RX FOR RECOVERY: GETTING CONSUMERS BACK
NEW YORK — Americans are nothing if not resilient, and even in the post-Sept. 11 world, business and consumerism will eventually return to some semblance of normalcy.
But how to get shoppers back into the stores — soon, and with credit cards blazing — without seeming callous can be a dicy proposition. WWD surveyed dozens of industry executives, observers, politicians, analysts and celebrities from around the world for their suggestions on what it will take.
Ralph Lauren said keep the stores exciting, while William Norwich told retailers to become hubs of the community. Many repeated the mantra “have plenty of in-store events” and still others, like Rose Marie Bravo and Michael Gould, suggested customer service was more important than ever.
The Japanese said “remodel,” Sarah Hailes, co-owner of Kirna Zabete, said “color,” and Michael Faircloth asserted that retailers should “call customers and invite them to come in.”
Then there are the advocates for a good media blitz and — speaking of the media — keeping a positive tone to help restore consumer confidence couldn’t hurt.
Simon Doonan, who said P.C. now means “Post Catastrophe,” pointed out that reviving tourism was another key.
Politicians from the President to Mayor Giuliani to scads of locals are imploring people to go out and support the economy, and not to “let the terrorists win by changing our way of life.”
The federal government is also putting its money where its mouth is, working toward an economic stimulus package that comes on top of this summer’s tax cut.
From here through page 11 is a special report on suggestions for retail recovery, plus an update on Washington’s plans and an exclusive consumer survey that might shed some light on the uncertain holiday season ahead.
Sen. Hillary Rodham Clinton, (D., N.Y.): “We need a concerted advertising campaign to buy New York and have pride in America. So when you go out to see a play and eat out at a restaurant, you seek out and wear clothes that are made in New York. I would hope the garment industry would be a part of a broad campaign like that.”
Sen. Charles E. Schumer, (D., N.Y.): “The terrorists win if we stop doing the things we did before Sept. 11. We have to overcome that fear and do what we were going to do.”
Ralph Lauren, chairman, Polo Ralph Lauren Corp.: “It’s our duty to be as stimulating as we can. If you get people in the stores, it has to be exciting. There’s nothing you can do if something really bad happens in the world. It has to wear off, and the customer has to say, ‘I want to live my life as I’ve always lived it and go back and shop.’
“Outlet stores have been doing well during this time. And in the last few days, our reports have shown that people have begun buying again in department stores.”
Bruce Raynor, president, UNITE: “We’re organizing a ‘Shop New York’ program to encourage people to come to New York and buy. New York doesn’t need donations, we need people to come and shop and see a show and stay in a hotel.”
Mark Lee, president, Yves Saint Laurent: “Today in New York, and in America in general, we are doing business by listening to our customers and accommodating our service accordingly. We are working with people in their homes and by consignment packages, as some customers feel more comfortable shopping in total privacy at this time.”
Kal Ruttenstein, senior vice president for fashion direction, Bloomingdale’s: “We’re encouraging our associates to contact customers and invite them to come in to see our new seasonal collection. Personal contact is one of the best ways of stimulating traffic. Special shops with exclusive merchandise, like our Mama Mia shops with peasant blouses and low-cut jeans, are bringing in a lot of traffic. Designer personal appearances is something else we do. We’re planning something very soon with Donna Karan.”
Patrick Bousquet-Chavanne, group president of the Estee Lauder brand and MAC Cosmetics at Estee Lauder Cos.: “[This is a season of getting in touch with family and friends and cocooning. It therefore will be a time of gift-giving and taking small indulgences of relatively inexpensive products. Our strategy is to do more in-store events — free makeovers at counter — offer more lower-priced gift sets and to advertise Lauder’s top-three fragrances — Beautiful, Pleasures and the new Intuition — on TV this Christmas, and to give the same treatment to Tommy Hilfiger’s new T men’s scent.]”
Terry Lundgren, president and chief merchandising officer, Federated Department Stores: “In spite of difficult economic situations, with great product or unique promotions, something different that the customer hasn’t seen repeatedly, we have success attracting customers. Cosmetics events have been extremely encouraging — product and value were right. Turning the assortments, flowing goods fast, lots of change, lots of newness on a regular basis, so customers can come in every week and find something new. Fashion is happening in the young market on multiple levels. There are a lot of categories, including denim and screen Ts, helping to drive that business. In juniors, it’s even more broad — clearly denim, sweaters, sweater coats, and related businesses.
