Where is the Fashion Industry Going? | Ilse Metchek
Being American companies, most of us are swayed by the wall street results. Retailers are measured by year to year comparisons for the last so many years. If you look at, so many of these retailers haven’t made money quarter after quarter after quarter. Think about it for a minute. If that doesn’t show where the trends are going, I don’t know what else can. So I’m gonna take an example. We all know that at retail, the prices have been going down right. So let’s say five years ago, I was selling $1 a garment and I was selling 100 garments. My total sale was a $100. Wall street wants to know the following year, what did I do against that $100. I wanted to be more competitive and I dropped my price to 90 cents by really squeezing the supply chain. But now to get my $100, I have to do 111 garments, because at 90 cents to get my $100. And this continued year after year from $1 to 90 cents to 80 cents to 70 cents, but just to get my $100 retail, I had to now come up to 170 garments to sell to make my $100. Where am I going to find those buyers? Where are those garments going to go? Eventually, somebody has to give. So you’ve seen all these retailers who are going under. It’s a very hard time for anybody in the retail or design to understand where the industry is going.. Where do you think the industry is going? Back to the specialty stores. The statistics are very clear. There’s a pie chart that shows you that 34% of apparel, and that is my specialty, apparel footwear accessories, are purchased at a specialty store and I’m not talking about specialty chains like Sad, Forever 21, or Victoria’s Secret who are having their problems. I’m talking about seven stores within a state, by the way that’s the that’s the definition of a specialty store, within a state, seven stores maximum. So it’s the store in the strip mall or the independent store in a mall, or on the street. These are the retailers who are testing and trying new things because as you clearly state, the major stores rely on those retailers to make the mistakes and they only buy what they think is hot based on last year or based on what the industry is saying is hot. The problem with that kind of merchandising theory is that in in the United States and we are the drivers of apparel merchandising in the United States, there are only twelve pencils, what we call pencils. Anywhere from Wal-Mart to Bloomingdales to Neiman’s to Saks to Dillard’s, name them, twelve retailers that can buy as you say, that hundred pieces of one style. To build your business around those twelve retailers, where every financial institution will tell you that your return is only 70 cents on the dollar after they take their discounts and charge backs and operational discounts and whatever. If that is your business model, yes you will have a difficult time, but at the same time if your business model is for the specialty stores, you better be ready with something new all the time. And the one thing we’re not talking about right now is online. As the driver of this merchandising frenzy, Now right now at this point in time, whatever date it is, online purchasing is still only less than 20% of apparel purchasing. It’s more than 80% we’re shopping online but pushing that button, only 20% of the time. So it’s still in the stores, but online has driven the stores to do two things that are really very exciting to be a manufacturer. And we see this at trade shows. We see buyers walking up to a line, a resource, and saying, do you sell to Macy’s? Do you sell to Amazon? and if the answer is yes, they walk away. Of course. Because they don’t want to compete with the sales and the prime and whatever it is. Now that is an open door for new brands and new ideas because here is 34% of the market who is looking for new ideas. And whether its made in India or made in Burma or made in Europe or made in Los Angeles, the essence of it is that’s not the first question. It’s not the first question. After they like it, the question might be, certainly delivery, where is it made, and coming up where is your factory, and what is your environmental disposition, but whether it’s made locally or made in New York or made in Atlanta or made in Timbuktu is not the issue. The issue is the immediacy of the look for the specialty stores. It’s a totally different sell, it’s a totally different sell.