Fashion emergency: Prepare to pay more for clothes after the holidays
Clotheshorses already have Project Runway, but coming soon will be project runaway prices. That's right, once the holiday season is over, get ready to pay higher prices for clothes. Less competition among stores, rising labor costs in developing countries and inventory control mastered during this recession all mean retailers will be able to raise prices again and mark down fewer items -- at least until the boom-bust cycle starts all over again."The recession will leave behind this industry with far fewer players and new rules," said Richard Beckman, CEO of Fairchild Fashion Group, the publisher of retail bible WWD. At the recent WWD Apparel/Retail CEO Summit, one speaker after another urged retailers to hold off on markdowns and start bringing up prices.
The good news is, you won't have to worry about stores being out of the graphic t-shirt or cute skirt you want for Christmas or Hanukkah -- retailers are getting better at cranking out just enough merchandise when they need it.
But going forward, you'll pay more for what you want. Bankruptcies and cost-cutting have reduced competition as nearly every major retailer had to trim back new store openings or even close down stores. Some, like the department stores Gottschalks and Mervyn's, went under altogether.
The survivors are getting by thanks to leaner inventories and cost-cutting and are waiting for the rising tide. The turmoil of the last year brought out "terrific nuggets of information as we had to dig deep into our business" said Karen Katz, CEO of Neiman Marcus Stores, part of The Neiman Marcus Group. Stores had to learn to edit their selections and focus on how to sell more items at regular price to get by, she said.
And that is not a lesson retailers are about to forget, according to most merchants. The losses of last year are a sharp reminder to not to let inventory out of hand again.
"We have to stop these markdown cycles," said Katz. "We have to wean the customers from this deal of the day."
Saks (SKS) wants to eliminate "events" -- the upscale term for sales -- according to Ronald Frash, chief merchandising officer of Saks Fifth Avenue. He noted the store chain has already been reducing the number of brands it includes in its sales events. In fact, he said Saks has reduced the number of brands it carries altogether by analyzing data to figure out what sells and what doesn't.
And it's not just the luxury retailers that are reaching for the price scanner. Mindy Meads, president of Aeropostale (ARO), said her company has managed to raise prices a little recently and anticipates raising them some more. Ironically, Aeropostale has been beating the pants off of rival Abercrombie & Fitch (ANF) over the last year, partly by dropping prices while Abercrombie held fast.
Apparel prices are flat now, but the deflation cycle we've seen during this recession is coming to an end, said Bruce Rockowitz, CEO of Li & Fung (Trading) Ltd., a company that sources merchandise to stores worldwide. Rockowitz said the cost of producing apparel is about to go up and that will get passed on to stores.
"China was exporting deflation," said Rockowitz. But Chinese manufacturers cut back on staff during the recession and won't be able to build it up again that quickly. As a result, Chinese labor is about to get more expensive. And there are no production centers coming online elsewhere to compete with China's factories.
Meanwhile, consumers in that country -- nearly a billion strong -- will want their share of the goods they produce, noted Rockowitz. That's a lot of demand -- enough to keep prices stable at least.
Most experts figure these developments will shape the industry for the next year or so. But the experts also point out that consumers will do what they do best -- shop -- once they feel the economy is on an even keel. And shoppers like variety and excitement.
Although shoppers have reset their spending habits to look for value, the consumer looks for what's new and different, said Matthew Katz, managing director at AlixPartners, a business consulting firm.
Also, Wall Street pressures retailers to keep square footage growing, said Howard Tubin, director of equity research-softlines at investment bank RBC Capital Markets.
Both things add up to new "store concepts," or new chains. So the growth-and-overstock cycle will repeat eventually.
When that will happen is anybody's guess, though. As Matthew Katz put it: "We're all looking at how do we get through the next six months."
So in the short term, better take advantage of those sales. They may not be there much longer.
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Reader Comments (Page 1 of 3)
11-12-2009 @ 11:03AM
Aaron said...
