California Apparel News

Retail sales have steadily climbed in 2010, but many consumers are still shopping like it is the bad old days of 2009, according to high-profile boutique owners such as Fraser Ross.

“Price is the magic formula right now,” said Ross, who owns the chain of Los Angeles–based Kitson boutiques. “People want value for their dollar. They don’t want to overpay for anything.”

For many retail executives, these are words to live by. Throughout almost every sector of the retail market, stores have been changing their inventories and developing new concepts to attract dollars from consumers who have become highly frugal since the Great Recession of 2009.

Retail analyst Jeffrey Van Sinderen said while the luxury segment has been showing signs of a comeback—iconic, heritage brands Prada and Fendi will be opening boutiques in the United States in 2010, for example—frugal shopping will be a crucial theme for the next year.

“What we’ve seen is a shift. There has been a tide change in the consumer mindset,” said Van Sinderen, who works for Los Angeles financial-services firm B. Riley & Co. “You differentiate your store now by product or differentiate by price.”

Ross is expanding Kitson’s real estate by debuting a new boutique, which will open in August, at high-tier retail center Santa Monica Place in Santa Monica, Calif. He also is scheduled to open his seventh Kitson store, in Tokyo, this year. However, Ross has been merchandising his stores to attract more dollars from consumers who made frugality their religion since the Great Recession.

While Kitson is known for designer price tags, the store also carries $50 shorts and other relatively low-priced items placed next to $300 tops, Ross said.

“You got to mix fast fashion with contemporary wear,” he said. “We have clutches for $48 next to bags for $600, Nicole Richie boho tops for $300 next to cut off shorts for $50. Kitson has always mixed high and low items, but we’re repeating more low-priced items than high-priced items.”

Interest in frugality and newness has been a boon for retailers that have delivered fashion at a low price, such as fast-fashion company Forever 21 Inc. The Los Angeles retailer has been so successful recently that it will open two emporium-sized stores this year. This summer it will open a 90,000-square-foot store in New York’s Times Square. Also this summer, the company will open its largest store in a 126,000-square-foot space at the Fashion Show Mall in Las Vegas.Discounting on a large scale

Low prices and brand names have been the formula for success for off-price retailer Ross Stores Inc. For the past seven fiscal quarters, the Pleasanton, Calif.–based retailer, which has a fleet of 1,005 stores, has boasted record-breaking sales. For its March 2010 earnings report, it stated that its same-store sales, one of the most commonly cited gauges of a retailer’s performance, increased by 14 percent compared with its same-store sales in March 2009.

Department stores and luxury department stores are also courting the frugal consumer.

Nordstrom will open 11 of its off-price Nordstrom Rack stores across the United States this year. Nordstrom Rack offers prices that are 50 percent to 60 percent off of full price.

Neiman Marcus, one of the most celebrated nameplates in luxury retailing, will be testing a new discount concept in Dallas. The free-standing store will sell discounted garments from popular designers. If successful, this new concept will have a different footprint and focus—and, perhaps, name—from the Neiman Marcus Last Call Clearance Centers outlets.

Outlet centers, with overstock merchandise selling at prices 30 percent to 70 percent off of retail, have been one of the major success stories of the Great Recession and its aftermath.

Commerce, Calif.–based Citadel Outlets has experienced low-double-digit sales increases for the first quarter of 2010 compared with the first quarter of 2009, according to Jess Irwin, marketing director for the outlet center, located near downtown Los Angeles.

By fall, the outlet mall will debut a new 157,000-square-foot wing, which will house more than 36 factory stores. Citadel owner Craig Realty Group, based in Newport Beach, Calif., has made plans to open more than three outlet centers across the United States. One will be The Plaza at San Clemente, which will offer 350,000 square feet of outlet shopping and dining less than a mile away from the beach in San Clemente, Calif., which is a hub of affluent south Orange County.

Outlets are part of the retail-expansion strategy for Los Angeles–based premium-denim brand Joe’s Jeans, according to President and Chief Executive Officer Marc Grossman.

Joe’s has opened seven outlet stores since late 2008 and will be opening six more before the end of the year. Crossman said outlet stores are not for frugal buyers only. “It would have made sense as the economy got stronger that you would have seen customers go back to full-price stores. But I have not seen that,” he said. Rather, Joe’s customers who shopped at the outlets have continued to patronize the off-price factory stores, and the Joe’s outlets’ same-store sales have increased by double digits over the past year.

Crossman also continues to have faith in full-price stores. By the end of the year, he will open seven full-price Joe’s Jeans stores in malls across America. Online and off-price

Designer brands and discount prices are helping drive online growth, said Andrew Lipsman, director of industry analysis for Reston, Va.–headquartered market-research site comScore Inc.

“Consumers always respond to deals,” Lipsman said. “This is definitely an area of growth; we’ve seen traffic double and triple for many of these sites in the past year.”

Unique visitors to designer discount e-store HauteLook skyrocketed 258 percent in March compared with its traffic in the same month of 2009. Another designer discount site, Gilt Groupe, found traffic for its unique visitors increased 80 percent in March compared with the same month in 2009.

However, many e-commerce boutiques find more success in selling fashion at full-price, said Jacey Kunka, a buyer for e-commerce boutique Shop LA Style. The site’s core retail price points range from $175 to $230. “Our sales are few and far between,” Kunka said. “It’s a lot different than the end of last year. Through holiday time, we had to have sales every other week.”Specialty businesses

Independent boutiques have long been a source for establishing trends in fashion. The Great Recession devastated this segment, however. Surviving independent boutique owners have been retrenching and finding success.

Influential retailer Lisa Kline pared down her fleet of shops from a peak of more than six shops in 2008 to just two boutiques, the Lisa Kline flagship and Lisa Kline Kids on Los Angeles’ high-profile Robertson Boulevard, this year.

In February, she told California Apparel News that the bigger her fleet of stores became, the farther she got away from the heartbeat of her business and the key to her success, which was working on the shop floor of her boutiques. “I’m going back to basics,” she said.

Independent specialty boutiques continue to open even in the face of a still-weak economy and an avowedly frugal customer. Designer store Echo Park Independent Co-Op (E.P.I.C.) opened in March in Los Angeles’ Echo Park neighborhood. Business partners Tristan Scott and Rhianon Jones forecast their 2,300-square-foot boutique will succeed because it caters to a niche. They are consumers who prefer to buy garments made domestically by emerging, local designers. “It’s wearable art,” Scott said. “We’re selling to people who buy art.”