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Dress for Less - the New Normal

Oct 1, 2009
by Kevin Zimmerman

"Clothes make the man," goes the old saying, to which Mark Twain once waggishly added, "Naked people have little or no influence on society." But while apparel is one of life's necessities, it's not impervious to the vagaries of the economy. New realities require new thinking, as Walmart CEO, Mike Duke, noted during a recent conference call announcing the retail giant's second quarter results. "There's a 'new normal' now, where people are saving more, consuming less, and being more frugal and thoughtful in their purchases," he said. "Customers are shopping smarter. They want quality products that are cost effective, sustainable and provide real value."

This was already becoming evident during the back to school shopping season. Analysts at industry research firm, IBISWorld, predicted that back to school spending would decrease by 3.4 percent, with the sharpest decline coming in the apparel sector, expected to drop by 5.4 percent. "Parents will inevitably put more thought and less dollars into their back to school shopping strategies," said George Van Horn, senior analyst at IBISWorld. "In particular, dollar and variety stores can expect to see a greater wave of traffic, since parents are doing everything they can to save an extra buck."

Coming to a similar conclusion was auditing firm, Deloitte, whose own survey found that 64 percent of consumers said they would spend less on back to school items, down from 71 percent who said so in 2008. A total of 43 percent said they would cut their spending by more than $100, compared with 48 percent in 2008. And, most troubling for the apparel sector, 81 percent of consumers said they were most likely to cut back in clothing purchases. "There is some bright news, in that shoppers are slightly less pessimistic than last year," said Deloitte managing partner, John McEwan, "but still, the results point to a challenging back to school season. Consumers still plan to stretch their dollars, which means retailers should focus on delivering the best incentives and in-store experiences, to get the most out of the back to school season."

However, not all indicators are down. According to market research company, The NPD Group, sales of men's underwear rose by 4.6 percent during the first six months of this year, while sales dropped in virtually every other apparel category. U.S. consumers bought approximately $2 billion worth of men's underwear from January through June; $89.5 million more than in the same period a year ago, when the negative effects of high gasoline prices and the credit crunch were being keenly felt. While such measurements may strike some as frivolous, sales figures for men's underwear have actually been considered an economic bellwether by numerous analysts, including former Federal Reserve chairman, Alan Greenspan. The theory is that men only buy underwear when they absolutely need to. Once the category sees an uptick in sales, spillover into other categories usually follows.

"The consumers may be down, but they're not out," Marshal Cohen, chief industry analyst at The NPD Group, told The Washington Post. "If this were a true, deep, long, embedded recession, they wouldn't even be buying underwear." As a result of all this, apparel wholesalers are coming to see, if they hadn't already, that swinging for the fences is usually not the best sales strategy. Instead, a well placed single can make all the difference.

"In a bad economy, people want to buy less expensive goods," says Ben Yang, owner of Xclusiv Inc., a Los Angeles based apparel wholesaler that maintains three large warehouses of merchandise. "Brand names become less important. We specialize in inexpensive stuff, and we sell a lot of it." Part of Xclusiv's success comes from its proximity to Mexico, Yang says. "We do a good business selling to Mexican businesses, and with the Mexican peso down in value, that's definitely helped us," he says. "Overall, sales have been pretty typical for us. Business has been down a little, but we haven't been battered. The main challenge is in keeping up on what trends are in and out."

Xclusiv maintains its inexpensive prices by factory direct sales, and specializes in women's, children's, and baby clothing. "Skinny" jeans and women's Capri sets are doing particularly well at the moment, Yang says, though he notes that, "It can change from month to month. We've got to catch on to what's happening out there quickly." While declining to specify Xclusiv's prices, Yang says, "We pride ourselves on having prices that are extremely competitive. We can beat any price."

Also benefiting from its lower priced stock is Offpricegarment, although spokesman, Danny Daniali, says sales of late have been, "up and down. We rely primarily on closeouts, so whatever we get is what goes up on our website." The company offers mostly women's clothing, with tops and plus size tops generally going for $16 to $36 per four or six piece sets (one nine piece junior size top sells for $49.50 per); dresses for $33 to $39 per six piece set; and pants and jeans for $66 per 12 piece set. Offprice also offers kids' padded winter jackets for $5.50 per unit, or $198 for a 36 piece pack. In addition, the store offers clearance merchandise in the $12 to $36 per pack range. "We might do extra discounts for the holiday season this year," Daniali says, noting that most of Offprice's merchandise is already 70 percent off, and that shipping is free for all orders over $500. "We'll be doing a fair amount of advertising as well."

