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Fashion retailers cutting costs and inventory amid the economy crisis

6/16/2009

The economy has been in crisis for some time now, but Karen Videtic, chair of the Department of Fashion Design and Merchandising at Virginia Commonwealth University, says that clothing retailers are just adjusting now, and consumers can expect big changes on the sales floor.

“The sales floors won’t look as deep. They may have the same amount of styles, but not in the depth of the colors and sizes they had before, or they might just have fewer styles,” Videtic said. “You may go into a store and it will look a lot less crowded. The racks may look a little thinner.”

Fashion retailers are cutting their inventory after having to massively mark down prices on extra merchandise over the past year. And because retailers are making drastic changes, Videtic warns that consumers should not expect the same deals that have been prominent.

“[Retailers] kind of trained us over the last six months to not buy full price, because it’s going to get marked down. All the retailers are marking things down,” Videtic said. “But what may well happen coming up this holiday season is, because they bought narrower and closer, taking a lot less risks than they had previously, we may well find that when we go to the stores, there will be less merchandise. So my advice to consumers would be, buy early, so you get what you want. And don’t expect the mark-downs we saw last year.”

Retailers are doing a lot to cut their costs, and according to Videtic, stores will look sparse because of less merchandise and fewer sales people. But in this economic crisis, that might not be enough, forcing clothing retailers to look for more creative ways to cut back.

Videtic says clothing stores can not get much cheaper labor than they already have, so many retailers are cutting back on manufacturing by selling their warehouses and changing their fabric choices in favor of cheaper materials. Because of these changes, Videtic says buyers need to be extra careful.

“You have to be a little savvier than you were in the past few years. You have to really check out the fabrication, and you need to look at the details to see whether you’re really getting a good deal,” said Videtic.  “It may look like a great deal – ‘oh look how much cheaper it is this year’ – but you need to see where they cut their costs.”
 
Clothing merchandisers are not the only ones taking a step back because of the economy. Videtic says the recession may have lasting effects on how consumers value clothing items, particularly certain brands. By having to cut back on spending, many fashionistas are changing their minds about spending hundreds of dollars more on a garment for the label alone.

Consumers are changing their “perceived value” of brands, she says, and starting to put more emphasis on function and garment quality than designer names.

Merchandisers are making such enormous changes to adapt to the recession that they will not be able to turn it quickly back around when the economy picks up, Videtic says.

“This is a really deep change. So if the shift changes back, how fast can you get the factories up and running again? Probably not fast enough,” Videtic said. “So I think for us, as consumers, we need to be aware. For retailers’ sake, they hope they have demand, but as a consumer, we may find that our merchandise needs may not be able to be met.”

About Karen Videtic
Karen Videtic has taught retail buying, fashion merchandising, advanced store development, management and fashion promotions at VCU for more than 20 years. Videtic’s retail experience extends from department stores to national specialty store chains, in management and fashion promotions, as well as independent consulting on merchandise planning and control. In wholesale, Videtic has assisted several independent manufacturer sales representatives in both the intimate apparel and fine jewelry industries attending New York and Atlanta markets, and she has developed numerous new product lines for national jewelry manufacturers. Videtic has co-authored two textbooks, “Perry’s Department Store: A Retail Buying Simulation,” and, “Perry’s Department Store: A Product Development Simulation.”

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