“There will be pockets of merchandise we will be able to sell this year better than other years,” like Americana, flag and related merchandise, gifts for children and home products.
Trey Laird, executive vice president, corporate imaging and creative director, Donna Karan International: “When you have a compelling product, that’s the best possible antidote, more than promotions or events. We’re planning some community-based events that are intimate and about the community. For instance, we’ll do a photo exhibition in the downtown DKNY store next month called ‘Characters of New York,’ photographed by Gillian Zoe Segal, who has a book coming out next month. It will feature about 65 photographs of New York personalities, from Richard Johnson to Ed Koch.
David Dalrymple, designer, House of (Patricia) Field: “It’s been difficult for Pat’s store downtown near Canal Street, so they’re having a fab sale to get people in again. I’m not making basic apparel, but fun-loving club clothes.
“Things on the wholesale end of the business are very positive, but those were put into spin before the catastrophe. We’ve not had any cancellations, but we have had some European stores not come into town because of their fears of travel. I certainly wouldn’t change the direction of the collection. People have got to go out and have a laugh. Our customers look to us to be fun and optimistic.”
Retailer Janet Brown: “What will bring people back to the stores is the most beautifully, finely tuned selection of merchandise. People don’t need another sleeveless dress — it has to be a color, a fabric, a new shape. Designers must cooperate with deliveries. There’s no room for business mistakes, either with logistics or taste. And it has to be from both sides.”
Rose Marie Bravo, ceo, Burberry: “The mood has improved since the days immediately following the disaster. People are generally pleased to be out a bit and feel comfortable. I think there is a newfound warmth and graciousness to people, and we are trying to get back to some sense of normality. The best thing we at Burberry can do at the moment is to reach out to people. It’s not about markdowns. We are in the service business and are focusing more than ever on excellent customer service and giving that special human touch to fulfill people’s needs.”
Yves Carcelle, president of the fashion and leather goods division of LVMH: “The media can help. It’s important to quote what happens, but it’s important not to speak about [economic doom and gloom] all the time. To encourage people to shop, as always it’s important to have good products and good service. You have to call people and invite them to come to the stores. It’s an interaction between the store and its customers. “
Ron Frasch, chairman and ceo, Bergdorf Goodman: “Most important, we are working to give venues for our sales associates to speak to our customers. It’s a difficult situation right now. People don’t want to call their clients. They’re feeling uncomfortable about it. We are also making things enjoyable inside the store, providing refreshments for customers, food, water, to make it a very pleasant experience. We can’t overreact, but we can come up with some positive strategies to make the store a wonderful place to visit.”
William Norwich, New York Times Magazine: “I think the best thing stores can do — particularly the department stores, but also the boutiques — is find new and innovative ways to become the hubs of the community. There could be free concerts with musicians, lectures, dramatic readings…something a little more comforting that the usual public appearance with designers, although, of course, fashion designers are very comforting people. Find ways to expand the meaning of the store to invite greater participation.
“It is more than about service. It is about how the store casts its line, so to speak, and the context it creates for all its communications with the citizens of the city. It’s a shift in how fashion, and fashion stores, perceive themselves and their roles in the culture today.”
Jeffrey Kalinsky, owner, Jeffrey stores: “People need to start to fly again. The traffic flow into New York City needs to return to normal. I think the less doom and gloom that comes out of everybody’s lips now will do a lot to help every industry recover. Our obligation is to be as positive, as optimistic as we can.”
Sarah Hailes, co-owner, Kirna Zabete: “We are not doing anything aggressive like advertising or calling customers. Our staff has written notes to their regular customers saying, ‘I hope you’re well,’ and things like that. We’re not buying a lot of black, unless it’s black and white. We love color. I don’t think this is the time for mourning clothes, but we are buying looks that are not frivolous, not silly, certainly not boring, beautifully designed, rich fabrics, details, prints, but nothing overtly sexy or too tough or hard.”
