Retailers, consumers and prices
Luxury apparel, redefined
American luxury retail has been, well, in shambles.
Since department store revenues began to plummet in September, luxury’s glossy image transformed to one that brings to mind strewn-about merchandise on a Saks Fifth Avenue floor.
Pricing structures have come under pressure as shoppers seek deep discounts, or worse, question price guidelines after aggressive reductions at the end of last year. In the spring, markdowns crept dangerously close to the start of the season. Clearly, discounts really are not what designers want their labels to be known for.
“For younger, newer designers, image is everything,” said fashion consulting firm Launch Collective’s Rob Spira, who recently co-curated the New York City Save Fashion pop-up shop to celebrate independent designers.
“Before, designers were coming to us for ideas to build funding,” Spira told Reuters at the Save Fashion store, which popular style Web site Refinery29 also co-curated. “Now they’re looking for creative ways to sustain in this kind of environment.”
Refinery29 Editorial Director Christene Barberich said many rising designers complained recently that upscale department stores were canceling orders despite interest in their brands.
“These smaller companies don’t really have the resources to sustain their $60,000 orders when stores cancel,” said Barberich.
Save Fashion, around for a one month stint in the city’s Port Authority bus terminal, allows designers grappling with lower profit margins and less marketing money to sell their overstock at half-off or more. The bright space houses about eight fresh designers every week — including Helmut Lang, Steven Alan, ACNE, Earnest Sewn, Rachel Comey, and Rogan — in a way that won’t recall “a shabby sample sale,” Barberich said. Rather, she dubbed it a “dream capsule department store.”
Save Fashion’s ad campaign, depicting a model wrapped solely in an American flag, says a lot. The event indicates a shift in how Americans may define high-end products once the smoke clears.
“Most of the designers here aren’t considered ‘luxury,’ but there is something about them that shows a future of luxury: smaller quantities, more care, more attention,” Barberich said, adding that some of the brands make their own patterns and trademark their own textiles. “Here, it’s not dirt cheap, but it’s as cheap as it can be where the designers are still making some money or at least falling flat instead of going into the red.”
Refinery29 Founder Philippe von Borries talks about alternative retail from the Save Fashion store
Department stores are expected to see a bumpy road to recovery this year. In March, Fitch Ratings Services said it sees same store sales for luxury department stores underperforming the broader sector, with double-digit sales declines continuing in the first half. Standard & Poor’s cut five department store credit ratings in April, sending Macy’s and J.C. Penney to junk status, and Neiman Marcus into even riskier territory. Saks received a speculative B-minus rating from both agencies due to weakening store sales.
Meanwhile, the Dubai investment firm that owns Barneys New York gave the high-end store a capital injection last month to help it pay for its remaining shipments, one day after S&P cut Barneys to a deeply distressed ratings level.
“The nature of retail is changing,” Launch Collective‘s Spira said. “Despite the fact that we’re in challenging times, to the consumer it has to seem like everything is still beautiful.”