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Cross the Borders and Beat the Crunch

February 13, 2025 - February 13, 2025   


FashionCapital provide essential industry tips to beat the crunch and utilize the economic environment to succeed.





New York





US consumer confidence is at the same level last seen in the months following the 1990-91 recession. Overall economic outlook remains dismal for the first half of 2009 and only a modest recovery is expected in the second half. With a strengthening of financial markets, interest rates dropping, gas prices remaining low and a new Obama stimulus package expected then we should see consumer confidence pick up over the next 2-3 months. Retailers need to “think beyond” the doom & gloom to be prepared for the eventual opening up of discretionary income.






Overall results only verify that no one is immune to the current turbulent economic environment. This is a global issue. However the question on everyone’s lips remains ….what is the solution???





Keep in mind there is no “quick fix”. Retailers have basically “set themselves up” in offering extensive discounts as the solution to stimulate customer interest. This has resulted in the death of full price business. Stores have now trained customers to wait in expectation of the deepest discounts. In fact, this expectation continues to be fuelled as newest SS09 receipts are already being promoted!



 

Topshop




For any new businesses or young designers there is a learning curve and in this difficult climate it will be nearly impossible to survive, so not the right conditions for newness out of the box. Topshop has the right prices, branding, design & image for UK market but how will this need to be tweaked to invade the new frontier known as the US market? To succeed one needs to differentiate their product & assortment to be in a position to provide the items that the customer is looking for.



 

The retail intelligence antennae needs to be up at all times so there is daily knowledge of competitors, brands & market trends to know what’s working & what’s not. In an effort to maximize sales of an item or category it is essential to know what is the highest retail price the customer is willing to pay in order to price items up appropriately to sell. All retail channels must be analyzed ….in the current environment every retailer is competing against each other.



Ideas to consider:



  • It’s time to retrench, be prudent & analyze “what’s working”
  • The customer is responding to value and necessities so figure out how this winning combination resonates with your core customer
  • Embrace the customer who is experiencing a career change, for too many will be going through a complete life change. Keep in mind in many instances a career change = a wardrobe change. Be the first to make an emotional connection with this new found customer.
  • Keep inventory levels in line, focused & lean. Turnover & higher dollars per square foot is the name of the game to succeed.
  • This is the time to innovate not hibernate…introduce new lines, labels & exclusive pair ups with known designers
  • Maybe the answer is not to be narrow & deep in assortments. It’s time to be broad & shallow. Do not invest just in private brand volume items, they cripple flexibility & tie up open to buy. Partnering with brands has become increasingly more appealing as this allows for later confirmations and the ability to react to sales trends.  Offer selections surrounding an item or within a category. Let the customer decide.
  • Put testing strategies into place to “chase” a trend. To have an edge, Topshop requires a developed factory base that can respond quickly to trends at moderate, value price points.  
  • Leverage multi channel businesses 


Retail




Know thy competitors….





Currently Target is the only moderate retailer who offers fresh, innovative designers in their “Go International” program in ladies apparel & accessories. This takes fresh international & US designers who are known (usually at luxury pricepoints) but not over exposed and offers a collection for a limited timeframe within a moderate pricing structure. Currently in RTW it’s Thakoon from 12/28 -1/31/09. In handbags it’s Hayden-Harnett. With the tag line: Target puts A list bags affordably at your fingertips starting at $19.99





A future featured designer includes Ashley Paige, a Los Angeles based swimwear designer known for her 70’s inspired looks. Her line will enter stores for summer. However, there have been projections that hypermarkets & supermarkets with their array of food & general merchandise will gain appeal as consumers’ trade down even from Target.





Lower priced performers to watch include Forever 21 who has gained market share with the bargain driven yet trendy consumer audience. They are one of the few retailers looking to expand in ’09 as they pick up new mall locations/leases from those retailers who went out of business in late ’08.






Forever 21




Forever 21 will open a 90,000 sq ft flagship store in Times Square in 2010. It will feature apparel for women, men, & children. It also plans an extensive shoe, lingerie & accessories departments, a larger selection of fashion basics & new unannounced product categories. It is being referred to as a department store. This California based retailer has been known as a chain for juniors but the new flagship will also launch apparel for an older customer 35 yrs of age & older who are fashion oriented and want more for their money.





Zara, continues to expand in the NYC market. They have just opened a new flagship at 500 5th Ave (corner of 42nd St).  It is a 3 level 12,000 sq ft unit which is a new prototype for Zara as it features a more upscale vibe & upgraded product lines. This is its biggest store in NYC & offers stepped up assortments of women’s, men’s & childrenswear.  A similar prototype is due to open on the Upper West Side in early 2009. During the 1st quarter several new locations will be opened in North America in US cities; Los Angeles, Chicago & Boston as they expand their penetration within the US markets. Zara has always been known as a “testing lab” & enjoys an infrastructure that allows for quick response to customer trends.





The current outlook for department stores is negative as consumers look for value and newness. Same old, same old is not going to entice the customer. When they do visit they want to see newness & fresh assortments, not the same key item top or bottom the entire season!   





US customers are no longer flaunting designer labels, it’s now considered poor taste & consumers are exhibiting self restraint. The affluent have more pressing financial issues and the aspirational customer no longer feels the need to dress to impress. There are major changes in shopping psychology. Topshop will need to deal with & over ride the current attitude that European goods are expensive, so for now “buy American”. To be successful they must offer quality and fashion at value price points.



 






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