California Apparel News

Move over music. Clothes are emerging as one of the hottest markets on the Internet.

While analysts predict skyrocketing oil prices and fear of terrorism will drive more consumers to buy clothes online, apparel retail Web sites would be popular even if gasoline cost $1 per gallon, according to a recently released study.

Once novel, e-commerce is fast becoming an accepted part of America’s shopping routine and more e-commerce operations are making money, according to “The State of Retailing Online 7.0,” conducted by Shop.org, a division of the Washington, D.C.–based National Retail Federation, and Cambridge, Mass.–based technology research company Forrester Research.

The study, released May 25, polled more than 150 e-retailers on the direction of their business. Seventy-nine percent reported profitability in 2003, compared with 70 percent the previous year.

The study predicts that online apparel sales will grow 42 percent this year while overall online retail sales will grow 27 percent. However, the apparel market will only make up 1 percent of total online retail.

Selling clothes online is a growth industry for Southern California retailers. E-commerce for Pacific Sunwear of California Inc. shot up 90 percent this year over last year, according to Greg Weaver, chief executive of the Anaheim, Calif.–based surf- and skatewear chain that has more than 859 stores throughout the United States.

Even small businesses are benefiting from the trend. At Intuition, a 1,000-square-foot high-end casual contemporary boutique in Los Angeles, Internet sales make up 70 percent of business, said owner Jaye Hersh, who opened a 5,000-square-foot warehouse in Culver City, Calif., to maintain the growth of her online business at www.shopintuition.com.

“I had no expectations,” Hersh said of building the Web site in July 2003. “It was a way to run the business more efficiently. The time it took to physically take information over the phone was tremendous.”

Remarkably, Hersh said her booming Internet business encouraged people to visit her bricksand- mortar store.

Hot Topic Inc., a mall-based purveyor of music and youthculture apparel based in City of Industry, Calif., also sees e-commerce efforts as benefiting the company’s mall stores, Chief Executive Betsy McLaughlin said.

“Our marketing strategy has always been to locate ourselves in the places that teens visit regularly,” McLaughlin said. “Regional malls and the Internet both meet the criteria. We don’t believe that one takes from the other. In fact, it’s the reverse. We often see customers in our stores with printouts of products from the Web, and we often have requests online for products that have been seen at a store.”

Hot Topic’s e-commerce makes up approximately 3 percent of the company’s total business.

Although the demographic of Hot Topic and Pacific Sunwear is Web-savvy teens, www.shopintuition.com gets orders from not only teenagers but also from women ages 40 and above. And www.chocosho.com, the Web site of Chocosho, a new e-retailer based in the Silverlake district of Los Angeles, attracts 18- to 35-year-old women, said co-founder Larissa James.

“Chocosho.com is most busy during the week when people are at work in front of their computers,” James said of her customers, who purchase T-shirts, tops and underwear made by new Los Angeles designers.

Even less fashion-forward retailers, such as Sears, Roebuck and Co., have seen apparel sales increase on their Web sites. Clothes are one of the most requested items at www.sears.com, said company spokesman Willy Medina. That is ironic because until recently, the Web site did not offer clothes—it specialized in the store’s other big-ticket items, including appliances, tires and jewelry. However, Sears expects the Web site’s retail mix will change by the fourth quarter of 2004, when the company will make a full array of clothes available online, Medina said.

One reason for the success of apparel e-tailing has been its steady and uneventful history, according to Aubie Goldenberg, a Los Angeles retail analyst at Ernst & Young.

“One big difference between selling music and apparel online is we haven’t seen the Internet create huge price pressures on apparel retailers,” Goldenberg said. “People don’t get on the Internet for a discount on a pair of pants. There’s a lot more consistency in price.”

Neither Hot Topic nor Pacific Sunwear offer discounts or deals online that are not already available at their stores.

While discounts are not motivators for online apparel shopping, economic and political instabilities are. An April bomb threat in West Los Angeles malls, which later proved to be a hoax, boosted sales at www.shopintuition.com by 30 percent, Hersh said.

Also, rising gasoline prices are prompting consumers to consider whether they should drive to the mall or turn on the computer. John A. Challenger, chief executive of Chicagobased human resources company Challenger, Gray & Christmas Inc., recently wrote that he expects rising fuel prices to benefit e-tailers.

While apparel’s claim on the e-commerce market seems secure, veteran retailers such as Ron Herman, owner of several Southern California high-end boutiques bearing his name, said this market still has room to mature.

“I think I’ll be selling items online when I have unique products that should be there,” said Herman, who is redesigning the Web site for his stores but will not offer online shopping. “It cannot take the place of personal contact with people in a specialty store.”