In a candid conversation with an executive at arguably one of the nation’s best specialty retailers, the current state of apparel sales was reported as such–
Womenswear = tough.
Menswear = worse.
Men’s tailored clothing (suits in particular) = abysmal.
Answer = a wide-sweeping retail price correction is much needed in order to start the process of regaining consumer confidence.
The pricing bubble in luxury clothing has grown at a very healthy rate to the point now that it’s a lot like the housing market– out of line with the current economy. Go back 4-5 years ago– that’s where the pricing needs to be today. The market simply will not bear it any longer, and vendors will have to either sharpen their pencils or watch their business shrink dramatically. For brands like Zegna, Brioni and Kiton this will be a hard pill to swallow, as they will certainly resist in order to maintain brand integrity and exclusivity. I get their thinking, but ultimately the customer decides the value of your goods in a climate like this. They will definitely continue to wait for a markdown and inventory turn will get even worse unless something is done. The retailers are responding by putting major pressure on vendors to share in the pain. For them it’s not about trading down to lesser brands, it’s about getting pricing in-line with the current vendor base. Luxury brands bring the customer in, and the retailers need to convert them back to purchasing at full-price by giving them a pleasant surprise when they look at the price tag.
Just like the picture below, it’s time for a little haircut.
Heads up Saks Fifth Avenue– the word on the street is that you’ll be in the doghouse a very long time over the pre-holiday, deep-discount shenanigans. The extreme preemptive strike is being blamed by many for upending the luxury market– forcing some firms into bankruptcy, tearing down long-standing pricing and distribution standards, and ultimately eroding the exclusivity and coveted air of the very brands that trusted Saks to look out for their mutual interests.
Saks Fifth Avenue may have succeeded at clearing goods quicker than most, but they hurt many in the process and tarnished their name. Short-term thinking resulting in long-term damage, some might say.