Miyake is sticking with the downtown location. “We are committed to continuing our mission of creating a dynamic and creative space to present what we feel is new, interesting and unique. It is in our company’s culture to try new projects, and although we do not plan to retrench, we will reevaluate our priorities.”
Designer businesses have reevaluated their merchandising plans for the next year, focusing on tight capsules in reaction to the conservative approach of many retail accounts.
“Going into the summer, we’re working with a much more focused offering that is very targeted,” said a spokeswoman for Donna Karan, where spring bookings have been dominated by the designer’s ultralightweight fabrics, as the company is being digested by LVMH Moet Hennessy Louis Vuitton. A black techno-gauze crinoline trench and a cotton faille one-button jacket paired with a slim skirt have been top-booking items from the collection, she said.
A spokesman for Calvin Klein said the company expects “to see some recovery in the spring, though it may take some time before everyone gets back to their 2000 numbers.” Klein is planning to open a flagship in Paris next year, while the designer also is said to be the top contender to buy his underwear license and jeans business from the bankrupt Warnaco Group.
“Customers want to get back to a normal life, and shopping for and finding that new must-have item is what the designer customer enjoys,” he said. “Customers are responding best to special, must-have pieces and fashionable items like our beaded merino silk knit from pre-spring. Color and different detail is also key, as in our berry and aubergine dresses in spring 2002, as customers look for special pieces that lift their spirits.”
Also, dresses are expected to be a particularly strong category for Marc Jacobs, based on their success in his fall and resort collections, Robert Duffy, the firm’s president, said, noting that the firm had a tremendous demand for dress bookings from the spring collection. The company is planning to open its third Bleecker Street store here in February, he added, noting that the location at 385 Bleecker Street will be dedicated to accessories and will coincide with the launch of Marc Jacobs sunglasses under license with De Rigo.
“I was really nervous about the season, but our sell-throughs have been really strong, and our handbags are doing really well,” Duffy said. “We’ve also done very well with the fragrance launch both here and in Japan.”
Anna Sui similarly has seen a boost in overseas markets by expanding its licensed collections, such as a new eyewear line that is beginning to be presented worldwide.
“We think it’s going to be a conservative year in the U.S., obviously,” said Michael Pellegrino, president of the firm. “But we have other opportunities outside of the country. In Korea and Taiwan, we have distributors that are going forward with plans for Anna Sui shop-in-shops and, eventually, freestanding stores. Even with the economics in that part of the world not being as great as they had been in the past, it’s still better than it is here.”
Pellegrino added that while the economies in many Asian countries also are facing difficult times, Anna Sui products have enjoyed a particularly loyal following there. That helps the company because sales in stores there are not as promotional as they typically are in U.S. department stores, leading to a healthier bottom line, he said. Through its licensed business with Isetan in Asia, Anna Sui also has opened two strictly accessories stores in Taipai and Seoul in March that have helped raise the designer’s profile there.
“We would do more of this going forward, but the key ingredient is finding a distributor who can properly position the product,” Pellegrino said. “We’re looking at the Canadian market, but we are also continuing to talk a little more seriously about jeans, or perhaps another market such as a young contemporary collection concept.”
Other designers are considering a host of side projects and alternative products as a way to distinguish their brands and connect with the consumer at a critical time.
“Nothing is ever going to be the same, but that doesn’t mean in a negative way,” said Catherine Malandrino. “People are still looking for clothes to dream, clothes with soul, clothes to enjoy themselves with a lot of individuality.”
One of her offerings is a limited-edition series of one-of-a-kind pieces, sold in her Los Angeles and New York boutiques. Malandrino whipped up 100 individually designed T-shirts recently and sold out of them at $150 apiece, inspiring her to develop a full line of handpainted Ts and accessories for spring.
“Women are looking for exclusivity and a connection to the woman behind the clothes,” Malandrino said. “People are taking much more time to shop and they want a human dialogue with the salespeople in my store.”
Rowley is championing a horizontal growth model, as a means to protect her standing in a risky wholesale market, by adding new licenses such as a cosmetics deal.
