TAKING THE REINS
TO MEET OR BEAT LAST YEAR’S HOLIDAY HEIGHTS, MERCHANTS WILL BE GUIDING THE SLEIGH THEMSELVES.
Byline: David Moin / With contributions by Janet Ozzard
NEW YORK — Turn back the hands of time? If only retailers could.
Last year, millennium-related products and categories were a sure thing and drove holiday sales. This year, retailers are on less firm footing, going with gut feelings that such categories as leathers, gold-colored accessories, handbags, eveningwear, formalwear, gift areas like tabletop, and sweaters will be strong.
But with offerings from apparel vendors generally regarded as disappointing, retailers are pressured to be as creative as they’ve ever been in digging up hot items. Based on interviews with top executives across retail sectors, the fourth quarter is expected to be bigger than ever for promoting private label.
They’re also hoping that some leftover festiveness will carry holiday ’99’s winning categories forward. Some retailers, including Federated Department Stores, are even counting on dresses, a long-depressed category, but one that a few feel could bounce back. Bloomingdale’s even has a new handle on a classification its merchants think will be popular: “party pants” to go out in, culled from a variety of designers. Express, one of the nation’s hottest chains currently, is banking on more fitted, sexy goods, versus last year’s trend toward “sweet glamour,” e.g., taffeta ballgown skirts.
Retailers should benefit by the two extra days to the holiday shopping season, with Christmas Day falling on a Monday, compared with Saturday last year. It’s hoped that the Saturday before the holiday will generate huge volume, helped by the fact that it’s a presidential election year, which usually lifts business.
Retailers also expect a repeat of last decade’s persistent trend to last-minute shopping. Frenzied price promoting is a given, and much more of it will be blasted over the Internet. The Internet is fast becoming a consumer tool for learning about apparel offerings and deals, but there’s still only a small amount of apparel transactions on the Web.
For a host of reasons, more so than in any recent holiday season, retailers are being pressed to find the right stuff to spur shopping. And last week, retailers acknowledged that the planning for the fourth quarter and Christmas 2000 has been trickier than expected. It’s been compounded by consumer spending slowing in the past two months and little fashion newness in the pipelines to perk up the pace.
“We are beginning to see the consumer reacting to the interest rate increases and gas hikes and other changes,” said Terry Lundgren, president of Federated Department Stores. “It’s causing them to think twice about purchases.” So is the lack of fashion newness.
“We’ve not had the same opportunity in the fashion cycle that we had last spring and last year,” Lundgren explained. “Last year, the customer did not have capri pants or stretch tops or stretch pants to a significant degree. It was relatively new to the wardrobe.”
“Newness and innovation is the key,” said Debbie Mitchell, manager of investor relations, Intimate Brands Inc. “We will continue to have new products or relaunches at Victoria’s Secret every month right through the fourth quarter.”
“As merchants, we have always been accountable for finding the right products. If it is not out there, we’ve got to create it,” asserted Darlene Daggett, executive vice president of merchandising, sales and product planning for QVC. She said the company has been accelerating its own exclusive assortments, with such designers as Louis Dell’Olio, and its Cedar Canyon private collection in ready-to-wear and jewelry.
Department stores and other broadline retailers are reportedly expecting conservative comp-store gains of 3 or 4 percent for the fourth quarter, while luxury retailers are seen doing a couple of points better. So are the handful of consistently strong retailers, such as Wal-Mart, Tiffany’s and Kohl’s, as well as Intimate Brands Inc., operator of Victoria’s Secret and Bath & Body Works, where street estimates call for comp-store gains of 6 to 8 percent for the fourth quarter.
Currently, retailers are in the summer clearance mode and are fine-tuning the mix for the rest of the year. While general fashion stories are set for fall and holiday, it’s not too late to emphasize or de-emphasize certain looks and items with modified ordering.
As for tweaking the mix, Lundgren said, “In most cases, we are getting more aggressive in key items and key gifts. With certain items, you just feel in your stomach that they are going to be home runs. We will take a stand on what we believe in.”
“There’s no real excitement in the ready-to-wear business, but we’re up and we feel good about the opportunities we have,” said Michael Gould, chairman and chief executive officer of Federated’s Bloomingdale’s division. “We’re optimistic Christmas will be better than last year.” Still, he added, “You look around and see the real estate market is strong, the stock market is still strong, even with its ups and downs, and you think that business should be better.”
Bloomingdale’s merchants see opportunities in merino wool and cashmere sweaters; leather; decorative home, particularly tabletop and housewares; fashion accessories; women’s shoes and fashion jewelry; party pants, and the ongoing Bloomingdale’s “Only At” campaign featuring private label or exclusive goods. They also see a shift in jewelry to bolder styles; and the color gold becoming much more important in several categories, including jewelry and pants.
