Luxury Apparel - February 2008

Table of Contents

• The Big Picture
• Retail Review
• New Strategies
• Blacks Bottom Line

The Big Picture

Consumer confidence tumbled in February as concerns over the current business climate and job market took hold. The Conference Board’s Consumer Confidence Index fell from 87.3 in January to 75 – its lowest level in five years. Meanwhile, wholesale prices and inflation continued to ratchet up as the economy slowed.

While consumers are showing some trepidation over the economic conditions, the numbers are mostly in-line with analysts’ expectations for a bumpy first half.

Retail Review

As predicted, apparel retailers posted small, single-digits drops in January. Menswear sales were down 5% during the month, while women’s wear fell by 3%, according to Blacks data. Women’s wear fared slightly better because women shop for new merchandise earlier in the season. Most of the new buys were concentrated in collections. We expect women’s wear to show a slight slowdown in February because women have already made their early buys.

Collections aside, most retailers concentrated on clearing out their marked down goods in January. Those clearance sales should be wrapped up by now. If they aren’t, chances are your turnover is not fast enough. Steep discounts are not the answer – you need to buy less. Marked down goods should account for no more than 10% to 15% of your inventory at this point in the season.

New Strategies

Now that the old winter goods are mostly gone, it’s time to concentrate on marketing this season’s buys. The trends have not really changed from the last few seasons, so your challenge is to create excitement around the new merchandise.

(In women’s, the dress and boots trend is extending well into fall; in men’s, we’re seeing little change except for a renewed demand for knits.)

Since the styles are not fresh, try changing your approach. If you don’t have an email marketing strategy in place now would be the perfect time to form one. Email marketing is relatively inexpensive and allows you to connect with your customers on a regular basis. During slow months like these, try building your email address database and inventing "mini-events" that will get your customers in the door. If you can get your top-tier customers to come in just one more time a season, you’ll see big sales increases.

March is approaching and that means it’s trunk show time for men’s wear retailers. These are perfect "mini-events" to sell through email marketing. It doesn’t take long to get up and running with the technology so consider investing now. If you don’t know how, contact us.

The other issue to keep your eyes on in March is deliveries. Make sure your goods are landing on time, and if they aren’t, negotiate discounts. You don’t want anything to drift in too late. In slow times like these it’s more important than even to use your good merchandising skills.

Blacks Bottom Line