Retail survey: Upping the game

For independent menswear merchants, the challenges are mounting.

LBM1911 SoftcoatIt’s been a not-so-terrible year for independent menswear merchants. Those who remain are clearly the best of the best and many say they’ve brought volume back to almost pre-recession levels. That said, business is more competitive than ever and nothing these days comes easy.

According to an MR survey of independent stores nationwide, menswear business for the first two quarters was, on average, up single digits, with fall plans about the same. Only 10 percent of responding merchants reported double-digit increases for the season whereas 40 percent were flat to down. Similarly, this same 40 percent has planned flat for fall, with the rest projecting second-half gains averaging six percent (ranging from four to 15 percent).

Among factors adversely affecting recent business: severe spring weather in much of the country, the mess in Washington affecting consumer confidence, and intensifying competition, both off-price and online. To make matters worse, merchants today are competing not just with other retailers but also with their own vendors who sell direct, in stores and online. As one respondent noted, “The great luxury labels no longer care about the independents. In the old model, these brands would be grateful to sell specialty stores who painstakingly nurtured and grew the business for them. Then once it got established, the brand would sell to the majors. Today, I’m not sure some of these luxury companies even have a wholesale division! It’s more profitable for them to go direct to consumers; they carefully control who can and cannot sell their product.”

Although retailers cite numerous luxury brands among their best sellers, their lists are more about items, (which is, after all, the way most men shop!). Sportcoats, especially softcoats, are mentioned by 60 percent of respondents (although a few say that business had been strong in sportcoats but suddenly flipped to suits). One merchant notes that it’s taken him three years to get his customers to buy softcoats but finally, they’re responding. “I still sell more structured than soft, but I believe the momentum will continue in the softcoat direction.”

Casual bottoms are mentioned as top sellers by 40 percent of respondents, although a few note that the strength has been overwhelmingly in five-pocket models. “I can’t sell regular flat-front casual pants at all,” one laments. “Not khakis, not chinos, not even the top brands. Unless it’s five-pocket, they’re not buying.” Other strong sellers this season, as noted by survey respondents: slim suits, Eton shirts (described as “a phenomenon” based on great colors, the right collars, wrinkle-resistant fabrics, multiple fits and “good value compared to other luxury labels”), MTM shirts, formalwear, hybrid (dress/casual) woven shirts, accessories and even neckwear. “I’m surprised our neckwear business has been so strong,” writes one merchant. “I think it’s a combination of narrower widths, bow ties, and the fact that guys haven’t bought ties in awhile.” Accessories were listed as both “best” and “worst” sellers, according to store (and according to assortments, most likely, as certain brands are on fire).

On their lists of worst sellers, retailers include knit shirts (including polos), dress pants, casual pants, woven sport shirts, neckwear, swimwear and fancy dress shirts. A few note that woven shirts had been hot for so long that the downtrend was inevitable. Some theorize that casual and hybrid dress shirts are taking some business from woven sport shirts.

Strategy Shifts

The best news to come out of this survey: most independent merchants are becoming proactive, implementing aggressive moves to boost sales and profits. “We just closed one of our two stores,” notes one merchant. “We never intended to be a multi-unit operation, so now we can be more focused, and hopefully more profitable.”

“I’m trying to better control inventory,” insists another. “Prices have crept up to the point where our dollar investment is off the charts. Think about it: a $3,000 Italian suit at 40 off is still $1,800 which is a lot for our customers. I’m planning to discontinue fringe vendors (at these prices, I can’t afford it) or if I want to add a line that’s special, I’ll drop something else.”

Other strategic moves: renovating the store, “buying less upfront for spring 2014 to take advantage of off-price deals (there were many great deals on spring goods this season, but we had no OTB…),”

“enhancing our marketing via more social media and events,” and “a stronger focus on selling, selling, selling!” One retailer talks about paying vendors in a more timely manner. “We’ve been working on this for the past three years. Before the recession, we independents were all fat and happy living off our vendors’ credit. We’re now making sure all our payables are under 60 days.” A few merchants mention a shift in emphasis from men’s to women’s (not exactly what this menswear editor wants to hear but a trend nonetheless…).

Fight ‘Em or Join ‘Em?

Asked about competing with all the new online and off-price competition, some survey respondents are resigned to it while others are using it to raise the bar on their own execution. Says one, “I used to say our upscale customers don’t comparison shop online or look at the flash sales, but I realize some do. For example, we carry a Donald Pliner shoe at $108 retail; a guy came in the other day and told me he saw it online for $25… But what can I do? There’s only so much I can worry about and I’d rather put the energy into improving my own business rather than stress over everyone else’s.”

2013 menswear breakdown by categoryWrites another, “The online business has obviously added competition, but we thrive on competition. It’s helped us by forcing us to “up our game” and improve all aspects of our business. Clearly, we have to provide outstanding service that can’t be found online. In addition, we now demand better prices and deals from our vendors who are discounting online. We presently have a small e-commerce business, but plan on increasing it in the future.”

Although few independents as yet boast a well developed online business, several are developing it, many via exclusive product. “Our merchants are putting more effort into both private label and seeking out unique items,” says a retail consultant who represents about 50 stores. “To compete in the online universe, it’s got to be special.”

Says another, “We get Google alerts to determine which brands are most frequently discounted and then challenge those vendors or simply drop those brands.” Not surprisingly, to bolster margins, numerous merchants are giving preferential treatment to those brands that don’t sell online. What’s more, to keep business clean, a few are clearing out end-season goods on eBay, using a totally different name that has no connection with their store.

A final observation: the vast majority of surveyed merchants refuse to trade down to meet off-price competition. “We feel we’ve missed some business by bringing in cheaper goods,” says one merchant. “We’re done with good/better/best and we’re back to best,” notes another. “Let’s just hope we find enough customers in that bracket.”

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