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By
Reuters
Published
Sep 2, 2009
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U.S. apparel makers say less product is 2010 reality

By
Reuters
Published
Sep 2, 2009

LAS VEGAS (Reuters) - Fewer brands, lower prices and less product are the new reality of the U.S. apparel industry in 2010. While that may seem stark compared to the recent boom years, it's better than the chaos and uncertainty of 2009.



"Six months ago everyone was reeling and trying to figure out what to do next," said Chris DeMoulin, president of MAGIC International, whose twice-yearly MAGIC trade show brings together clothing makers and retail buyers to place orders.

"The mood has moved past that," he said, noting that vendors have now accepted what many dub "the new normal" -- consumers demanding value and retailers buying closer to need and keeping inventory tight -- and are looking at ways to spur growth.

Growth has not exactly been a buzzword for 2009 -- a year when retailers from Saks Inc and J Crew Group Inc to AnnTaylor Stores Corp and Kohl's Corp hunkered down and slashed costs to preserve profit margins battered by a drastic drop in sales that began last fall but still lingers.

And with industry experts agreeing that sales may still be pressured next year, brands that want to grow are lowering prices, paring down their assortments and eliminating extraneous items.

"Your product needs to be focused and there has to be less of it," said Lynne Koplin, president of women's wear at Tommy Bahama, which is owned by Oxford Industries Inc. She estimated that the overall industry has pared down its assortments by as much as 25 percent in the downturn.

As manufacturers get better at judging which items they excel at -- and cutting out the rest -- they are also making just enough product to supply the retailers, but no more.

"You have to be so careful not to oversell to the retailers and keep them coming back for more," said Kenneth Wengrod, head of FTC Commercial Corp, a factor or company that provides financing to apparel makers.

At Miss Me, a Los Angeles-based brand that sells women's jeans and other contemporary wear to department stores like Macy's Inc and Dillard's Inc, having too much inventory is not an option.

"I don't over-cut," said owner Stella Cho, adding that she used to cut some 50 percent more as a buffer. "If they want more, they go without. No matter what, we can't overstock."

PRICE IS NO. 1

Prices, too, have to reflect the new reality.

"Price is No. 1 and you hate to admit that as a better brand. It's hitting every consumer," said Koplin, who has lowered retail prices on Tommy Bahama clothes by 10 percent on average from before the downturn, with no item priced above $200.

At Perry Ellis, prices are down 5 to 10 percent.

"You have to be right in price. If not you will get killed," said Perry Ellis President Oscar Feldenkreis. "The retailers know it."

Lowering prices upfront helps move the product quicker and enables retailers to bring in new items. It's a better strategy than eventually marking goods down -- or having to pay retailers a cut if clothing doesn't sell at all, he said.

"That formula works but it's better to sell it upfront early than at the end when it's at 50 percent off," he said.

Fewer brands will also be a reality for 2010 amid tight credit and retailers buying less overall.

"Next year it's going to be a close-out year," warned Charles Alloun, chief financial officer of Sledge USA, a women's T-shirt brand sold at Nordstrom Inc, Bloomingdale's and other department stores.

Clothing brands that cropped up seemingly overnight when times were good just can't get the upfront financing necessary to produce goods, said Alloun.

"Those companies are going to be swept completely out of the way," he said, calling factors increasingly risk-averse.

But the question lingering on everyone's mind is how long consumers' new fascination with value will last.

"It will be interesting to see if that continues a year or a decade," said Eliot Peyser, chief executive of Weatherproof Garment Co. "If in America pent-up demand will rise up, will the Jimmy Choo shoe at $800 become normal again?"

By Alexandria Sage

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