Forget the Basics — How Retailers Plan to Boost Sales This Fall
Consumers are in the driver’s seat as retailers move away from wardrobe staples and shift to fashion-forward pieces while planning their upcoming fall inventories, industry analysts said.
To cater to a more strategic and tech savvy shopper, retailers are increasing their e-commerce offerings and incorporating the latest fashion trends instead of playing it safe as they try to entice consumers to break out their wallets and boost sales.
“I think smart retailers who are trying to find a way to capture the consumer’s dollar know that fashion is where they have the best opportunity,” said Catherine Moellering, executive vice president of The Tobe Report, a fashion retail consulting firm. “Basics are really going to be a price war.”
While recession-era inventories emphasized versatile basic pieces with minimal embellishment that avoided the risk of trying to capture the hottest runway looks, the upcoming fall season will be different.
Designers will take their cues fromNew York's Mercedes-Benz Fashion Weekand other fashion shows around the world as they ramp up the risktaking in their fall inventories and seek to build upon recent retail sales gainsand rising consumer confidence.
Some trends that will be coming soon straight from the runway to a retailer near you include designs that incorporate ladylike silhouettes, bursts of color, leather, menswear elements and tonal dressing, said Roseanne Morrison, fashion director at The Doneger Group.
Retailers will strive to differentiate their stock from other stores because unless basic pieces are highly value priced, they are not that profitable for stores, Morrison said.
Shoppers on the hunt for these wardrobe staples can now quickly find the least expensive option through mobile technology. This has led to a sort of commoditization of basic pieces, Moellering added.
“Because mobile apps have really enabled them to have a lot more control, it’s really created a new paradigm,” she said. “If you’re going to get the same pair of basic jeans that have no real difference, it’s going to come down to price.”
Risk Has Its Rewards
By making their items unique, retailers have a better chance of drawing consumers to pay full price for items. But if stores miss the fashion trend, the strategy could backfire and retailers' items could land with a thud and drag down company profits.
Fashion risktaking recently yielded success at Gap as the perennial laggard embraced brightly colored skinny jeans in a new marketing campaign and beat Wall Street's February sales estimates.
The amount of merchandise that retailers chose to buy also shifted during the recession. Before the economic downturn, consumers spent more freely and retailers undertook deeper buys than they do now.
“I think before it was more of a free-for-all,” said Morrison about retailers. “I think they’re very tailored now in how they approach what they buy. It’s also scientific in a way.”
Although consumers are steering away from pieces that do not incorporate the latest trends, they are still demanding pieces in versatile fabrics that can be worn year-round.
"I think an overriding factor in how everyone is approaching the business is seasonless," Morrison said. "It's almost like we don't want to make anything that people can't wear all year long. It's a different mindset."
At Nordstrom, inventory turn is at an all-time high as the company vows to change along with the consumer, said Colin Johnson, a spokesperson for the department store chain.
Fresh Merchandise Faster
“A big driver in our business for some time is newness,” Johnson said. “We feel it’s important to stay fluid with our inventories so we are able to bring in fresh merchandise to give the consumer a reason to buy something new.”
While Johnson did not comment on what the company has in the works for the fall, a recent Nordstrom email listed its top five spring trends as "prep club, streamlined, new horizons (a focus on neutrals and earthy textures along with hints of turquoise), graphic prints and French charm."
Technology is a key component of Nordstrom’s strategy to exhibit the latest looks and provide consumers with product availability information.
Since 2011, Nordstrom salespeople have carried handheld devices that can scan items for additional colors and sizes and can ring up purchases. Some salespeople also have iPads that they can use to display the latest looks from Fashion Weekand to pre-order items for consumers.
The company is currently testing same-day delivery of online sales in a couple of markets. Johnson added that online sales are the fastest growing part of the company’s business.
Nordstrom competitor Macy’s is also seeing a boost in online sales, said Durand Guion, the company’s men’s fashion director.
In addition to rising online purchases, Macy's is seeing an increase in menswear sales as fits become slimmer, and men adapt and buy the new styles. Recent research from IBM projects that men's apparel saleswill rise almost 8.3 percent in the first quarter.
Men, who suffered higher unemployment than women in the “man-cession” and are now benefiting from an economic “he-covery,” are also returning to work and demanding dressier styles — a departure from a less dressed-up dotcom feel that used to be more prevalent in the workplace.
“The competitive landscape for employment is tough,” Guion said. “People perceive that they are getting a leg up by being dressier.”