Big Apple Diary 3/03/09
03-03-2009
Definitely one more unfavorable turnaround in this never ending recession. Typically 4th quarter is the bright spot of the fiscal year but results indicate that consumers seem to have put off buying anything other than groceries and necessities. For many retailers, the only way to entice the customer was to take steep price cuts which industry wide took its toll on profit margins.
Macy's 4th quarter profits fell -59%, Sears plummeted -55.4%, Target slumped – 41%, Kohl's declined -18.4% ,Gap dropped -8.3% and Wal-Mart fared best with a -7.4% decrease which looked quite successful when compared to their competition. The most modest profit decreases came from the discounters; namely Marshall's, TJ Max and Ross stores.
Luxury retailers Saks, Neiman Marcus and Nordstrom's took the hardest hit in 4th quarter profits. They were forced to take the sharpest markdowns in an effort to hold on to their upscale shoppers or risk losing them permanently to moderate and discount retailers. It has become increasingly obvious that the affluent customer is willing to trade down. This behavioral change will definitely benefit mid tier stores and discounters.
It is accurate to say that all stores have shifted into survival mode as the retail landscape is shrinking. The only way to combat plunging profits is by extreme cost cutting so look for retailers to reduce inventories, slash staffs, close poor performing existing stores and cut back new store openings.
Conversely, as retailers cut costs and adjust the way they do business, they can not forget that their immediate goal is to maintain and ultimately increase customer traffic. Sure lower prices remain a key factor but as the consumer takes a more modest approach to spending their discretionary dollars it is important to remember the fashion quotient. Even if "being cheap is chic" there remains a need for fresh, innovative merchandise.
So for Spring '09 the most immediate challenge is to call out the trends that appeal to a broad customer segment. Currently store ad campaigns featured in local newspapers and fashion magazines are focusing on the trend Bohemian.
This trend is highly adaptable with multiple age group appeal;
« For those of us who remember the late 60's hippie, it's reinterpreted
« For the contemporary & teen customer it's new & cool
The Bohemian trend takes on many interpretations from feminine & flirty to more casual looks when paired with denim or leggings.
Most importantly this is a trend rooted in key items for both apparel and accessories;
« Flowy tops with origins in the peasant blouse. Match them up with jeans or under a tailored jacket
« Tunics : embellished or embroidered
« Billowy knit jersey tops: a mix of Tee shirt & peasant blouse
« Tiered skirts and dresses
« Maxi dresses
« Soft, drapey pants: dhoti silhouettes. crops
« Lots of prints: feminine vintage florals, exotics & ikat. Looking newest when prints are mixed together.
« Tie dye apparel & accessories
« Head scarves & headbands
« Fringe trimmed vests, handbags, totes, sandals and belts
« Slouchy bags: printed or textured exotic skins
« Jewelry musts: wide cuffs or multiple stacked bracelets
So whether you were the "free spirited" California girl of the 60's or are the young "modernist" of the 2000's this is the trend for you!
Cheryl
