The Big Picture:
Consumer confidence waned in June, dropping to its lowest level since August of last year, according to The Conference Boards consumer confidence index. The drop was attributed to a perceived weakening in the U.S. economy.
Despite this report, specialty retailers are faring well. Early fall merchandise has already landed and we expect early sales to mimic last year's success.
Summer may havejust begun, but major retailers are already on their second round of summer markdowns. Fall collections and high-priced specialty items are filling theirfloors, offering more margin opportunities. Specialty retailers should accelerate their markdown schedule to stay in line with the majors. To do this,you should be landing more new merchandise early. Fashion customers are ready to make fresh buys and old inventory just wont do.
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These on demand consumers are actually instigating a new Buy Now, Wear Now retail cycle. They continually want new merchandise and its up to the retailers to give it to them. Vendors are geared up for this cycle because it ultimately means more business.
To move in this direction, retailers should break their year down into 60-day periods in which youre buying and flowing in new merchandise. Everyone is facing an on demandbusiness model and its important to start the transition now.
As fall goods arrive, we expect to see a continued emphasis on dresses and a pickup in the Skirt Suit (Skirt/Jacket) business. Although dresses were the most important trend of SP07, we expect women to look to skirts in SP08 because of their mix-and-match capabilities.
In the mens market, alternative, loose jackets continue to be a driving force. With them,we expect to see more casual tops and bottoms. Most men now have a closet full of denim (five pocket) and deconstructed jackets and future buys will have to complement this casual base.
The ability to produce profitable margin is directlytied to the amount of margin built into your inventory. In the Buy Now, Wear Now world, you need new, full-priced merchandise at all times, including saleperiods.
Luxury Apparel - July 2007
The Big Picture:
The U.S. economy rebounded in the second quarter, posting GDP growth of 3.4%, thanks to the strength of exports and a lower unemployment rate. This was a substantial gain from the 0.6% rise recorded for January through March.
Better retailers are benefitting from the economic acceleration. Sales of early fall merchandise are strong so far, particularly in the luxury category.
As weve mentioned before, landing early fall deliveries is key to making it through the dog days of summer. Retailers who planned an early season are now reaping the rewards. Blacks is seeing big ticket collection items, luxury outerwear and sweaters flying off the shelves.
Retailers who are doing well in this market planned their success far in advance by establishing relationships with vendors to assure receipt of early deliveries. They 've already blown out a majority of discounted summer goods and are now looking at a floor of full-priced merchandise that includes early fall goods and Wear Now product.
If youre a retailer whos still dealing in discounted summer stock, its time to start on your early delivery strategy for spring/summer 08. It takes time to shift gears and adapt to this new schedule but the current market leaves little choice. Fashion consumers want to get their hands on the hot, new merchandise as soon as it comes out. If you dont have it, they will go elsewhere.
Another important strategy is to forge relationships with your vendors that will allow you to fill immediate buys (Buy Now, Wear Now) on fast-selling merchandise. To do this you need to get into the vendors pipeline and establish your intention to make Wear Now buys. This has to happen seasons before you actually order the merchandise. Both these strategies take a lot of planning so if youre not already moving in this direction you should start now.
Buy Now, Wear Now:
These on demand consumers are actually instigating a new Buy Now, Wear Now retail cycle. They continually want new merchandise and its up to the retailers to give it to them. Vendors are geared up for this cycle because it ultimately means more business.
To move in this direction, retailers should break their year down into 60-day periods in which youre buying and flowing in new merchandise. Everyone is facing an on demand business model and its important to start the transition now.
Buyers are back from their first look at spring 08 merchandise and were hearing strong feedback on the quality of goods. Sportswear is going to be the driver this season since theres little newness in clothing. Theres a definite athletic influence in sportswear and at the same time were seeing premium street wear seep into the category. Colorations are getting lighter and were seeing a return of the much-vaunted gray that never seemed to take hold last season.
Blacks Bottom Line:
If youre not on an early delivery cycle, start the process now. If you need help, contact Blacks.
Luxury Apparel - August 2007
The Big Picture:
Despite Julys uptick in new home sales and durable goods orders, concerns about the strength of the U.S. economy persist. The housing market slump and subsequent withdrawal of lenders has made it harder for consumers to borrow money. At the same time, oil prices remain high, putting a further squeeze on consumer spending. While the overall economic picture is cloudy, high-end apparel merchants remain unaffected so far. As we predicted, early fall business has been strong, especially for unique, luxury items.
Fall Start:
All indications point to another banner beginning of the season. Weve seen sharp sales in knitwear, cashmere and outerwear as tops continue to drive early business. Cloth outerwear is trumping leather and the most popular pieces have novelty treatments.
Mens clothing has taken on slimmer cuts this season but the change in silhouette is subtle and not as fitted as some predicted. The narrow suits touted for younger men are selling, but in very low volume.
The rising costs of Italian goods has put pressure on retailers in price sensitive regions, but most East and West Coast merchants are seeing little change in demand. What has changed is retailers selection of units. Merchants cant afford to buy a broad size range with such high prices.
In womens wear, dresses continue to outsell all other categories. The dress and tights trend we saw so much of last year has faded. Tights will still be worn out of necessity in cold weather, but they're not as much of a look as they were previously. The same is true of the dress and boot trend.
Shoulder scarves will be an important accessory item this season so were expecting strong add-on sales in this category.
In footwear, were seeing a lot of burnished or scuffed leather on mens shoes and boots. Were predicting that boots will be another hot mens trend this season, shown with a flat heel and a rounded pointy toe.
Retailers have done a pretty good job at clearing out their spring/summer merchandise and are in the process of wrapping up their clearance sales. At this point in the season, S/S goods should constitute no more than 20 percent of your inventory. If youre exceeding this number, you could be in trouble. Get help with your merchandise planning now to avoid these situations in the future.
Blacks Bottom Line:
Now that August is nearly over, take some much deserved time off. Sometimes you need to step away from your business to see the fuller picture.
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