Retail Report
Blacks Retail Report is a free monthly newsletter providing expert information and advice on the current retail market.
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October 2006
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Blacks Retail Report
Luxury Apparel
May 2006
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Table of Contents
The Big Picture
While U.S. first-quarter growth was strong,
consumer confidence has slipped in recent
weeks. A souring political climate has added to
existing concerns over soaring energy costs and
rising interest rates.
Although we're still seeing a boom in luxury sales - Bergdorf Goodman recently staged a Chanel trunk show that pulled in $6.1 million in three days - it would be a mistake to assume that everyone could swim up market.
Our retailers are reporting an average 5-point drop in sales compared to last year and this sluggish climate is unlikely to change anytime soon. Here at Blacks, we are advising retailers to respond to the current market with tried and tested strategies to keep ahead.
Now that we are in May merchants should have a pretty good understanding of what their positions will be at the end of the spring season.
From our perspective, it looks as though retailers were planning for a stronger season and heavy markdowns are in the cards. Prices are already being slashed at Saks Fifth Avenue and other high-end chains.
Smart retailers know that the early markdown is the cheapest. This is especially true right now since the sell-through rate on markdowns has decreased in recent years. So as the dog days of summer approach, make sure to take the adequate reductions early on.
Pick Your Product
Even if sales are sluggish, don't put off landing new product for too long. Remember that your margin potential depends on the amount of margin you have on the floor.The men's market is opening in June and some merchants will be going to Europe for fall buys.
Europe still takes the month of July off, so early delivery is crucial to get the product in on time.
In women's, this is the time to shop for fall accessories and scout out some holiday buys.
Trend Dead End?
So far we aren't seeing any emerging men's trends for the upcoming season, which is worrisome. With a lack of fresh items to drive sales, we could be looking at a challenging fall. And at Blacks, we do not consider "more luxury" as an emerging trend.Even if there's nothing really new to hang our hats on, try not to get caught revisiting old trends. We've talked a lot in the past about the men's casual jacket trend that has been floating around for the last few seasons. It's important not to let old jackets wither on the floor because this trend is definitely worn out. Remember to treat the casual jacket as sportswear - not clothing - and take the necessary markdowns to get them off the floor and out the door.
Eye on Events
With the dearth of new product, look out for event-driven buying. For example, the November elections could create a shift in consumer confidence, but right now it's impossible to predict whether the results will induce the nation to buy or to save. The elections could give a small boost to sales of formalwear as the campaign season heats up, however.