Business Class
Fashion’s Makeover
The economic downturn has forced the
high-gloss, quick-change world of retail to
reinvent itself. And as it turns out, fashion may
be leading where business should follow
B Y MICHELE ME YER
Fashion, by nature, is change. Last
year’s skinny jeans give way to wide-leg trousers. Floral prints move aside
for earth-tone neutrals. However, a
shaky economy is forcing retail to spin
its topsy-turvy tilts even faster. From
boutique luxury brands to low-cost
department stores, the conspicuous
consumption of 2007 has vaporized.
In its stead? Conscious consumption.
“The slump has been a rude awakening for us all,” says Lori Holliday Banks,
senior fashion analyst at Tobe Report, a
retail consulting firm. “We ponder each
purchase. We shop with more purpose
and less as entertainment.”
Over 80 percent of women have
changed the way they shop, reports a
March 2009 Retail Forward survey, and
30 percent say they won’t buy costly
clothing and shoes even when the economy improves. To pull through the downturn, apparel designers and merchants
are redefining expectations and relying
on a new mantra for survival: instinct,
innovation, exclusivity and Internet.
Instinct
When formula fails, instinct must prevail, says Bud Konheim, CEO of Nicole
Miller. After 54 years in the business—
including tripled sales in 2007–2008—
his message is to forget greed.
“Those years were an aberration,” he
says. “Why take your success peak and
expect it each year? There was so much
money that everybody was successful.”
Thus, while others were heady with such
profits last year, Nicole Miller pared store
inventory to pre-boom levels based on
history—and was spared when retail
tanked. “I realized this ride was over,”
Konheim says. “Oversupply brings markdowns. I wanted a viable, well-run business by design and careful distribution
—not a larger pie.”
Paring back not only helps stores
but also helps shoppers. Scaled-down
inventory o;ers a sharpened point of
view and a sense of urgency: If there’s
just one fabulous blouse in your size, it
may be gone if you wait for a sale.
Or the store itself could disappear.
The International Council of Shopping
Centers reports the highest store closure
rate since 2001. Of nearly 1. 1 million
U.S. stores, 148,000 closed in 2008, and
73,000 closed in this year’s first half.
Rather than risk closure, Manhattan’s Henri Bendel dropped clothing
and honed to accessories, cosmetics
and gifts, its most lucrative items. “It
was a smart move,” says John Mincarelli, fashion merchandising professor at New York’s Fashion Institute of
Technology. “The American mentality
of ‘grow, grow, grow’ failed.”
Innovation
Tough economic times should spark
bursts of creativity. “You’ve got to take
risks,” Konheim says. “Fight the fear that
the sky is falling, because you may cramp
people with great ideas. Just making
payroll and cutting costs doesn’t deliver
merchandise that excites shoppers.”
But presentation does. Retail is
theater, so think fanfare. It’s the di;er-ence between Target—where Mincarelli
had to scour racks before finding new
wares—and Sears.
“Their Lands’ End swim shop last
summer made you feel like you were in
a resort,” Banks says. Picture Astro Turf,
Adirondack chairs and fake piña cola-das. Decorated flip-flops were stu;ed
in pails and beach towels fluttered on
clotheslines. “It made shopping a
