U.S. RETAIL SALES – DO THE NUMBERS LIE?

So the International Council of Shopping Centers (ICSC) and Goldman Sachs tell us that U.S. retail sales this holiday season rose 4.5% over last year. It sure doesn’t feel like it.

The National Retail Federation thinks retail sales have increased 3.8% this holiday season, down from a 5.2% increase last year. Where?

NPD Group, a consumer and retail market research firm based in New York, opines that deals made a difference. Marshal Cohen, chief industry analyst at NPD is quoted on Bloomberg.com as saying, “The holiday was better than expected. Consumers who were tired of living in this spending cocoon went out and bought what they needed and wanted.” Are you sure??

This sure looks like a painful holiday selling season to me. One of my social media clients has 2 retail stores in Los Angeles, one in the busy Belmont Store in Long Beach, and one in the economically devastated downtown San Pedro. I spent some time at both stores over the past week. How things have changed. 10 years ago, the Belmont Shore store used to have lines around the block at Xmas. Now, there are hardly lines at the cash register. As for San Pedro, you’d think it was a sleepy Sunday afternoon in the middle of summer most days rather than the week before Xmas – it was a ghost town.

I realize there are macro factors affecting both locations. Downtown San Pedro is lost as a retail center so not too much was expected. But Belmont Shore is supposed to be one of busiest specialty retail areas in this part of greater Long Beach. It is pretty clear that the affect of online retail that has been nibbling away at bricks and mortar retail sales in a serious way for years is now really starting to bite. comScore, a digital marketing intelligence collector, just released new numbers on U.S. online holiday spending for the season-to-date, and found that consumers continued to shop online in record numbers. For the first 56 days of the November-December 2011 holiday season, $35.3 billion was spent online – an increase of 15% over the corresponding days last year, and a new record. Ouch!

NPD Group’s assertion that the retailers that gave deals this year did better than expected may be accurate but what about margins? Sales are great but what about profits? Marshalls Department Stores lives on providing deals all year round. Their margins are dependent on their buying power. But how can you run a small retail business on the same principle? By the way, the woman at my local Marshalls thought that sales had not been as strong this year.

I am looking forward to seeing some of the sales data from sector to sector. In particular, the fashion sector. The chatter is that designers and sales showrooms in the Los Angeles fashion world are hurting. The fashion industry has been hit badly during this extended economic downtown. Things started to look up a little around mid-year. There was an air of optimism at the August round of fashion trade shows in Las Vegas (check out my blogs). That optimism evaporated as the year progressed. I know for a fact that a lot of inventory that was supposed to be hanging in retail stores for the holiday season got kicked back to the manufacturers. This means retailers aren’t moving goods, designers and manufacturers are sitting on inventory that cost to produce and has nowhere to go, and sales reps won’t be getting any commissions on those orders. Everyone is losing.

So do the numbers lie? You bet they do. Do I wish things were different? You bet I do. Am I being too pessimistic? I wish.

All the research firms and think tanks in the world can produce numbers that tell us that this is better than last year or that improved this year or things are on the upswing next year but on the street the pain continues. I am not saying to give up. The U.S. is still a huge market with incredible potential if you have the right product at the right price. But you better be ready to ride this economy out.

Keep an eye out for more on this from me soon.

Paul Brindley

paulbrindleyconsults.com

DESIGNERS AND AGENTS LOS ANGELES, OCTOBER 2011 – A FULL HOUSE AND A MIXED BAG

Here we are again in downtown Los Angeles for the October 2011 LA Fashion Market Week where we are focusing on the Spring 2012 collections, and filling in with end of year immediate goods – if we are lucky enough to need them.

In the U.S., Spring deliveries begin at the end of January and usually run through the end of March. Spring deliveries are crucial for most West Coast designers and manufacturers. With a natural emphasis on clothes for the warmer climate, Spring (and the flow on of designs for Summer deliveries) is usually make or break.

De Lacy is a good example. Bridget De Lacy is the designer and owner of De Lacy, a distinctive women’s contemporary collection based around item pieces that can be worn day or night, casual or dressy, and transition from season to season. Bridget thinks that her March delivery is one of the two most important of the year (the other being September): “Things are heating up, stores have sold through all their Fall and Winter deliveries and their sales are done. Plus De Lacy offers jersey which is a great transition fabric.”

Each LA Market Week, on the usually vacant third floor of the New Mart, you’ll find the Designers and Agents showcase – designersandagents.com.

Known in shorthand as “D&A”, it describes itself as “an independent, international trade fair for collections and retailers who define the cutting edge in fashion and life style. Identifying emerging talent and creating an intimate, synergistic environment that fosters relationships between designers and buyers, each of D&A’s shows in Los Angeles and New York (which typically attract 3,000 retail and media visitors) are pre-edited, art-directed, and merchandised to create a sense of camaraderie and discovery.” All of which means, it sells itself as a hip and happening place to buy and sell … and I would have to agree.

This week the 3rd floor is full. There are over 100 booths with the usual eclectic mix of fashion forward men’s and women’s basics, separates and denim, shoes, hats, bags, jewelry and accessories. Some of the most notable collections and trends are:

• The color palette for Spring is at both ends of the spectrum with bright and neon pinks, reds, yellows and oranges hanging with greys, dark blues and black. Color Story (represented by the Aubrey Company) is a good example.
• Collections are being given depth and texture by the use of fleece, linen and wovens to hang along with the usual cottons, silks and rayons. Patterns are popular. Fluxus is using the range of colors and fabrics to beautiful effect.
• Medium sized bags are all the go – natural and colored leather, tribal and fringed, woven and geometric pattern. I liked the look of 49 Square Miles.
• Those large floppy sun hats that your Mum wore in the 70′s just keep on keeping on as do the short brim “Mad Men” style hats for men. Check out Christy’s London and Eugenia Kim.
• The semi precious stone boho chic look in jewelry never gets old. There is plenty on offer.
• It was fantastic to see Marithe + Francois Girbaud still at the forefront of contemporary ready-to-wear. They are only showing men’s this week. The collection is sleek and clean with their usual innovative use of design and color – like constructed v-neck tees with an inside chest pocket. Check out their website – it’s brilliant!
• The popular Genetic Denim was as busy as ever in their 4th year doing D&A.
• The Brasil Fashion section is small with only about 10 collections in 7 booths. There was nothing that really caught my eye.

This was not one of my more memorable D&A shows. While the collections were of the usual quality, nothing really jumped out at me. There was plenty of buyer traffic when I was there. And I’m sure that will continue until the D&A ends on Wednesday afternoon.

Paul Brindley

www.paulbrindleyconsults.com