FINDING THE RIGHT POINT OF VIEW
Byline: Jennifer Weitzman
NEW YORK — Trying to appease the fashion senses of today’s fickle teenager is oftentimes a hit or miss proposition.
But for a handful of retailers catering to them, hitting a merchandise home run is akin to the Yankees playing baseball in October — it comes to be expected.
Retailers like Limited Express, Pacific Sunwear of California and Abercrombie & Fitch have become staples of today’s youth because they offer a point of view, analysts who follow these store chains said.
With teen shoppers having more disposable income and time than previous generations, they can afford the luxury of perusing the malls to make more choices. After all, fashion to them is of prime importance and helps to form their personal identification.
So exactly how do some retailers manage to appear more often in teen’s closets season after season?
Those who follow the teen market said retailers need to target the needs and wants of its core customer base efficiently and consistently in order to capture the imagination and apparel dollars of teenagers. Some retail analysts pointed to companies like Hot Topic’s and Abercrombie’s ability to properly identify their niche audience and offer up merchandise that suits their specific tastes. Still, others industry insiders look at Express’s ability to offer fresh merchandise and quickly rebound from any fashion misses.
Richard Jaffe with PaineWebber said Express is “the hottest thing since sliced bread. They keep coming back.”
Specifically, he said Express’s merchandising vision has a clear sense of its customer and then processes and executes this vision consistently, intelligently and effectively. So much so, that when Express is wrong with fashion, it can still make money by switching directions in midstream each week, he said.
Still, the road has not always been smooth for Express, which now operates about 670 stores. While the company had enjoyed exceptional operating margins in the late 1980s through 1992, it was barely profitable by 1997. The company recovered modestly in 1998 and has been profitable the last two years.
Express enjoyed a 19 percent increase in comp sales this September, from 2 percent a year ago, reflecting its current popularity.
Pamela Seidman, a spokeswoman for Express, said the company’s move in August 1997 to an in-house design studio based in New York was a major factor for the firm’s recent success. Pointing to the 51 person in-house design team, up from six, Seidman said Express is better able to quickly turn out fashion-forward products that appeal to its customer base.
With celebrities on TV and on concert stages baring it all, Express has turned away from basics and is turning out trends today’s young women want: a sexier and feminine look. Top sellers are novelty items such as a tie-front blouse, dirty denim jeans, knit tops like chunky sweaters and a fitted cable-knit sweater available in eight colors, according to Seidman.
But having the right fashion is not the only key ingredient for those retailers who have been churning out strong results with the teen market.
Kelly Armstrong with First Union Securities said her top picks — Pacific Sunwear and Abercrombie — are successful companies because they identify with only a subset of teens.
To further appeal to its customer, who enjoys extreme sports like skateboarding, surfing and bike racing, Pacific Sunwear sponsors the X-Games, a huge skateboarding and motocross biking event held in San Francisco, where brands like O’Neill, Quiksilver and Billabong take center stage. In addition, PacSun, which now operates 560 stores, offers lines with celebrity extreme sports stars like Tony Hawk to further appeal to its customers.
Timothy Harmon, president and chief merchandising officer with the Pomona, Calif.-based company, said it has the right combination of the right brands with the right style from them, as well as using its own in-house design team to expand on key fashion trends.
“We dominate (the lifestyle) category better than other branded retailers that carry similar products,” Harmon said.
Same-store sales at Pacific Sunwear are improving. In September, the retailer posted a same-store sales gain of 10.7 percent, up from negative numbers in August and July. Top sellers were snowboard-inspired outerwear, clean chest-striped sweaters and basic and fashion denim, as well as accessories and footwear.
Going to the other extreme, Abercrombie, the operator of 325 stores, has also catered to the needs of its targeted customer by offering a “prep school look” and it has followed up with in-store marketing efforts to instill that image.
“By using the imagery of college kids playing rugby and focusing on its niche base and not appealing to each teenager, the company developed customer loyalty,” Armstrong said.
Although Abercrombie has had problems in the past, including not enough freshness in styling and color, as well as too narrow a look/feel in the product line, Deutsche Banc Alex.Brown’s Marcia Aaron, noted that management appears to have recognized the problems and is addressing them. So far, the fall assortment is paying off for the retailer. While its comps are still negative, they are slowly improving. September 2000 same-store sales were down 2 percent, from 3 percent in August and July, and 4 percent in June.