Saks Fifth Avenue’s chief executive Christina Johnson, said, “One of the things that helped the millennium business was a resurgence to formalwear, evening, accessories footwear and fine jewelry. These are still very strong businesses for Saks. Their rate of increase has not declined. They’re all running in double digits.
“We anticipate the consumer will continue to spend in those areas,” Johnson said. Recognizing that the casual trend is still building, Saks customers are still “very interested in dressing up for special occasions and evenings,” for men and women in designer and bridge areas, formalwear included. Underscoring the store’s direction, Johnson noted that the chain recently launched an exclusive Badgley Mischka separates program at the flagship here and at 10 other stores, and will roll it out further. It’s a group of evening jackets, underpinnings and skirtings.
In addition, gift inventories and pre-wrap inventories are being intensified in tabletop, china, crystal and frames.
“Our plans are well set,” Johnson stated. “Luxury still has significant opportunities, there’s tremendous newness of fashion for the luxury sector for fall. The entire dressed-up, more polished look for designers is wonderful for Saks.”
At Henri Bendel, Ed Burstell, vice president and general manager, said, “The most exciting thing is the rebirth of the home department. We’ve been out of that business for almost two years.” Burstell said the revived department will open in early October with a full range of glassware, tabletop and linens.
Also, the store is looking to anniversary some businesses that took off last year fueled by millennium fever, although Bendel’s didn’t buy too heavily into millennium-linked merchandise. Some categories that were hot last year will have to be rejiggered to make their numbers this year.
“Ballskirts were a very big business for us, and we are looking at how to anniversary that,” he said. “The same for pashmina — that business is dead, basically.” Bendel’s has bought heavily into embellished scarves and wraps, and blouses are expected to be good.
“Everyone will want one. But the item of the season might be a fur collar,” he said, referring to the tie-on fur scarves first shown at Prada’s fall 2000 runway show.
“As fashion calms down, women are still going to want to be dramatic, but less embellished,” he said. “I think we’ll see less embroidery, fewer embellishments and more luxury.”
Target stores, known for their fashion approach to mass-market apparel, are also focusing on leather separates, handkerchief print skirts and shirts and stylish denim pieces for fall and holiday selling. The retailer, which did a trend presentation for the media in New York earlier this month, also picked up on western motifs and animal prints.
Tiffany’s won’t be altering its strategy much, having experienced strength this year across merchandise lines and the U.S. As Mark Aaron, vice president of investor relations, said, “We are certainly optimistic about holiday, unless there is some dramatic change in the macro picture.”
Diamond jewelry will continue to be important, though gold, platinum and sterling silver are very popular, Aaron added. He noted that if the economy dramatically slows or the stock market were to plummet, it would effect every retailer to some degree. Tiffany’s would be less effected since it is occasion- and gift-oriented, though consumers might spend less per item at Tiffany’s, he acknowledged.
“We planned our business to achieve low-double-digit comps, or high-single-digit comps in the fourth quarter,” Aaron said, meaning anywhere from 7 to 12 percent. It is going up against last year’s 26 percent U.S. store comps.
Federated’s business lately has not been as even across the country. Lundgren said the strengthening West Coast sector had exceeded expectations, but the East Coast was weak, except for Florida.
Going into fall, Lundgren said, presents “an opportunity to focus on newness.” That will be coming from dresses, blouses, career merchandise, social occasion dressing and leather pieces, also naming boots, handbags and cosmetics and fragrances as doing well.
He also cited “a total store focus on being a gift headquarters.”
“We’ll have gifts for everyone on your shopping list,” with an emphasis on items in the $20-to-$100 range in all categories, he said.
In dresses, Lundgren said Federated is aiming to “stop the bleeding” and sees business flat or slightly ahead in the fourth quarter. “There is an opportunity to capitalize on the return of the little black dress in five or six silhouettes that we simply missed last year.”
Lundgren also sees a return to career dressing, and said leather was a category that was good during the last fourth quarter. “We simply didn’t have enough of it; it sold out.” Suedes, and pashminas at lower prices, could be big again, according to Lundgren.
Federated’s stronger focus on career will be reflected in wider distribution of the year-old private label Alfani women’s collection, from 110 stores this spring to 150 in the fall, as well as bigger buys on Jones New York, among other vendors.
QVC’s Daggett said the company has “a really good feeling” about the fourth quarter. “There’s strong momentum behind us,” she said, with apparel, cosmetics and accessories in high teens for the first half.
For the fourth quarter, QVC will emphasize novelty sweaters, chunky knits and Irish imports, which “proportionally looks great over a slimmer silhouette on the bottom.” Oversized wraps, lower-priced pashmina products, stretch, leather and suedes, particularly pierced or perforated, and New Zealand lamb will be important. QVC expects to sell 25,000 units of a New Zealand lamb leather jacket, priced under $120, in one day.