Simon Doonan, creative director, Barneys New York: “The first thing we need to do is to get people to New York City. A big part of the deficit is the tourists, and not just from Japan and Brazil, but Atlanta and Boston. The retailers in New York are gutsy and on it and are well prepared to serve customers and give them great merchandise. Our Barneys loyalists were very responsive to Mayor Giuliani’s call to shop. Having the mayor tell people to shop was fantastic. Right now, you need psychological permission to do something self-indulgent.”
Hal J. Upbin, chairman, president and ceo, Kellwood Co.: “I wouldn’t go as far as to say there is no cure for today’s ailing retail and apparel economy — but as an industry, we are still looking for one. With the terrorism scenario layered on top of stagnant apparel sales and the economic pressures of the recession, I believe it will be holiday 2002 before we see an upturn in apparel. Consumer confidence will be the deciding factor. We can have the greatest fashion offerings in the world — but if the consumer’s mood is depressed, she is not going to buy.”
Phillip Bloch, celebrity stylist: “I heard about an employer in the [San Fernando] valley who gave each employee a $100 bonus to go out and spend in the community, not save. And I think that’s a great story because you can’t let yourself get down. You need to be part of the cure and not the cause.”
Beth Pritchard, chief executive officer, Bath & Body Works: “This season, more so than any other, we will look to delight the consumer. BBW is beefing up its product offerings, rather than cutting back, with two new collections in November — aromatherapy and spa lines — plus two holiday gift sets.”
Nancy Pfotenhauer, president of the Independent Women’s Forum and an economist: “We need a component that says, ‘Damn it, they’re not going to get us off our game. We’re going to thrive and prosper, and protect our shores and our freedom.’ It almost can’t be said enough. People need to know if they stay at home and don’t believe in the future, it will become a self-fulfilling prophecy.”
Cristyne L. Nicholas, president and ceo, NYC & Co.: “Shop by example. We’re doing this as much as we can. Celebrities and well-known folks should be shopping as much as they can to set the tone. [Also], it’s marketing, it’s advertising, it’s making sure that everyone knows that New York is open for business and remains the greatest shopping destination in the world.”
Michael Crooke, ceo, Patagonia: “It will take stability in the world economy and global events to restore consumer confidence. In difficult economic times, consumers look for quality. They’re not going to be spending as much, so when they do choose to purchase something, they want it to last a long time.”
Charles Gargano, chairman, Empire State Development Corp.: “We are doing more than helping retailers get back on their feet. We are helping them to reach out to customers and potential customers, and we are letting them know New York is open and ready for their business. That’s why Gov. [George] Pataki has announced an unprecedented $40 million ‘I Love New York’ advertising campaign to let people across the country know that we are rebounding and that New Yorkers are ready to welcome them.”
Donny Deutsch, chairman and ceo of Deutsch Inc.: “People need to be jolted. You need to give them incredible deals [on big-ticket items]. History has shown in the car business, when there were safety issues, and you give them $5,000 off a car, cars sell. People are saying, ‘I’m not flying,’ but if they see a great deal, they’ll go. It’s a behavior prod. New York should have a one-day sale, with no sales taxes. For small, inexpensive indulgent purchases like cosmetics, people should tout the easy, small simple pleasures. People want to feel good for not a lot of money.”
Jeffry Aronsson, president and ceo, Oscar de la Renta: “What we have to do is focus on what we love to do: compelling product with superlative service. The service supports the product, which is born out of the passion and care of what we do. It’s like a patchwork — if everyone does their thing, it will work.”
Bud Konheim, president and ceo, Nicole Miller: “You have to get people feeling good about feeling good. We need to have people in the streets and having fun and going back to what we’ve been doing all along. It’s tough, but it would be helpful for everyone to understand that it’s an atmosphere we have to create.”
Larry Hansel, ceo Rampage Clothing Co.: “I think people do want to come back to the stores. Product has to be better priced or more special or in shorter supply.”
Norm Campo, owner of Champlain Clothing Co., in Burlington, Vt.: “We’re doing what we do anyway: running sales, merchandising, constantly changing our windows. We’ve got a store of fresh goods — probably more than we’d like at this point. We definitely noticed an upswing in business the day after President Bush’s speech. I think it was because of a ‘Do what you do to support the local economy’ kind of thinking. People seem to be interested in supporting the economy and local businesses now. They like the idea that their money is not going to some big, faceless chain that’s corporately owned. People are asking more and more if it’s made in America. We had a live jazz band in the store last week, which is something we’ve never done before.”
