designer-luxury
designer-luxury

Fashion Industry Cautiously Stages a Comeback

WWD looks at companies from Chanel to Givenchy, Eileen Fisher to Juicy Couture, as they plan postrecession business strategies.

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The tide has turned, the worst is over, there are glimmers of hope.

Whatever cliché one wants to use, it seems as if the industry is staging a comeback after the debacle that was late 2008 and all of 2009. Consumers are sallying forth again like nervous rabbits coming out of the bushes, beginning to snap up not only handbags, shoes and jewelry, but also apparel. Comparable-store sales are on the rebound from their depths of 12 months ago, and executives express optimism that the upswing will continue through the year. According to the U.S. Commerce Department, consumers increased their spending 3.6 percent in the first quarter, the strongest showing since early 2007.


“Right now, I feel a sense of optimism…but it is fragile,” Stephen I. Sadove, chairman and chief executive officer of Saks Inc., said last week.

Fabrizio Freda, president and ceo of the Estée Lauder Cos., told analysts last week, “We believe consumers are beginning to reconsider luxury products.”

Yet even as companies step up advertising, marketing, store openings and hiring, uncertainties remain. “From day to day, no one knows whether it will be issues with financial markets, fabric prices, labor shortages or even volcanic eruptions that will impact our business that day, week or in coming months,” said Seth Morris, president of The Carole Hochman Design Group. “I think consumers have money they are willing to spend, but they definitely remain value driven.”

So how do companies figure out the lessons of the Great Recession to ensure the “green shoots” of growth don’t wither in the summer sun?

The first major lesson, executives agree, is not to get drunk on the rebound à la the prerecession euphoria. “Make sure you don’t forget the lessons of the recession and get into an overexuberance too quickly,” Sadove said.

“We anticipate that consumers traumatized by the severity of the economic downturn will continue to watch their wallets in the short term,” said Don Montuori, publisher of Packaged Facts, which recently issued a report called “The Post-Recession Consumer in the U.S.” “In response, retailers and marketers are coming to grips with the need to reposition their brands.”

Companies now can turn their attention to investing in their brands and seizing overseas and domestic opportunities. Executives said they are trying to be innovative and proactive. The challenging times last year allowed them to strengthen their firms by lowering costs, better controlling inventories and getting out of underperforming areas.

Among the key steps firms must take to reenergize their businesses and reengage with customers are:

• Expanding their retail presences worldwide.

• Upgrading their Internet operations, including e-commerce and social media.

• Broadening price points.

• Going one-on-one with customers via trunk shows and personal appearances at stores.

• Pumping up marketing, visual merchandising and in-store presentations.

• Hiring again and, in some cases, unfreezing salaries.

• Making key acquisitions and/or expanding licensed categories, such as handbags and footwear.

Below, WWD takes a look at key players in the designer, bridge, better and contemporary arenas in the U.S. and Europe and examines their strategies on how they’ve survived the Great Recession. None of the steps being implemented are easy or quick. But if firms are to prosper — and be prepared for the next economic shock, whether it be from the Greek debt crisis or some yet-unforeseen trauma — all of these and more are vital.


DESIGNER

GIORGIO ARMANI


Giorgio Armani is moving ahead with freestanding stores and remodeling many of its in-store shops.

“We didn’t cut back much in the downturn, but we’re pushing ahead now and plan to open 70 new stores this year between the various lines, including A|X Exchange, in various parts of the world such as Brazil, China, India and Eastern Europe,” said John Hooks, deputy chairman of Giorgio Armani SpA.

He said Armani also has an aggressive plan to expand or renovate many of its shop-in-shops.

“We signed an exclusive deal with Macy’s to promote the Armani Jeans line in the U.S., where it’s not so strong, with the goal to start in the fall and reach 200 doors in the next two years,” said Hooks.

But core retail isn’t the only area the company is expanding. Last week, Armani unveiled a striking 160-room hotel in Dubai, in which no expense was spared, the first in a planned collection of hotels, resorts and residences in key cities around the world to be created in partnership with Emaar Properties.

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