California Apparel News

If fashion can be sold by once non-traditional venues such as TV shows and the Internet, then why not at music stores, too?

Los Angeles–based Virgin Entertainment Group Inc. will find out as it rolls out more fashion offerings at its 17 Virgin Megastores across the United States.

The retailer has been known primarily as a purveyor of CDS, DVDs and electronic games. But fashion is becoming a serious subject for the American subsidiary of British-based conglomerate Virgin Group. Along with standard music store fare of T-shirts, Virgin is selling collections of contemporary clothes. The retailer’s fashion initiative is merely a response to the changing tastes of consumers, said Kevin Milligan, Virgin Megastores’ vice president of product and merchandising.

Increasingly, consumers are cruising the Internet toshop for music, which is taking a toll on music stores’ profits. In 2005, CDs, DVDs, vinyl records and cassettes shipped to retailers dipped 7.6 percent from the previous year, according to the Recording Industry Association of America. To combat the decline, apparel and accessory products now consume 35 percent of the floor space at Virgin’s New York store and its mammoth location at the Hollywood & Highland shopping center in Hollywood, Calif.

Even though sales of T-shirts, track jackets, blazers and denim were less than 10 percent of Virgin Entertainment’s revenues of more than $200 million in 2005, Milligan said an increase in revenue from apparel sales is on the way. The company’s 15 other stores are expected to increase their selection of clothes from 8 percent of floor space to something on par with Hollywood & Highland’s in the next 18 months, said Maureen Ferguson, Virgin’s divisional merchandise manager of apparel and fashion accessories.

While music retailers have traditionally sold T-shirts, Virgin is now selling nearly 100 brands of clothing including jeans and board shorts from Quiksilver, hip-hop–inspired bottoms from New York–based G-Unit, blazers from Ben Sherman and contemporary clothes from FCUK.

Virgin has been testing its fashion offerings since 2002 but started putting some muscle behind the category a year later when Ferguson, a former buyer for Neiman Marcus and The Wedding Channel, was hired to develop the company’s fashion selection.

Virgin isn’t the only music store in the United States casting an entrepreneurial eye towards fashion. Other music stores across the country have started to react to the changing market by increasing apparel and accessories selections, according to Don Van Cleave, president of the Birmingham, Ala.–based trade group Coalition of Independent Music Stores.

“The markup on music is tiny compared to clothing,” he said. “For example, a CD costs $11 to the retailer and you can mark it up to $14.99 or $15.99. An $11 item of clothing can be marked up to $22, if not more.”

That’s a serious switch from a few years ago when clothes and accessories were merely used as a tool to broaden the appeal of music retailers, said Ron Dedmon, co-owner of Dr. Freeclouds Electronic Music Boutique in Fountain Valley, Calif. Now music retailers are increasingly relying on other categories to beef up sales.

Twelve years ago, Dedmon and his business partner, wife Helen, stocked such non-music products as backpacks, T-shirts and baseball caps to attract more women to the store. This year, they’re going to increase their selection of clothes by 30 percent to make up for the shortfall in CD sales.

“We’re finding out a lot more people are looking for clothing,” Dedmon said.

Casting about

Virgin started testing the apparel category at its San Francisco and West Hollywood outlets in 2002, when it stocked Ben Sherman clothing—the label with a rock-star following that was being introduced to the U.S. market.

“We were not quite sure how our customer would react to having, say, Ben Sherman alongside music CDs,” Milligan said. “Much to the surprise of some of our store associates, Ben Sherman was a big hit. This win provided us with the confidence to move forward beyond U.K.-influenced brands.”

The following year, the retailer added FCUK and hiphop– inspired brands to its retail mix. But Virgin’s goal is not to compete directly with traditional apparel retailers.

“Music and entertainment always will be the glue,” Ferguson said. “Everything I bring in must have a music and entertainment heritage.”

Ben Sherman seemed a natural starting point since the label was popular in the mid-’60s with rock bands such as The Who. Other clothing brands such as Quiksilver products, which are merchandised around shopping areas dedicated to skateboarding and surfing, fit in with a particular youth culture.

At the Hollywood & Highland store, Virgin’s merchandising effort is focused on 34 tables where the clothes are crossmerchandised with books and music popular with a specific youth group.

For example, Beatles T-shirts and Ben Sherman items are merchandised with books on English pop culture and British pop CDs. G-Unit clothes are sold near CDs and books about hip-hop, and there is a dressing room in the middle of the store.

Virgin’s emphasis on clothes and accessories has been a boon to purveyors of music and pop-culture clothes. The Crystal Group, a Los Angeles–based company that markets various kinds of T-shirts and kitschy gifts, saw its sales to Virgin increase 120 percent between Sept. 1, 2005, and April 15, 2006, compared to the same time period the previous year, said Michael Lederman, Crystal’s sales manager.

Music vs. fashion

While Virgin is headed in a fashion direction, Lederman doesn’t believe that the music store is competing with other retailers of music-inspired clothing such as Hot Topic because the two attract different customers.

“They both sell Rolling Stones T-shirts but the crossover is insignificant,” Lederman said. “They have different demographics.”

Virgin caters mainly to men and women in their 20s to 40s with annual incomes ranging from $60,000 to $75,000. Hot Topic serves music and pop-culture fans aged 12 to 22.

Clothing manufacturers understand the benefits of selling in a well-trafficked, if untraditional, retail environment, said Erik Steube, president of San Francisco–based Blue Marlin Corp., which sells vintage sports-inspired T-shirts and track jackets to Virgin.

“If you have millions of visitors each month and they see Blue Marlin being presented in a great way, it could only help,” Steube said.

T-shirts and track jackets are the top-selling items at Virgin. The retailer’s fashion price points range from $17.99 for a T-shirt to $200 for a leather purse made by New York–based Loop. Track jackets range from $50 to $90.

The retailer also hopes to lure consumers with T-shirts from independent music labels such as Ubiquity Records of Newport Beach, Calif., and exclusive product launches from the Playboy label.

Other stores in the conglomerate’s family have closely watched Virgin’s fashion initiative. Ferguson is scheduled to travel to Australia later this year to consult on a fashion rollout at Virgin’s music stores down under.