Large publicly traded retailers weren’t the only ones clobbered by the tough fall and holiday season. Independent specialty stores also felt the impact of the recession and consumers’ reluctance to spend. The difference is that smaller merchants don’t have the large-store luxury of receiving markdown money from vendors. And so now, when the bills come due, many face another hurdle — how to pay for goods that didn’t sell while pondering their shopping lists for next fall.
That’s the backdrop for many retailers heading to New York for market. Although most stores surveyed by WWDWWDWWD are still planning to make the trip to shop The Collective, Blue, Project and the men’s wear showrooms, they’re significantly cutting back on their open-to-buys for the season, some by as much as 50 percent.
As Ellen Levy, co-owner of Levy’s in Nashville, put it: “Everything has to be cut back, but I’m not worried. There’s no shortage of inventory.”
Nevertheless, retailers realize that, to get customers into stores, they need to find fresh, exciting merchandise to whet their appetites. Although this quest is nothing new, it’s even more important this year since the same tried-and-true basics are not enough to lure shoppers living in the worst economic downturn in a generation.
David Rubenstein of Rubenstein’s in New Orleans said he’s planning to shop the New York market, although he won’t be staying as long as he has in the past.
“But we’ll be there,” he said. “We’ve still got to buy things.”
In Rubenstein’s case, that buying will be scaled back this season. “Our open-to-buy is about 50 percent of what it was last year,” he said. “And we are not adding any resources until we get a better feel for spring.”
In New York, he will be filling holes in his tailored clothing inventory, he said, and looking at sportswear. But for the latter, he’s waiting to see if business turns around in March or April before adding a lot of inventory. He plans go back into the market to freshen the store before Father’s Day.
“We will play it conservatively,” he said.
Rubenstein also plans to trim the dollars spent on luxury-level goods. “Medium-price sold well, but luxury is taking the biggest hit,” he said. He pointed to the more-moderately priced Jack Victor as an example of a suit vendor that has connected with customers. The same holds true for other categories. In furnishings, shirts retailing for $150 to $200 are outperforming those in the $300-to-$400 range. And so, the former will be on his abbreviated shopping list next week.
“With sweaters and jackets, if we sell through, we’ll fill in,” he said.
Still, Rubenstein added he believes “business will level off” soon. “I don’t think it will go down from here,” he said.
Rubenstein, like many other specialty stores, said the tough economic climate is forcing him to turn his focus back to the basics of retailing. “It’s like starting over again, like it’s our first day in business,” he said. “Before, life was easy and we didn’t have to make the tough decisions, but then the bell rang. Now, we really have to look at our overhead. But that’s how people got started.”
Ken Giddon, president of Rothmans in New York City, agreed. “Many of us confused brains with a bull market,” he said. “Now we have to think about expenses, our vendor structure and our personnel costs.”
Christmas sales were “very bad,” he admitted, “and it’s tough to do 2004 revenues with 2008 expenses. But the challenge going ahead is to remain upbeat and really become businessmen and women again. It’s intimidating to be forced to deal with it, but it’s also invigorating.”
For those companies whose balance sheets have remained strong, there are possibilities that will pay dividends after the recession ends. “This is this generation’s opportunity to acquire assets in a distressed environment, and will probably only happen once in our lifetimes. There’s going to be a lot of real estate available, and if an opportunity came along, we would consider [opening another store],” Giddon said. “We’re strong, we have no debt and we’ll be looking. But right now, the consumer is still on strike.”
As a result, his visit to vendors this month will morph into something other than a buying trip. “We’re excited about going to market,” he said. “We want to see who our friends are. We’ve been a good customer for many years and we’re going to see who’s really our partner. When wholesalers say they feel our pain, I wonder if they do. We’re paying them full price and marking things down 50 percent. That doesn’t seem like a partnership to me.”
Giddon said he’ll be “looking for a level playing field. If department stores are getting markdown money, I want it too. We pay with the same money they do.”
He plans to attend The Collective and Project, but without preconceived notions of what he needs to buy. “We’ll be thinking outside the box in all categories,” he said. “I’m going to market with more of an open mind than I ever have. I’m going under the assumption that things will get better and I’ll be looking at the lines with the best chance of making me money. And I’m going to avoid anything that is 80 percent off at Saks.”