I think we need to start manufacturing clothes again in the United States.
Word to Wall Street, stop shipping our jobs to Asia!
Reply
11-14-2009 @ 8:40PM
anna said...
Well, maybe if American workers stop suing their employers left and right, stop demanding that the employers keep and accommodate lazy and unproductive individuals, realize that they need to make the employers WANT to hire them, rather than force the employers to higher them - then the employers would consider bringing the jobs back. But right now the cost of doing business within the US is extremely high because the legislature favors bad employees out of proportion. Lots of resources are directed towards constant litigation and litigation insurance. In the meantime, an average employee is getting worse; the majority of people can't spell properly, have more and more chronic diseases that must be accommodated, etc.
11-12-2009 @ 1:01PM
foxxy said...
what a bunch of crap. I wont spend more than what the sale price is. So you richie riches can eat your clothes. I will continue to do my part to bring you to your knees=buying second hand. You cant beat $3 for a pair of name brand jeans or shoes. So eat that you loosers. I and many others are learning the fun of price control by shopping cheaper and second hand stores. so let the stuff sit and get all dusty. raising prices is WRONG!
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11-12-2009 @ 4:01PM
LIOENL said...
I`M GOING TO SPEND " NOTHING " FOR XMAS !GETTIN RID OF COMCAST TV AND AT & T CELL PHONE AND CAR, BUYING MOTORCYCLE .DUMPIMG MEDICARE PLAN B AND DUMPINMG SUBLIMENTAL HEALTH INSURANC, THE HELL WITH ALL OF IT . HA HA AND CLOTHES HA, I MAYBE SPEND 100 DOLARS A YEAR ON CLOTHES . AND DONATIONS , I DONATE TO NO ONE ! THAT INCLUDES THE CHURCH .
11-12-2009 @ 1:01PM
?????? said...
Oh I get it! A stategically placed news article just before the holiday buying season stating that prices will go up after the season is over thus increasing purchases for an expected dismal holiday shopping year. Pretty s-m-a-r-t! People are unaware that clothing prices as well as other consumer prices usually go up at the begining of each new year.
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11-15-2009 @ 2:12AM
dmf said...
Yeah..you hit the nail straight on...these were my thoughts as well!
11-12-2009 @ 1:09PM
El said...
It's probably a scam to get us to buy to perk up the holiday sales. Don't forget they do inventory in January and always do deep discounts to get rid of merchandise.
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11-12-2009 @ 1:06PM
easy said...
Now this is about the easiest problem to cure in America
CLOTHING....most os the country looks like slob's and does not buy any new clothing to begin with...so why worry about price increases if the general population lives in
sweatsuit's and old crap?
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11-14-2009 @ 9:06PM
S said...
I agree with you, America is becoming a bunch of slobs. I can handle sweats, though. If every young man out there wearing pants 3-4 sizes too big for them would get them cut down to fit them...all the excess material could put pants on a couple of other people and we wouldn't have to see their underwear anymore!!
11-12-2009 @ 1:17PM
Fred said...
Bwahahahaa. They are DESPERATE for you to shop, shop, shop,
oh yeah and they call you names like 'teabaggers', but but your still supposed to shop, shop, shop. Better HURRY, HURRY, HURRY, just like the stimulus, HURRY, and unemployement won't go above 6%.
YOU LIE. it's already 17.5%
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11-12-2009 @ 1:42PM
Rose said...
HIKE UP PRICES AND AMERICAN'S WILL BUY LESS AND LESS...AMERICAN'S ALWAYS know where to find a good deal..Who is going to loose...not the consumer!!!
Reply
11-12-2009 @ 1:45PM
JEFFREY said...
