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ABOUT THIS BLOG

It's a make-it or break it time for retailers. The holiday selling season is always a critical time for retailers, but this year this may be even more true. With several retailers already falling victim to a drop in consumer spending, and filing for bankruptcy, retailers will be navigating through some tricky waters. Consumers are strapped for cash due to high energy and food prices, and unemployment is rising. The recent credit crunch has made it more challenging for retailers and consumers to borrow.

This blog will look at the winners and losers in the retail space. Who has the right strategy to capture consumer dollars? It also will look for trends in consumer spending and how that will impact the economy.

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Oct.31

11:30 AM ET

Friday, 31 Oct 2008

Retailers Offer All the Frills, at Half the Price

Posted By:Christina Cheddar Berk

Topics:Marketing | Consumers

Sectors:Retail

Companies:Kohls Corp | Children's Place Retail Stores Inc | Gymboree Corp | Wal-Mart Stores Inc | Target Corporation

Already have the kids’ clothes for your holiday pictures?

If you do, you might want to look again because that suit or dress is probably on sale, at a steep discount.

Holiday Dress
Source: littlemissprincess.com
Holiday Dress

When the economy hits a rough patch, as it has now, there are a few things folks take for granted. First, the high-end retailers will hold up, and second, people will still buy for their kids before they buy for themselves.

But many retailers of children’s apparel are already selling their festive holiday dresses and sweaters for as much as half off, and it’s only October.

“Retailers planned for a weak holiday season, and some for a very weak holiday season, but not many planned for the significant cliff drop off that we have seen in September, and which persisted into October,” said Adrienne Tennant, a retail industry analyst at Friedman Billings Ramsey.

Retailers ordered their holiday clothes last spring, long before they began to experience the massive contraction in consumer spending that they are seeing now.

“The real surprise has been the dramatic way in which shoppers just disappeared in September,” she said.

According to Tennant, even those who are making the trip to the mall aren’t necessarily shopping. Many are simply walking around, and won’t spend unless they have a coupon or see a big sale. Retailers are noticing this, and looking to just keep the inventory moving and end the year clean. The result: steep discounts, even on the higher end.

Hanna Andersson, a Portland, Ore., company that sells upscale children’s apparel through its stores and catalog, is currently promoting its holiday dress sale. Dresses from the most fancy to the everyday are half off.

At Gymboree’s [GYMB Loading... () ] Janie and Jack store, a floral silk dress that once sold for $78, is now $47.99, while a rosette velveteen coat has been reduced from $98 to $59.99. Meanwhile, a black velveteen blazer for boys is now selling for $46.39. Originally, it sold for $78.

While it’s true, parents and grandparents will buy for their kids before themselves, they are still looking for good deals, said Ellen Davis, a spokeswoman for the National Retail Federation, an industry trade group.

“A lot of people are trading down to discount and department stores,” Davis said. Specialty stores are attempting to get ahead by offering customers bargains, she said.

“They are saying, ‘We’ve got really good prices too. We have good value,’” Davis said.

Tennant expects consumers will continue to spend proportionally more on their children than they do on themselves, but the high-end is at greater risk during this slowdown because a large number of the lost jobs are happening at higher income levels.

A recent report from BIGresearch showed that consumers are still spending on children’s clothing — in fact, spending is up just slightly from last year — but price is a bigger factor in their decision than it was last year.

What factor most influences your
decision to buy children's apparel?

FACTOR	October 2007	October 2008
Price	46.4%	48.9%
Selection	34.7%	34.8%
Location	24.4%	24.6%
Quality	27.0%	27.9%
Service	7.5%	7.5%
Advertising	4.5%	4.2%
Fashion ideas	6.6%	7.3%
Good selection of brands	16.4%	16.6%
Good selection of sizes	20.9%	20.7%
Good selection of styles	17.7%	18.1%
Newest styles	9.0%	9.8%
Newest fabrics	3.0%	3.6%
Knowledgeable salespeople	4.2%	4.9%
Store appearance	7.6%	7.0%
Store layout	5.5%	5.3%
Other	9.5%	9.4%

Source: BIGResearch
The sum of the % totals may be greater than 100% because the respondents can select more than one answer.

And consumers are shopping most often at discounters such as Wal-Mart Stores [WMT Loading... () ], Kohl's [KSS Loading... () ], and Target [TGT Loading... () ], according to the BIGresearch survey.

Incidentally, if you've already bought holiday clothes for your kids and the retailer has marked them down since your purchase, ask for a refund. It's a buyers market. Retailers want to stay on your good side, so there's a very good chance they'll give you a refund or credit.

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