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High Styles for Low Times

How fashion and luxury firms will ride out a recession.

By Lesley M.M. Blume
Posted Wednesday, May 14, 2008, at 2:50 PM ET

Mention the word recession to members of the fashion elite, and you'll get some colorful reactions. Among high-end retailers, a grim optimism is de rigueur. Burt Tanksy, CEO and president of Neiman Marcus, recently quipped: "Remember, when our customer tightens their belt, it's generally ostrich or alligator."
But even the rarified worlds of fashion and luxury are linked to the broader economy—and marketing lavish, often ephemeral goods is brutally challenging in the best of times. With banks tanking, bonuses vanishing, and retailer bankruptcies on the rise, peddling luxury in 2008 is no enviable task.
Here's a quick survival guide for how the American fashion industry will ride out these distinctly un-fabulous times.
1. Accessories will be everywhere

Like jewelry, for example.
In a paper detailing predictions for the 2008 luxury market, consumer-trends analyst Pam Danziger of Unity Marketing deemed jewelry purchases less susceptible to market fluctuations. "Jewelry is unique among luxury goods because it offers the customer some perceived inherent value," she said.
Retailers and editors are keeping their fingers crossed that Danziger is right.
"We've shot more and more with jewelry," says Sally Singer, fashion news and features director at Vogue. "Jewelry can upgrade any outfit, and jewelry purchase values don't change as quickly as clothes, especially gold."
Other accessories—especially shoes and handbags—will continue to be big business for designers and retailers. Consumers might be skittish about investing in expensive, trendy apparel but will still give themselves a smaller designer fix with these products.
And designers—many of whom already make more money from accessories than ready-to-wear—will be looking for ways to further expand these lower-price-point lines of their brands.
2. Bon voyage, French couture; hello, Americana.
The disastrous state of the dollar abroad has made the importation of European collections prohibitively expensive in America, causing buyers to cut back on purchases from design houses overseas.
"I skipped the last buying trip to Paris altogether," says Erin Crandall, head buyer of designer collections for online retail site ShopBop.com. "The cost of the trip would have outweighed the money we'd have made on the lines."
Which means that enterprising American designers can step up to bat and vie for real estate once occupied by their French and Italian counterparts. Crandall points to wunderkind Alexander Wang and wrap-dress queen Diane von Furstenberg as "recession-proof" designers with perceived long-term value.
Other big American sellers for ShopBop: relative newcomers Derek Lam, Chris Benz, Rachel Roy, and Tory Burch. Expect to see more of them elsewhere.
3. Earlier, increasingly aggressive sales.
You came, you saw, you desired: a gorgeous but hideously expensive Armani dress. You made a deal with yourself: If it goes on sale, I'll buy it.
This might be your lucky season: Designer goods are going on sale earlier than ever. Markdown schedules are moving up and becoming more competitive. For example, Saks Fifth Avenue recently announced 40 percent-off markdowns, which included some of its couture merchandise; the spring sale came a week earlier than last year's. Other retailers will feel obliged to follow suit, since failure to mark down as quickly could hinder sales. In order to keep margins from sinking too low, retailers will likely use techniques like mandating a minimum purchase amount, then giving big discounts on more.
4. Chic downgrade options.
Retailers and editors will provide a variety of lower price options for women looking to spend less but maintain a particular luxury aesthetic.
"Let's say that we have a woman who didn't get her raise or bonus," says Crandall. "She might turn to Theory instead of Chloe, so I'm stocking up on that. I just added Free People, too, to make sure that I had the under-$100 price point covered, too."
Barneys New York—usually home to some of fashion's most elite fare—surprised many in the industry by showcasing the soon-to-be-launched Rogan for Target Collection in its New York and Beverly Hills locations. Lower-end retailers, such as H&M and Kmart, have made enormous successes of their designer capsule collections, such as Karl Lagerfeld for H&M, Stella McCartney for Puma, Issac Mizrahi for Target, and so on. Elite stores appear to be sanctioning and capitalizing on this trend. Magazine editorials will follow suit in showcasing a high-low mix.
"We'll show big labels with H&M tees," says Elle's fashion news director, Anne Slowey. "Ten years ago, fashion was about luxury conglomerations. Now it's democratic."
5. Spare, spare, everywhere.
Fashion oracles declared the trend of the garish "it bag" dead last year, but other gestures toward flashiness are apparently teetering on the edge of the same grave. In the fall collections, showcased in New York earlier this spring, editors and buyers sensed a move toward minimalism and even austerity.
"There's a mood: It doesn't feel right to show things that are overly opulent or steeped in luxury, in light of everything going on in the world," says Hope Greenberg, fashion director of Lucky magazine.
The dress, which has enjoyed a lengthy reign over the market, is losing ground to more conservative, versatile, basic pieces that can blend and carry their owners through several seasons. Retailers report excellent sales in practical items such as blazers, denim, basic separates, and trousers.
As ShopBop's Crandall says: "Classic designs in bad times."
Of course, it's always possible that a downturn will produce its own aesthetic. Uncertain times often produce astonishing results in the fashion world; after all, the dreary early-1990s economy produced Marc Jacobs' now-famous grunge epidemic. Editors and buyers are very curious to see what turns up in the American spring/summer 2009 collections, which will be showcased in New York City this fall.
"We're in very unstable times," says Vogue's Sally Singer. "There's a war going on, and you wouldn't know it in the city. But fashion designers are receptors; they have refined antennas, and it comes out on the runways.



