Most Recent Articles In Business
Latest Business Articles
- Dick's Beats Street Despite Golf, Hunting Trouble
- Alibaba Exec Sounds Off on Chinese Market at FN Platform
- Dr. Martens Names Steve Murray as CEO
More Articles By
Sharper Price Points
But on-trend fashion means nothing if the price isn’t right. Value has been the buzz word for months now, and department store players are refocusing their price grids to avoid aggressive markdowns.
“The purveyors of luxury goods now have to make the case as to why the product is really value priced. And if it isn’t, they have to reprice those goods to reflect contemporary values,” said consultant Manny Weintraub of Emmanuel Weintraub Associates.
Nordstrom is one retailer that is touting value while “trying to keep pace with the promotional cadence in the rest of the mall,” observed Lizbeth Dunn, an analyst at Thomas Weisel Partners. “They’ve [also] acknowledged that they need to offer sharper initial price points.”
The Seattle-based retailer is hardly alone in its efforts. Sources say that Bergdorf Goodman buyers are being urged by top management to negotiate wholesale deals down to 2005 prices.
Other department stores are redistributing their buys according to “good,” “better” and “best” product tiers. “Our customer is both a high-end and an aspirational customer, and we believe ... having more accessible price point products from the high-end brands, as well as brands with more of the bridge luxury price points, will actually play better in this environment,” said Saks CEO Steve Sadove at The Bank of America consumer conference.
Christian Lavergne, senior designer footwear buyer at Holt Renfrew, said the “sweet spot” for the Toronto-based retailer are shoes between $495 and $595.
“When it starts elevating above $600, and especially above $700 and $800, that’s where it really needs to have a reason to be priced [that way],” Lavergne said.
A proper balance of supply and demand is crucial for department stores looking to stay in the full-price business.
“Many of them have responded with larger open-to-buy positions going into the spring and buying for a low-single-digit to double-digit decline in sales,” said Wayne Hood, an analyst with BMO Capital Markets. “So the amount of clearance inventory that they should have coming out of spring relative to the fourth quarter should be less unless there is another step down in consumer spending.”
“Inventory control is a big piece of everyone’s strategy right now,” said Dunn, “They have decided to confirm their orders closer to the ship date and are pushing the inventory risk back on to the vendors.”
One advantage that some department stores have over independents and small specialty stores is the ability to shift merchandise between locations, analysts said.
“You’ve really got to be paying attention to your shelves regardless of what your open-to-buy sheet says,” said Dan Mann, founding partner of The Mann Group consulting firm. “You’ve got to monitor it virtually daily, see what’s moving and then respond to it very quickly. If you can move quickly internally, you are at an advantage.”
Sears is leveraging its online business to gauge customer demand for brick-and-mortar merchandise.
“Over the past year, Sears has tightly focused it’s footwear assortment,” said Nick Grayston, SVP and president of footwear for Sears Holdings Corp. “[We] are able to use the Web to respond more quickly to market trends and customer demand — translating those key learnings to an even stronger in-store experience.”