Sign of the Times. Great Sales For Fashionistas, But Bad For Business

November 12, 2008 • Fashion

We may be broke, but we are certainly getting used to 30, 40 and even 50% off signs from retailers everywhere we shop. Right? Even weeks before the holiday season kicks off we re seeing massive discounts not afterward which we are used to. According to an informative, yet disturbing article in yesterday’s WWD, it’s
no wonder retailers are hitting up the vendor community for markdown
money even earlier than usual — and for greater amounts.

This fall selling season has turned into one of the most disastrous on record
because consumers virtually stopped shopping in October. Retailers have
been forced to cut prices at least a month earlier than usual. Neiman
Marcus, for example, offered 40% percent off all merchandise throughout
the store for several days in late October, went back to regular prices
and then resumed major sales of 25-40% throughout women’s
designer, couture, contemporary and career sportswear this past
Saturday. Most stores are following suit.

As a result, retailers
have become much more aggressive in asking vendors to help shoulder the
responsibility for merchandise that’s not moving off shelves. In addition, several
stores are canceling some of their fourth-quarter orders.

One contemporary vendor,
which sells to department and specialty stores and requested anonymity,
expressed frustration with retailers because of the massive markdowns.

“We are getting squeezed from all sides. On the manufacturing front,
raw materials Intermix_50
costs are rising as well as for labor and transportation.
This in turn makes it challenging to provide the kind of starting
margins one needs to run a business. To add, stores are asking for
lower prices than last year. On top of all these challenges, markdowns
are higher than usual and our retail partners are requesting more money
than in the past,” she said.

  But market experts say stores don’t have much of a choice.

Bob Grayson, founder of The Grayson Co., a retail consulting firm, said
it comes down to partnerships between vendors and stores. “The
real story is not about when markdown dollars are requested or how much
or whether cancellations should happen. The facts dictate that
markdowns must be taken to clear the excess inventories created by the
last two months of disastrous sales results. And there is more
merchandise on order than can be sold during the anticipated dismal
holiday season, which dictates cancellations. Therefore, the
discussions between the stores and the vendors which revolve around
justification for markdown support and cancellations are out the
window. No one saw this coming,” said Grayson.

Read "Mania for Markdowns: Consumers Get Benefit, But Vendors Squeezed" here.

Source & Photo: WWD

See the Top Ten Summer 2016 Trends for Women Over 40

Tags: , , , , , ,

Leave a Reply