PLAYING THE PRICING GAME
Byline: Rosemary Feitelberg
NEW YORK — Markdowns, multipacks and incentive pricing have become the norm in the legwear market, which continues to struggle due to casual dress codes and sluggish sales of sheers, and vendors see no end in sight to the promotional strategy.
In fact, legwear makers feel the tactics have become a vital element in the sales plan and said hosiery departments need to continue to have signage highlighting discounts and special sales, with price swaying shoppers to one brand or another.
“Without promotions, there’s no sale. How else will customers know what you’re selling?” Tony Taylor, creative director of Look From London said. “It’s always been there. It’s gotten more promotional and it will get even more so.”
Molly Mott, vice president of sales for Kayser-Roth Corp., said markdowns are offered regularly for all types of apparel, not just hosiery.
“That’s the whole direction department stores have taken in relation to the slowdown in the business and competition from Target, Kohl’s and other mass stores,” she said. “The only way for department stores to keep customers coming back is to attack with prices.”
That strategy does not work on a long-term basis, Mott said, since shoppers are also interested in innovation and newness.
“As a manufacturer, we need to understand the price sensitivity of consumers and give the stores newness,” she said.
Otherwise, stores will continue to be stuck in this promotional cycle without any way to back out of it.
“They’re not selling more dollars, they’re selling more units,” Mott said. “That hasn’t been the answer to growing the business — maybe staving off the decline.”
Jordan Lipson, president and chief executive officer of American Essentials, said stores are not addressing items since they are so focused on price.
There are still customers in the market who shop for great, new items and fiber content, he said. Nordstrom and Dayton Hudson recognize that and focus on fashion-oriented items to avoid markdowns, Lipson said.
“Socks will never replace the kind of turn stores had with the sheer business,” he said. “Women don’t wear socks once, rip them and throw them in the garbage. To get the average margins up, retailers have got to go after the item business.”
Tracy Crenshaw, vice president of sales and marketing at Crescent Hosiery, the maker of licensed Columbia socks, said Crescent is focusing on better goods made of such performance-oriented fibers as Outlast and Teflon. As a domestic supplier, Crescent, based in Niota, Tenn., can’t compete with the heavy promotional pricing in the market, she said.
“The market is polarizing. There’s the price competitors and the better end, which is growing,” Crenshaw said. “We’re focusing on better goods that bring value to the product.”
Despite the prevalence of promotions, Sid Smith, president and ceo of The Hosiery Association, said the situation is improving.
Markdowns on legwear have decreased in recent years, according to research by the NPD Group, a Port Washington, N.Y.-based market research firm, he said. Last year discounted merchandise accounted for 33.3 percent of all legwear sales, compared to 34.9 percent in 1998.
In terms of categories, discounted socks comprised 34.5 percent of all socks sales, a slight decline compared to 35.3 percent in 1998. Discounted sheers made up 31.1 percent — a few percentage points lower compared to 1998.
“These numbers indicate there has been some tightening of the belt. As long as margins are being squeezed, concessions are being made in other ways,” Smith said. “We can’t keep giving it away in promotions. Companies are working in tandem and tightening the belt in the promotional layer.”
Russ Klein, president of Tommy Hilfiger Legwear, said that he would prefer to see the market sustain or increase sales with innovative products and creative merchandising instead of being driven solely by price.
“As a result of that not happening, price has become an issue. There’s a bit of a gas war as to who can be the most promotional,” Klein said. “That undermines the stability of the market. When everything is too price driven, it becomes a self-fulfilling prophecy and something has to come out of production to support it for all concerned.”
Consumers should be encouraged to examine a product for its trends, quality and legitimate value — not its price, Klein said.
“Shopping for legwear should be about getting an accessory with the best look, durability and comfort that’s fit for you,” he said.
Robert Sussman, president of ETC Hosiery, said promotions used to be to clear out old merchandise, but now are implemented to clear out regular-priced merchandise because prices are so inflated.
“People have to promote because the business is so soft,” he said. “Stores are bringing prices down to where they need to be for them to have real margins rather than the inflated prices they used to be.”
Sussman said the legwear market has become so promotional that off-price retailers like TJ Maxx and Ross Stores are worried that department stores are becoming as promotional as them. He pointed to Steinmart, a Jacksonville, Fla.-based chain with 265 units, as an example of how a retailer can offer everyday value pricing to avoid markdowns.
Taylor of Look From London said consumers have become so accustomed to shop for discounts that they won’t notice a product unless it’s marked down. Promotions help shoppers to take a closer look at merchandise to see their benefits.
In one sense, today’s promotional market has been good for consumers who wind up being more well-informed about merchandise than they might otherwise be, he said.
“Unless they have some sort of advance warning, people will walk right by your product,” Taylor said.
Wayne Lederman, president of Leg Resource, also supported promotions as a strategy.
“It’s a very challenging time for the apparel industry in general,” he said. “It’s important for retailers to be promotional to keep their inventories fresh. When times are tough, it’s important to keep moving inventory.”
Lederman said in some ways the industry is not promotional enough, since some retailers display the same merchandise for months instead of marking it down to make room for new goods.
“The worst thing stores can do is to have inventory that is not meeting the market’s needs,” he said.
Pat McNellis, president of Nine West Legwear, which is licensed to Royce Hosiery, said two major sales events annually should be enough to reward shoppers for their brand loyalty.
“Beyond that, most brands should not be promoting a lot,” she said. “The market condition in sheers has led retailers to want to drive a little new business with continued promotions.”
To avoid sales, Nine West offers everyday value prices such as three pairs of sheers for $18 or three pairs of trouser socks for $15.
Sales of casual legwear have been so strong that only one promotional event is needed annually, McNellis said.
“Otherwise, we’re at risk of doing what we’ve done on the sheer side, which is to let customers know there is no strategy,” she said.
Karen Bell, president and ceo of K. Bell, doesn’t think the market is too promotional, since it creates competition and interest in legwear.
“It generates enthusiasm in the department and brings in multiple sales, which can work in our favor,” she said. “If the merchandise is promoted in a specific area, people will buy it.”
While there “definitely” are a lot of markdowns offered, that’s what the market will bear, Bell said.
“The sock business has been very good,” she added. “That’s the one thing that drives the business.”
Mitch Brown, president of Doris Legwear, said he doesn’t think markdowns on socks or sheers have been much of an issue lately. Stores seem to be focused on trying to build sales of regular-priced merchandise, he said.
“There’s been enough newness with the brands,” Brown said. “Retailers that are going to make their sales projections are trying to keep their margin numbers.”