The situation is even more bullish at Moeim Fashion, where marketing associate, Sandy Kang, reports that the majority of merchandise available is young contemporary and junior women's. Although in business for just a year or so, Moeim already has a large inventory, ranging from the usual tops, skirts and pants, to party dresses, swimwear, lingerie, and knit wear. Mens' and boys' shirts, pants, and suits are also available. Such vendors as 17 Rio, Catwalk Studio, Tovia, and J&K Paris Inc. provide the merchandise. While pricing is available only on inquiry, the site does run frequent specials, such as the recently completed "$5 and under," sale on selected tops and dresses. In addition, Moeim offers free shipping on certain brands, for minimum orders of $300 and $400.

"Business has been good," Kang says, "and as a result we're still growing." Indeed, the site now offers a number of accessories, ranging from necklaces and watches to tiaras and outfits for pets. "We're strictly business to business now," she remarks, "but we're looking to open more websites as we go along. We want to be where our customers can come to our website and find solutions for anything they're looking for, not just apparel. What we have in mind ultimately is something like Google." Heading into the fall and winter, Moeim is, "continuously looking," for seasonal merchandise, Kang notes. With the wholesale site, moeim.net, doing so well, she adds, the retail friendly, moeim.com, may open sometime next year.

Also in expansion mode is Becker Glove International, where vice president of sales, Jon Flom, says men's and women's gloves remain the strongest sellers. Men's ski gloves sell for $30 to $72 per dozen, with men's snowboard gloves going for $54 to $105 per dozen. An abundance of other gloves (sport fleece, rag wool, acrylic) are also available, as are winter headwear, scarves, and three piece (headwear, scarf, gloves) sets, all priced per dozen. On the women's side, ski gloves sell for $30 to $60 per dozen, with fleece, knit, and other styles priced at between $15 and $42 per dozen. A large selection of ladies' caps, hats, headbands, and scarves are also available, again priced per dozen. Becker Glove also offers a number of cold weather wear for children, toddlers, and infants.

"We've been doing pretty well," Flom says. "We've expanded our line, added a lot of new product, and the weather was generally cold last year, which is good for us. Even though we sell a higher end product, price wise, this year, going into next, looks good." Since Becker Glove works on a "pre-sold" basis, the company is already looking at 2010. "We're pretty optimistic," he says, "as long as nothing seriously bad happens to the economy, we should do well."

Becker Glove also is in the midst of redeveloping its website, with the result being that beckerglove.com currently only offers its online merchandise in the form of pdf files from its catalog, with the company's phone/fax and email information appearing on alternate pages. "We had an online shopping cart feature, but the security was not up to snuff," Flom says. "We want to bring that back in an improved form, and make a few other tweaks to the site." Despite the "under construction" status of the website, however, Flom says that Becker Glove's sales haven't missed a beat.

Sales haven't been quite as strong at shoe specialist, NKSimpson, although owner, Nathan Simpson, attributes part of that to the fact that his business is new, having only opened earlier this year. Previously the marketing manager for an international closeout footwear wholesale company, Simpson is hoping to repeat that experience with his own company. "Our best sellers are pretty much what you'd expect: Converse, Adidas, Nike, Reebok," he says. "We get a lot of requests for kids' shoes, but men's and women's are really our strengths at the moment."

In addition, Simpson is looking to provide marketing services to clients, including photography, videography, and graphic production. "I'm looking to make some minor changes to our website," he adds, "and we'll definitely be adding more merchandise." The site is www.nksimpson.com.

Companies interviewed for this article:

Ben Yang, owner
Xclusiv Inc.
1000 Wall Street
Los Angeles, CA 90015
Tel.: 213-748-2216
Fax: 213-748-2239
Website: www.xclusiv.com

Danny Daniali, spokesman
1523-A Los Angeles St.
Los Angeles, CA 90015
Tel.: 213-747-5056
Fax: 213-747-5057
Website: www.offpricegarment.com

Sandy Kang, marketing associate
Moeim Fashion
3345 Wilshire Blvd., Ste. 415
Los Angeles, CA 90010
Tel.: 213-480-9008
Fax: 213-480-9009
Website: http://moeim.net

Jon Flom, vice president of sales
Becker Glove International
2200 Forte Court
Maryland Heights, MO 63043
Toll Free: 800-875-1244
Tel.: 314-298-9810
Fax: 314-298-9809
Website: www.beckerglove.com

Nathan Simpson, owner
4621 Ringgold Lane
Plano, TX 75093
Tel.: 972-985-7803
Website: www.nksimpson.com

Topic: Product Trends

Related Articles: apparel 

Article ID: 1191

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