slate.com

[kahlilg]

thanks for the story. just goes to show change is inevitable.

my favorite quote

Quote:

"Ten years ago, fashion was about luxury conglomerations. Now it's democratic."

[softgrey]

i think the idea of earlier more aggressive sales is good news for the consumer!...

..

however...the idea of fewer european designers being available (or affordable) is pretty depressing, no?...

[Mr-Dale]

I wonder if and how this will affect the European houses...America may be in a recession, but the European countries are all experiencing economic growth and a growth in purchasing power. Not to mention Asia....

Thanks softie!

[tourist10]

thanks for the article softgrey!
it's interesting ... it seems that American retailers are definitely hoping that consumers will be making alternative purchases to the high end items but not necessarily cutting back or curtailing consumption altogether ... I suppose they have no choice but to bank on this, they certainly need to stay afloat somehow! but personally, the worldwide food crisis alone has been making me feel guilty of any shopping ... I wonder what parallels can be drawn from the recession of the late 80's?

[gius]

i think growth in accessory design will be interesting..

and you can't always skimp on quality materials either
because it will be such a waste of money to spend a lot on a designer necklace that breaks once you buy it
i think sometimes with poorer quality clothes you can at least hand wash or maintain them in some way on your own

[tricotineacetat]

Quote:

Originally Posted by softgrey i think the idea of earlier more aggressive sales it good news for the consumer!... .. however...the idea of fewer european designers being available (or affordable) is pretty depressing, no?...

it's certainly hitting (independent) fashion retailers hard - but not only at that side of the market - certain well-established paris designers have seen a decline in order volumes lately, not only from the american market.

[melt977]

Thank you for the interesting read softgrey...

[softgrey]

you are all welcome......

[Bel]

Resurgence of classic styles:

Quote:

Falling dollar brings classic pieces April showers bring May flowers ... and trench coats? Yes, this spring, women are snapping up the classic trench and its modern offspring, jewel-toned trenches and coats with cropped hemlines. And the rise of the trench and other sartorial classics might not just be due to the rainy weather. "I personally think that when our economy dips like it is now, people revert back to classic pieces, Chanel-type pieces. History always repeats itself," said Devin VanderMaas, a junior at NYU and editor-in-chief of NYChic, NYU's fashion magazine. VanderMaas said that it makes sense to buy wardrobe staples when the market falters because these items are investments. "They might be a little more expensive, but you'll have them for decades," she said. Upscale department stores are tuned into the trend. "Everyone is doing trenches, but designers are still trying to be playful within a classic silhouette," said Michael Palladino, director of client services at Henri Bendel and adjunct professor at the Laboratory Institute of Merchandising, a university for students pursuing careers in fashion business. Palladino said that another reason women are crazy about trenches this season is because they transition seamlessly from day to night. "Gryphon [a designer] has devised a day-to-evening look with wrinkled cotton and a double belt. If you change the belt, it can double as an evening coat," he said. Palladino said that there are historic and stylistic parallels between the roaring 1920s and the 1990s, and subsequently the Great Depression of the 1930s and today. "We're really living in the same time [30s]. Fashion is definitely a reflection of the time we're living in. If you look at today's fashion trends, the country's economic state will be reflected in that," he said. In the same vein, Christina Rossetti, sociological research assistant at James Madison University, said, "Clothing defines the age, the time and the beliefs of the people. In a recession, people are bound to be more conservative to save money, but they still want to keep up with the trends of the times." And women still want to cling to opulence and whimsy, even if it means shopping at less expensive stores, said Suze Yalof Schwartz, senior fashion editor at Glamour. "Women are still feeling the classics. The trench will never go away, but it is being decorated with colors," she said. "Girls are buying clothes from cheaper lines like H&M and Sarah Jessica Parker's line, Bitten." A survey of Affluence and Wealth in America released by American Express Publishing Corp. and Harrison Group reveals that even the nation's top-tier consumers, defined as the 12 million people who have at least $352 thousand of discretionary household income, "cope with uncertain times through savvy shopping." According to the survey, these consumers are using the internet to compare prices online, a technique that could save families $100,000 or more. Mark Lundeen, senior fashion editor at Neiman Marcus, finds that his clients, who he defined as the top 5 percent of America's richest consumers, still want to make a splash this spring, even in the face of a recession. "My customers will probably buy one piece instead of three. It's usually historically how the market goes," Lundeen said. "Trenches always have a good, classic body and can be seen on any runway every season," Lundeen said. "The recession is affecting the way his customers are spending money. I think everyone is going to be a lot more price conscious." Palladino said that his clients at Bendel who normally spend $10,000 on a new spring wardrobe were spending $2,000 this season. "They have to scale back too," he said.

Washington Square News http://media.www.nyunews.com/media/s...-3369343.shtml

Makes sense in theory, but I haven't noticed it actually happening. However, the area I live seems to be doing very well in the recession (Silicon Valley) Anyway, being a lover of historic fashion, I would love to hear more about the parallels with the 1920s and 30s.

[softgrey]

thanks for posting...

[Louche]

The US market may be allocating larger budgets for US designers, but in Europe it is now hard to retail US brands due to the low dollar. The prices are already much higher on American brands in Europe due to higher sales tax, duties, distributors margins etc., and the difference is getting even bigger as the dollar continues to fall. But European distributors that distribute American brands are having good margins as they usually buy in USD. And I guess retail in NYC is booming due to the increased tourism that comes along with the low dollar.

[mkd1187]

Quote:

Originally Posted by softgrey Like jewelry, for example. In a paper detailing predictions for the 2008 luxury market, consumer-trends analyst Pam Danziger of Unity Marketing deemed jewelry purchases less susceptible to market fluctuations. "Jewelry is unique among luxury goods because it offers the customer some perceived inherent value," she said. Retailers and editors are keeping their fingers crossed that Danziger is right. "We've shot more and more with jewelry," says Sally Singer, fashion news and features director at Vogue. "Jewelry can upgrade any outfit, and jewelry purchase values don't change as quickly as clothes, especially gold." Other accessories—especially shoes and handbags—will continue to be big business for designers and retailers. Consumers might be skittish about investing in expensive, trendy apparel but will still give themselves a smaller designer fix with these products. And designers—many of whom already make more money from accessories than ready-to-wear—will be looking for ways to further expand these lower-price-point lines of their brands. slate.com

Yay for jewelry! (maybe the jewelry threads on here will become more popular COUGH). Thanks for posting softy!

[softgrey]

Quote:

Originally Posted by Louche The US market may be allocating larger budgets for US designers, but in Europe it is now hard to retail US brands due to the low dollar. The prices are already much higher on American brands in Europe due to higher sales tax, duties, distributors margins etc., and the difference is getting even bigger as the dollar continues to fall. But European distributors that distribute American brands are having good margins as they usually buy in USD. And I guess retail in NYC is booming due to the increased tourism that comes along with the low dollar.

i wouldn't exactly say booming...
but the tourists are the only thing saving NYC retail...
other cities don't have such high sales because they don't have the European tourists that NY does....
that is definitely true...

but there is no question...
the locals have been curbing their spending habits...
ny-ers are not spending as much money on clothes....
and they are waiting longer to buy this season...
esp with the weather being so unpredictable...

mkd..i'd like to see more action in the accessory threads as well...
i think you need to start posting in there more!
***if you post it...they will come...

[Acid]

i wonder how the reduction in european imports will affect the european brands themself.
the US is generally a huge market for those labels, particularly the french luxury