Shaheen Sadeghi, ceo and founder The Lab Anti Mall and The Camp alternative retail developments: “As for short- term Band-Aid solutions…any customer bringing in a current airline ticket could get a discount off their purchase. This would help both industries. Consumers could bring old clothes to stores and trade in to get a 50 percent discount on new purchases. The old items could be sent to Afghanistan.”
Ron Robinson, owner, Apothia at Fred Segal Melrose: “Our staff needs to have a bright and shiny face, a happy face with a lot of knowledge and a great deal of customer service, if for nothing else than to give the customer a spot of pleasure in the day. They’ll come back for that again and again.”
Michael Horowitz, president and ceo, Judith Jack: “I think the media can help restore confidence. Much of the media has focused on negative situations — not only the economic outlook, but risks involved and people’s fears. None of us will ever be the same again, but we need to go on with our lives. Retailers who are stocking merchandise and going after the business are getting the business. Our company is going to spend all the money we have budgeted for fall on advertising, and we are going to hold all of the in-store events we have planned.”
John Parros, president and chief operating officer, Bebe Stores Inc.:”We’re calling clients to invite them to different events [like] trunk shows in all the stores to stimulate that excitement. We’re also holding a couple of big charity events. I think you have to take a positive, active approach to try to support both the community and the desires of the customer.”
Candy Udell, co-president of four-store chain London Jewelers: “We need to let people know that shopping domestically is a good alternative to spending on vacations and travel plans and that they can help support the economy by shopping here. We have started offering some designer flag pins with proceeds going to the Twin Towers Fund, and those are selling well because everyone wants to do their part.”
Michael Bloomberg, Republican mayoral candidate: “Delivering essential city services that encourage consumers to patronize the city’s stores and small businesses, as well as creating lower taxes that will make New York City inviting to small businesses.”
Mark Green, Democratic mayoral candidate (via a spokesman): “It’s important to keep the focus on safety and security [as well as] on rebuilding the city and encouraging New Yorkers and people outside of the city to get back to normalcy and take part in the great tradition of shopping in New York.”
Billy Windham, sales rep for J.Lo by Jennifer Lopez: “I think we need shopping therapy. All those people who’ve been shocked need to get out and dress sexy. We need the sex appeal to get our confidence back.” Roger Chastain, president, Mount Vernon Mills: “I think there is a lot of patriotism right now, so if I were a store, I would display the products that were made in America.”
Jane Rinsler Buckingham, president of trend-tracking firm Youth Intelligence: “Young people are probably wanting to go back into the stores. They more than anyone are wondering when they will be allowed. They feel guilty…There needs to be something to let them know it’s OK to have fun and go shopping. With a lot of people now it needs to be added value, not deep discounts but maybe buy-one-get-one-free, a makeover, or something fun. There is something appealing in looking good and feeling good. Also, I think some sort of public-service aspect is important for stores. People want to see national campaigns as well as local campaigns. It might be that part of the percentage of sales goes to New York, and maybe part goes to local firefighters.”
Renee Zellwegger, actress: “It’s certainly not a time for pontificating solutions. It’s about trying to understand — and I think most people understand that keeping the economy going right now is really, really important. I don’t think it’s necessarily something that needs to be manipulated by the stores. People understand the importance of continuing to contribute. But the change of season — it’s gonna get cold! Everyone will need some mittens, a new hat, a dress. Your husband will ask you out some place and you’ll need to have fun — look pretty — get a new pair of shoes. It’s not something that needs to be manipulated. The holidays are coming. And more than ever, we’re going to embrace the good times — and make sure to pay more attention to them this year.
Erica Jong, writer: “We need to go back to World War II. People didn’t become uninterested in fashion then, they became more somber and practical with square shoulders and boxy cuts. I can see that happening again. The whole ‘Sex and the City’ look will be incredibly frivolous. If shops mirror the new mood, people will return. They might want to buy classics and investment clothes. We consume in this country. That’s what we do. Shopping is our spiritual discipline, but now it will be for less frivolous things.”