Hill Stockton, owner of Norman Stockton in Winston-Salem, N.C., also acknowledged “Christmas wasn’t really very good.”
And like Giddon, he’s not making a shopping list for his trip to New York this time. “It’s more about picking people’s brains,” he said. “I don’t know the answers, and I want to talk to other guys about what they’re thinking and how they’re buying.”
For Stockton, it’s not merchandise — exciting or basic — that will draw shoppers into stores during this recession. “We have to figure out how to get them in the door,” he said. “It’s probably more about marketing than anything else. If it looks good and is marketed well, then it will get people in.”
But he also recognizes his stores have to be inviting. “You have to look like you’re in business and keep an upbeat attitude.” He plans to spend about 30 percent less than in the past, he said, and will be wary of investing too much in luxury goods. “I’ll be looking forward to seeing what’s new, but also having conversations. I want to talk to people doing things a little differently.”
Dick Hite, owner of Norton Ditto in Houston, plans to open a store in the Woodlands in March and will skip the New York market himself. However, his buying team is making the trip.
And although business is far from robust, sales aren’t as bad as others have experienced, Hite reported. “Through October, we were down only 4 percent for the year, but November was very bad. December was fair — we didn’t match last year, but we had a good month. The good news is that our inventories are clean and we did our normal markdowns — nothing extraordinary.”
At The Collective, his buyers will be seeking “something to take the place of the long-sleeve sport shirt,” he said. “We’re looking for a unique, dressy knit presentation, something totally new and different.” In the Seventies, he recalled, there were “very dressy knits with different buttons and different fabrics and we keep thinking somebody can adapt that for today.”
The store’s sportswear buyer will also attend Project in hopes of finding merchandise that can generate excitement. “I don’t think people will buy unless they get excited,” he said. “And it’s our job to romance it.”
Levy said her store will spend one day at The Collective and will also visit several tailored clothing and collections showrooms while in New York. She intends to hold back on buying furnishings and sportswear until the MAGIC show in February in Las Vegas.
“We’re doing okay, but these are challenging times,” she said. “You have to be optimistic, but you also have to be cautious.” At market, she said she would be “looking for interesting things to stimulate the customer. We have to have basics, but we’re also looking for something exciting.”
Case in point: She said Levy’s added Scott Kay men’s jewelry for fall and customers responded strongly. “It’s new, it’s different and it created excitement.”
It’s also made in America, which resonates with customers these days. In fact, Levy’s hosted a Made in America week in its store last spring and will repeat it in May — anything to give customers a reason to stop in.
Sam Malouf of Malouf’s in Burlingame, Calif., said that, despite the recession, “What we are looking for hasn’t changed. We continue to look for great pieces — unique, well designed and in a particular fit. I still think fit is key. It’s what is exciting the customer. When he puts on a jacket, sweater, pant, knit or shirt, it’s one of the key selling points. It gives him a modern look that makes him feel more fit or in shape.” Malouf said that modern silhouettes have been a bright spot for the business and he’s seeking updates in all brands, ranging from Brioni and Etro to Paul Smith and Robert Talbott. “We carry the same point of view in traditional as we do modern and contemporary lines,” he said, noting it helps “move our customer forward.”
“Some people are talking about getting back to basics, but I don’t think there is anything inspirational about buying basics. It is still going to take great product to excite the customer. In men’s wear, it is all in the details.”
Although modern looks are doing well, Malouf said the store has experienced a “slowdown in all classifications,” and so will be “cautious and even more thoughtful” when shopping this season. We have always picked the cream, but now it is going to be tough because instead of buying five great pieces, we are going to have to buy three. We don’t plan on adding any new resources without taking out a resource.”
He will also seek to add more moderately priced merchandise to appeal to a customer who has cut back on buying. “The perception of being high priced hurts us as much as it helps us,” he said. “So far I have not seen many customers [trade] down in quality, but they have bought less or have not bought at all and are making do with what they own. I think when they are ready to spend again they will buy in their same quality level but a bit less.”