Luxury Apparel - May 2008
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Table of Contents
The Big Picture
 There were no real surprises in May as retailers continued to struggle against the U.S. economic slowdown. It's a buyers' market and shoppers are being cautious with their dollars, even amid the flurry of summer promotions.
The market hasn't changed much over the last 60 days yet consumer confidence continues to fall. Now all eyes are on the first quarter G.D.P. data, due out later this week. In a bit of good news, forecasts for the first quarter figures have been revised upwards. However, we expect to stay in this retail recession cycle through the third quarter of this year, with improvements coming in the fourth quarter.
Summer Sales
Warmer weather and a holiday weekend have brought on the summer sales. As expected, shorts and t-shirts are selling well in men's, along with short-sleeved knits. Jake Agave's polo is a standout item that's flying off the shelves at $175. Designer sneakers are also selling well, such as Alexander McQueen's hot designs for Puma.
Meanwhile, women's outperformed men's, thanks to strong sales across all categories. Skirts and dresses continued to perform well. Ladies are pairing these with a heeled shoe - either a boot or sandal - to give them height.
June Positions
As inventory accumulates with the slowdown in sales, promotions have increased at an alarming rate. In fact many retailers see themselves as over-inventoried. However, the truth is that inventories are in well managed positions - we’ve been anticipating this slowdown for a while and we still need adequate assortments to make compelling presentations.
The real dilemma is how to deal with price increases on key European goods, as well as goods produced in China. For more information on this topic, read our latest Luxury Blog post here.
Fall Planning
Most buyers are in market now, looking at items for holiday and early spring. As you contemplate your next buys, you may want to rethink the balance between early spring-coded merchandise and "wear now" merchandise. At Blacks we are concerned about the demand for early season merchandise. Consumers are more likely to stay in the "Buy Now, Wear Now" cycle that has been developing over the past several seasons.You may want to save some OTB dollars for lightweight, fall-colored goods, if not fall-coded goods, in season.
Of course, many merchants will be looking for off-priced goods so remember that cash is king. Get your finances in order now so you can make that last minute, high-margin buy. If you're not sure how to do this, take Blacks Acid test to understand the relationship between what you expect to buy and what you expect to sell. If you have any questions, give us a call.
Blacks Bottom Line
Check your projected Acid positions for fall to make sure that you can respond to in-season trends. |