Lou Holtz, University of South Carolina head football coach: “I believe you’ll see people getting back in the stores when people start having confidence in themselves again. As long as they worry about their security, their safety and their future, that will not happen.”
Michael Silver, president, Silver Jeans: “There are two ways going: Either discounting in a big way and trying to stimulate traffic on lower prices or trying to really turn the world upside-down in terms of new fashion looks. I think both can be effective.”
Neal Grover, president, The Forstmann Co.: “I think it should start with the travel industry. If tourists come back to Manhattan, then everything will follow.”
Patrick Chan, manager of fashion services, Hong Kong Trade Development Council: “First, we need peace. After that, the approach and marketing strategy need to be more personal, friendly and consumer-oriented. Making the consumers feel pampered, along with functional, down-to-earth merchandise in stores will help.”
Darren Chen, vice president, Asia region, Tiffany & Co.: “Customers will continue to spend on items that they believe will provide long-term value, items they can use for several seasons or perhaps years, or whether it means items that will retain their value. Price is less of an issue than value.”
Joanne Ooi, ceo and founder, Style Trek, Hong Kong: “Americans are feeling very patriotic — eventually they’ll be buying American designers and Made-in-the-U.S. products.”
Evan Greenberg, ceo, Allscope Media, a planning and buying company: “A combination of aggressive retail pricing and promotion, some discounting, up-selling, promotions, premiums, gift with purchase, retail offers and special financing deals will be necessary. Everyone is just going to have to get more promotional. In any down economy, promotion just becomes much more important.”
David Lamer, equity analyst at Ferris, Baker Watts: “Department stores seem to be getting ready to pull the markdown trigger, which is the worst thing that they can do. Those with proprietary credit cards should provide interest-free shopping through Christmas to spur customers into the stores. Also, department stores should [temporarily] employ the recently unemployed for holiday help and give them discounts to stimulate the economy. Retailers have been criticized for poor customer service, and now there’s no excuse for not being able to get good help.”
Janet Joseph Kloppenburg, analyst, Robertson Stephens: “Time. Time for people to heal, to feel confident. Psychological events in tandem with economic factors. If there were a big war event, like the capture of Osama bin Laden, it would probably get people shopping again and the stock market would probably go up 500 points.”
Marie Menendez, vice president and senior credit officer, Moody’s Investors Service: “It’s important to remember consumer spending patterns had already been pretty flat prior to the World Trade Center tragedy because of the glut of shopping over the past few years and dimming consumer confidence. What it will take to stimulate shopping will differ by sector. For apparel, it will take a compelling fashion message. There is no item people must have today. Also, there is no overall shift, like the trend to casual clothes in the Nineties. When consumers need to replenish their wardrobes or their confidence rises, apparel sales will pick up. Right now, with all the news about job cuts and people’s concerns about a possible military action and their own physical safety, that’s not going to happen.”
Gordon Finkelstein, president of Tocca: “People, especially now, need a ‘pick me up.’ Buying oneself something new has done the trick for years and will continue to do so. It’s not currently about a ‘basic’ or about something over the top. It’s important to offer our consumers something special and of great value.
“In the wake of recent events and the ongoing angst that surrounds us all, vendors and retailers must continue to offer the consumer newness. It would be a huge mistake to take an overly conservative approach.”
Carmen Electra, TV personality: “Celebrities and people who are well known have to encourage everyone to move forward and to go shopping. I don’t really know how a store owner could be capable of that. Maybe, if they could donate a percentage of the proceeds to a cause, or put an American flag in the window….Just be patriotic. Plus, shopping is good therapy. If you’re stressed out about what’s going on in the world, do something about it and go shopping. Buy yourself a new outfit!”
Amy Smilovic, designer/owner, Tibi: “After the tragedy, we dropped three groups from the collection that were pretty, but serious and sophisticated. We decided to focus more on lighthearted, playful and fun items. Retailers have told me that the most important thing for them, right now, is that their customers leave the store in a good mood and I think it is important that they have clothes to reflect that mood. Boutiques I deal with have said they feel business is strong because they have an environment that is small, comfortable and friendly. Customers are looking for a homey-feeling environment in times like this, so I think this is an even greater challenge for department stores.”