I THINK THAT MR FRASCH NEEDS TO WALK HIS STORE ---I BELIEVE THAT SAKS LOOKS ABOUT AS FULL AS IT CAN BE CONSIDERING THE TIME OF YEAR NOT TO MENTION THE ABUNDANCE OF NEW VENDORS WHOSE MERCHANDISE SEEMS TO BE MULTILPLYING RATHER THAN SELLING ----SAKS IS RUNNING IT "PRE SALE" AS IF THAT DOESNT COUNT ....BUT IT DOES
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11-12-2009 @ 1:50PM
JEFFREY said...
AS FOR MR BECKMAN HE WOULD BE WISE TO TRY AND AT LEAST REPORT THE NEWS OF THE INDUSTRY .............SINCE DNR AND WWD HAVE COMBINED YOU WOULD THINK THERE WOULD BE MORE NEWS INSTEAD OF LESS TO REPORT NOT TO MENTION THAT THERE IS NO FOLLOW UP ON ANY ONE'S COMMENTS AS TO HOW EACH RETAILER IS COPING WITH THESE TIMES...................SOMEHOW IT IS APPALLING TO SEE THE HEAPS OF UNSOLD MERCHANDISE................MAKES ONE THINK "HOW MUCH IS IT COSTING THESE VENDORS TO SELL THESE STORES " BETWEEN THE CHARGE BACKS AND THE ALLOWANCES AND THE GUARANTEES
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11-12-2009 @ 1:57PM
MIKE said...
WHO CARES THE THRIFT SHOPS HAVE SOME GOOD DEALS NOW ANYWAY,WHO BUYS NEW RETAIL ANYMORE?
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11-14-2009 @ 11:22PM
Caeoline said...
I am with you Mike, if you would see me each and everyday and especially on Sundays, you and all the others would think I had money, but the truth is that since my divorce and financial instability I shop at my local thrift store, especally on "sale" days half price sales, I am blessed, the only thing I do not buy at the thrift store's are shoes, so when Payless is having "buy one get one 1/2 price I go bonker's, I own at least 25 or more pair of shoes and I am happy, I turn my old unwanted dresses into skirts if I like the dress, I buy larger clothes at "Ross" and fit them to my size and never anything over $20.00. So, this scheme to get us to buy now will not work for me, So, I thank all the ladies who can afford to buy "New Expensive" clothes and donate to the thrift stores, for blessing me and other woman who cannot afford to buy expensive.
11-12-2009 @ 1:56PM
angie said...
Agreed - time to bring Manufacturing back to U.S.
WHY would we pay MORE to China (especially in lieu of all
the 'faulty' products they sold to us).
If we can pay more to China we can employ U>S> citizens here.
Reply
11-12-2009 @ 2:07PM
DON said...
RIGHT ABOUT XMAS,SO WE BUY. OH THEIR IS 0% INFLATION,WAIT TILL THAT HAPPENS,20% UNEMPLOYMENT
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11-12-2009 @ 2:07PM
lawdog said...
Okay you stupid sheepeople, hurry go out and buy up all the deals you can. It amazes me to think the press and government stoop this low to get us to spend money. I said two years ago, money in an economy flows UPSTREAM not down. I have yet to get my check from AIG that will help start this economy on a spending pattern. Basically, go to hell AOL, CNN CNBC and the rest of them for these tactics. If prices go up, I won't be buying then either.
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11-12-2009 @ 2:27PM
okpeople said...
The prises are always UP! Saks and such are selling 'Made in China", which supposed to be chip.. Not so.. Look at there tags. By the way they never have info on web sites, where the thing is maid... Should be a must. I do not pay in no way for maid in China with my money... If the company has the business in China forgetabbout it.
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11-12-2009 @ 2:49PM
W. C. Peterson said...
If the price hike comes because clothes are being made in the USA again, I will gladly pay the higher prices. If the greedy MBAs just want to make more money on clothes made in third-world sweat shops, I will continue to boycott. there's an easy way to tell the difference. Clothing not made in the USA has to have the word 'imported' in its description. If it doesn't have 'Made in USA' on the tag, I don't buy it. It's that simple.
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