“With the wholesale part of the business, we’ve tried to make it more manageable by tightening our distribution to our most manageable stores,” Rowley said. “You have to grow horizontally and broaden your scope of products to hedge your bets.”
She’s also encouraged by a return to pretty, frilly dresses as stores have frequently avoided basics for spring in favor of more emotional purchases. But overall, Rowley expects the coming months to be a period of slow recovery for Seventh Avenue.
“The pace and frenzy of the industry seems to have slowed down a little bit,” she said. “On the weekends, the building is empty. It’s not that designers are less motivated, but their personal time is more valuable, so unless you really, really have to be here, it’s more important to be with your family. That’s really important for designers and the heads of companies to understand, that they have to keep up the excitement, newness and motivation amid their staff. Hopefully, they will find new opportunities and new ways of doing business.”
Tocca president Gordon Finkelstein concurred that feminine clothing has led spring orders, noting that lightly embellished dresses and floral prints have been the line’s major strength. Halter dresses turned out to be a top style.
“The overall economic picture is not healthy, but the reaction has been good and people are wanting happy clothes,” Finkelstein said. “Also, by aggressively trying to cut costs internally, we were able to price the spring and summer collections really well. We went through every line item on a profit and loss, looked at every last expense, and were were able to come up with some specific savings.”
While Tocca plans to focus on its core collection for next year, Finkelstein said he sees the company’s beauty business as an opportunity to introduce new products, although he declined to identify the firm’s specific plans.
Ronald Curtis, president of Jill Stuart, said the company booked $3 million in spring orders, significantly up from last year. He also attributed the gain to flirty and floral motifs, but said the overall outlook for fashion isn’t so rosy.
“You’re going to see a consolidation in the market next year,” Curtis said. “The big companies are going to be affected as badly as the small ones. You have to be able to adapt quickly in this environment. It’s hard to back start-up ventures right now, and then the big guys are going to get hurt because they all have overstepped their bounds over the past few years. So, it will come down to what brands are really selling out there, versus which ones are just hype.”
Stuart has expanded her sportswear collection to 100 stores for next year, marking a major improvement in her U.S. presence. The brand had enjoyed a major growth in Asia in recent years, but Curtis recently has focused on building its domestic sales. One initiative the company is taking next year to help continue that growth is to include a Made in New York label on most of its garments to play up its link to the city and local production.
“It’s a matter of competition and that’s acute, right now,” Curtis said.
Escada’s Lerner expects an economic turnaround to take a slow and steady course over the next year. To steer through a difficult time, she said the company is concentrating on special items, such as luxury knits and leathers, and an evening cocktail classification of modestly embellished tuxedo separates and simple dresses, replacing its couture category, which has suffered. As a result, sales in its own stores for spring are 15 percent ahead of last year, Lerner said.
Having just opened a Fifth Avenue flagship and a Plano, Tex., store two weeks ago, and with plans for units in Short Hills, N.J., in January and San Jose, Calif., in August, Escada is concentrating on the growth initiatives already in place before taking on new initiatives for the year. Rather than splashy openings, the brand is taking a strategy of linking with charity organizations that relate to their customer base for special events as a means of strengthening its connection to the clientele.
Escada also recently launched its first intimate apparel collection with Hanro as a licensee and will expand its fine jewelry “diamonds” collection to nine additional Escada locations next year, up from two.
Strenesse’s U.S. operations have similarly focused on connecting with customers through events at specialty stores next year. Deb Maxwell, president and chief executive officer of Strenesse USA, said the company’s current positioning through primarily specialty accounts has helped it avoid the pitfalls other brands have faced that rely on department store distribution.
“Considering the negative forecasting for the last quarter of this year, we’ve seen a turnaround in the past month,” she said. “There is business to be done. It might not come as easily as it used to because you have to reach out to people and make them feel good. It’s brought us back to the basic fundamentals of the business we are in and that’s not a bad thing. We just have to work harder for it.”