Stan Pearlman, president of Impact Creative Group and SUNY professor at New York University’s School for Continuing and Professional Studies: “There was a rash of [patriotic] advertising after the tragedy that was necessary and important, to let people know that companies recognize the situation and support the government. There has to be a very strong incentive to purchase now. It’s immediate action and that’s the name of the game. Retailers have to make bold steps and get creative.”
Britta Steilmann, ceo, The Steilmann Group, Germany: “It’s important to have a strong retail presence, to have products that inspire people to buy fashion, something to make them forget their everyday grief. Basically, we’re trying to change mind-sets. Even if times are really rough, it’s the role of fashion to entertain and amuse people. We have to put a little happy thought into people’s minds, and color and fashion can do that. It’s important to have some beauty, to make people appreciate life again. And that’s the responsibility of fashion.”
Anita Britt, senior vice president of finance and investor relations, Jones Apparel Group: “Continuing to see proactive moves by the government would be a positive, directly from economic stimulus and also action to counteract the terrorist attacks and to instill more safety in the future of citizens within the country. People’s thought processes, right now, are ‘what’s going to be the next event’ and that worries them, too.”
Maria Pesin, vice president of Siena Studio: “What the customer needs now is more of a personal connection with the store. Phone calls contacting customers to see how they are doing and to tell them what is exciting in the stores will do more to connect with them than the traditional methods of advertising and direct mail. Additionally, enticing them by making the shopping experience more fun will go a long way. When customers are depressed as they are now, they need something to take their minds off of current events.
Gen Miyagaki, lecturer, Konan University, Japan: “There is no border between Web stores and real stores. Opening doors for ‘Net users is a must-do. Offering discounts for consumers who print out the Web page and show it when they visit the real shop is primitive, but it works. And what the retailers have to do now is customize [for their clients].”
Richard Tremblay, manager, J. Lindeberg store in SoHo: “As far as SoHo goes, a lot of people from uptown don’t realize they can still go downtown. People need to know SoHo is still happening. Even though it is close to what happened, it’s business as usual here. Last week, we did a tremendous amount of business through phone orders. Around the week of Halloween, we’ll be organizing events for private client discounts, since a lot of them haven’t started buying their fall wardrobes yet. We’ll probably have a champagne party and a deejay, because we’re all friends and we want to create an atmosphere that is more relaxed and about coming together.”
Arun Jain, Samuel P. Capen professor of marketing research and chairman, department of marketing, State University of New York at Buffalo: “People are tired of sitting at home and watching the news. They are overloaded with information and they are looking for reasons to get out of the house. Getting these people inside the stores is half the battle. Once they are there, they can be sucked in to buying things. One thing stores can do is hold in-store events to attract them. Anything patriotic would work, right now, since people are looking for ways to help the cause. Malls can invite high school bands to play patriotic music inside malls. This will bring in families and friends of the children as well as provide free entertainment to shoppers. Stores can have fashion shows with high school students modeling the clothes. Mall food courts can hold food festivals showcasing specific foods from around the world — anything without a greed motive will do. Events centered around the flag, good citizenship and patriotism would work best. If part of the proceeds from sales of items in the stores goes to charity, people will respond. They will want to come out, give money and show patriotism.”
Laura Wenke, vice president of sales and marketing for Lane Crawford (Hong Kong) Ltd.: “We have a mandate of unprecedented promotional in-store events planned over a 60-day period. This flurry of activity was originally intended to push our targets 10 to 15 percent ahead of aggressively planned 2001 targets. To date, the activities have met their goals in more than half of all instances. The balance of events seems to be holding us flat to last year. One thing remains clear: if we had not diligently planned such an intensive schedule, we would most certainly be seeing double-digit dwindles. Since Sept. 11 and for the balance of the year, we have events planned for no fewer than 23 days each month.”
Tsutomu Miura, a manager in women’s wear, Keio Department Store in Shinjuku, Tokyo: “Remodel. After our remodel in February, sales of women’s wear increased 29 percent in March, 42 percent in April and 31 percent in May, compared with the year-ago months. In remodeling, we focused on our strong categories and paid more attention to our old loyal customers rather than finding new consumers.”