California Apparel News

What might be good medicine for major retailers could make fashion boutiques sick.

With the stalled economy, many major retailers have been trying to jumpstart a holiday retail frenzy by starting the holidays several weeks early. National retailers Kohl’s and JCPenney have been offering huge discounts and generous promotions in the first week of November, well before Black Friday—the Friday after Thanksgiving and the traditional start of the holiday retail season.

While major retailers’ big sales have grabbed attention, many fashion-boutique owners said that they won’t be slashing prices at their businesses, even if the economy continues to weaken. Sweeping sales would hurt the bottom line of boutiques, which generally do not have the deep pockets of high-profile national retailers. They would also destroy the exclusive nature of their businesses, which rely on providing an alternative to the offerings at national retailers, said Fred Levine, co-owner of the Agoura Hills, Calif.–based M.Fredric chain of stores.

“We need to keep our identity and our integrity,” Levine said. “It will be tough, and the results won’t be predictable. We must create these special efforts without compromising who we are.”

Even if boutique owners were to offer big-box retailer-style sales, consumers might not care, said Fraser Ross, owner of high-profile Los Angeles boutique Kitson. Although Ross operates a couple of Kitson outlet pop-up stores, the retailer said the outlet customer is different from his more affluent boutique customer. And his boutique customer is not motivated by sales. “We’re in the trend business. If it is on sale, the trend is over,” he said.

However, boutiques are being forced to take action because this holiday may not be like any other. In a survey released Nov. 12, America’s Research Group forecast U.S. holiday retail sales will drop 1 percent in 2008, the first time in the Charleston, S.C.–based consumer research group’s 23 years of conducting holiday surveys.

Also alarming is the news that the luxury customer is cutting back spending because of the sagging economy. According to the “Luxury Consumption Index,” a survey released by Stevens, Penn.–based Unity Marketing on Oct. 20, the confidence of luxury consumers dropped 10 percent to a point of 40.3 on the index. It is the lowest since the index started publishing in late 2003.

Retailer Don Zuidema said he still sees luxury customers buying $400 jeans at his LASC boutique in West Hollywood, Calif. “But we’re seeing less foot traffic,” Zuidema said. “There are people who have stepped out of the buying cycle.”

To invite them back into the influential store, Zuidema plans to make space for a 10-by-6-foot sales wall in the 4,000-square-foot boutique, which specializes in premium denim from European brands such as G-Star and Diesel. LASC typically produces two sales annually, in January and September, to clear out Spring and Fall merchandise. A wall devoted to promotions will be something new for this influential store. “It’s a concession to the reality of the market,” Zuidema said. The sales wall, which will begin after Black Friday, will offer markdowns of 20 percent, mostly for remaining Fall items.

For the more than 10 M.Fredric stores, sales experimentation has taken the shape of a promotion dubbed “Project Purple.” Purple hangtags will guide M.Fredric shoppers to items typically priced under $100. Co-owner Levine also eliminated any risky items from the merchandise mix to rely solely on proven items that sell consistently well.

“I have to go right for the bull’s-eye, so I can avoid markdowns,” Levine said.

Another prominent boutique changing merchandise direction is Kitson, which is scaling back on fashion collections in the more than five-store chain. Fashion collections are more susceptible to being marked down, Ross said. Instead, Kitson will focus on accessories and gifts for the near future. “Money is tight. Customers are going to want to buy something small such as ’Liquid Leggings’ by Members Only, or it could be a fringe bag,” he said. “This is the trend business. It’s where our roots are.”

Gila Leibovitch and business partner Johnny Alper are experimenting with sales and promotions in their seven-store boutique chain, which is anchored by men’s store Premier Men at Los Angeles’ Beverly Center luxury retail center.

Premier’s happy-hour shopping started on Oct. 1. From 4 to 7 p.m. every Friday, customers can get one item for half off. Also, if customers at Premier purchase more than $250, the store will validate for $18 valet service at the Beverly Center. And there are 10 percent discounts for veteran customers and some gift-wrapping services. “When business was good, we did not have to reach out to customers,” Leibovitch said. “Now that business has gone down, we are trying to find ways to bring them in.”

Times are tough, but retailers are still opening stores in some of California’s most-exclusive addresses, click here for a list of recent store openings.