WANTED: BIG SPENDERS
FROM A NOT-SO-STELLAR HOLIDAY SEASON TO A SLIGHTLY MORE HOPEFUL SPRING, RETAIL’S FIRST HALF WON’T BE SETTING ANY RECORDS.

Byline: Kristin Larson

As the nation held its breath waiting for results of the presidential election, other factors — like stock market volatility and the rise in oil prices — were adding to a sense of uncertainty that’s tightening American’s wallets.
For about two years straight, retailers have been seeing double-digit increases in sales percentages, compared with some recent projections that increases will be in the two to three percent range, according to Dianne Erpenbach, director of fashion retail management at Columbia College in Chicago. “It’s a big drop,” she said. “But anytime there’s a presidential election, retail prices tend to slump. “
Indeed, the consumer confidence rating released this past November reflected this unease, plunging from 142.5 to 135.2 — a 12-month low, noted Erpenbach.
Still, Rosalind Wells, chief economist for the National Retail Federation, does not see the retail forecast as all doom and gloom. “With the economy slower, year-to-year increases will be, too,” she said. “What gets affected the most is durable goods: big-ticket items like computers, autos, furniture. Apparel and other soft goods will hold up.”
A broad study done in the third week of October by the International Mass Retail Association noted that 56 percent of the people surveyed would buy apparel for gifts during the holiday season compared with 22 percent for toys. “But there’s a caveat,” said Edie Clark, a spokeswoman for the IMRA. “People tend to put clothing at the top because it’s an easy answer.”
Conversely, Clark noted that when it comes to Internet buying, only 18 percent was spent on apparel — with items like books, toys and electronics performing better online.
But based on the buying season since this past Thanksgiving, the hottest sellers in stores are, ironically, luxury items — like leather pants, leather boots and cashmere, according to Erpenbach. Going forward into spring, she projected these upper-end items will still sell.
“The people who can afford the high-ticket items will still have money to spend,” Erpenbach said. “It’s the people in the middle who are suffering. For instance, Ann Taylor’s stock market value has gone down. And Old Navy was carrying the Gap, and now it’s not doing that well.”
Ann Caruso, director of retail development for better, bridge and designer women’s clothing at The Doneger Group, a New York-based retail buying and consulting firm, feels that her clients won’t suffer unduly from a slowdown.
“Coming from my vantage point — and I deal with individual retailers and high-end department stores — we have yet to see a decline in the business,” Caruso said.
In fact, some of her clients are expecting “huge” increases in items like washable leathers and suedes this year based on third- and fourth-quarter results in 2000, she noted.
“We’re in kind of a topsy-turvy tumble with the stock market, and the retailers are going to continue to try and elevate the level of price range within the stores,” Caruso said. “And the better customer is responding to fashion. She’s not conservative, and she’s buying it early. If she’s looking in the magazines and sees something [she wants], she’s not going to wait to get it.”
Without mentioning any store names, Caruso noted that upper-end retailers who have opened in large metropolitan areas within the last six months are doing really well.
“For example, there was a Michael Kors resort group that hit the stores (in early December) with $300 capris and $200 fuchsia tanks — and they were blowing out of the store,” she said. “Which makes me think this kind of spending is going to continue.” Interestingly, it is when the economy takes a downturn that consumers start to spend on better-quality products, said Gary Fritschi, manager of women’s outerwear at The Doneger Group.
“When the economy starts to slow, outerwear tends to uptick,” Fritschi said. “So maybe she’s not going to buy a stereo, but she’ll go out and buy a good piece of outerwear.” Items that Fritschi sees doing well through spring are leather jackets retail-priced from about $500 to $1,000, shearlings from about $500 to $1,200, and cashmere and mohair coats from about $600 to $1,200.
Moderate sportswear, meanwhile, saw disappointing results for the third and fourth quarter last year, so retailers are trying to be very focused in their assortment for first quarter this year, said Kathy Bradley Riley, division merchandise manager for sportswear at The Doneger Group.
“Going into the spring season, there are some wearable items that will give customers reasons to spend,” she said. “We believe skirts will be quite strong, and that hasn’t happened in a while.”
Riley said she believes the return to pulled-together looks with jackets, plus new patterns like houndstooth and herringbone for fall, will also work to entice the customer.
“Women haven’t worn jackets for a while — they’ve been wearing twinsets,” she said. “And the nice thing about jackets is they’re a bigger ticket item.”
Still, in order to be successful, Columbia’s Erpenbach said retailers will need to lower their inventory levels and explore promotional pricing.
In addition, she said that retailers might benefit from offering more fashionable plus-sized clothing and a greater selection geared toward senior citizens.
“There’s too much youth-oriented clothing,” she said. “And there’s a lot [more] that can be done for the over-70 group.”
Kurt Barnard, publisher of the Barnard’s Retail Trend Report based in New Jersey, agreed.
“Advertisements seem to ignore the fact that many women are older than 20 and not toothpick-thin,” he said. “Designers and manufacturers will have to recognize this market, and will be sorry if they don’t.”

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