Back-to-School Spending to Reach $18.4B
Washington D.C., Total back-to-school spending this year is expected to reach $18.4 billion, according to the National Retail Federation’s 2007 Consumer Intentions and Actions Back-to-School survey, conducted by BIGresearch. The study found that families with school-age children are expected to spend $563.49 on back-to-school merchandise, up 6.9% from last year’s $527.08 average.
According to the survey, the electronics category will see the biggest increase in sales this year, with families spending 13% more on electronics than last year ($129.24 vs. $114.38). Footwear will also see a higher-than-average sales increase, with sales expected to rise 10.3% over last year ($108.42 vs. $98.34). Families are also expected to spend $94.02 on school supplies, up from $86.22 a year ago.
Though the majority of shoppers will be purchasing clothing and accessories this year (95.4%), spending in that category is expected to be flat, with consumers spending an average of $231.80 on those purchases. Last year’s spending average topped out at $228.14. Clothing and accessories remains the largest spending category at $7.6 billion.
High-end designers stake their claim at mass
Apparel performance saw its third straight year of growth in 2006, posting a moderate 5.1% sales gain from last year, according to data from The NPD Group.Children’s apparel led the industry’s growth with an increase of 8.4%.Women’s apparel grew 5.2% to nearly $102 billion. Men’s apparel grew just 2.9% to nearly $55 billion in sales. Overall, the industry brought in $190 billion in top-line sales last year.
Among the sub-segments that enjoyed the most growth were children’s and infants’ sets, with 15.1% growth; special infants’ wear with 16.3% growth; and intimate apparel with a 9.9% boost.
The “dressing up” trend fueled sales growth in both men’s and women’s apparel last year, NPD said. The categories of notable growth in women’s apparel were dresses and hosiery. Dress sales were up 7% this year, and hosiery sales overall were up 3.4%.
For men, the bottoms category was up 8.5% overall, with pants and slacks (a dressier option) posting 7.2% growth, while jeans posted 5.4% growth. In suiting, NPD reported that the unit volume was up 6.2% for 2006.
“Suits are stronger in the younger men’s market,” said Marshal Cohen, the apparel industry analyst for NPD. “Younger men are realizing the benefits of dressing up…‘dress for success’ has become ‘dress to impress.’… Men ages 25 to 34 increased their purchases by 13.4%, while men 18 to 24 purchased 11.6% more suits [in 2006] than [in 2005].”
Beyond segment sales, apparel headlines in 2006 were again focused on designer fashion at discount prices. Target began its limited-edition, quarterly GO International program last February, introducing juniors’ apparel and accessories collections from a roster of high-end designers including Luella Bartley, Tara Jarmon, Sophie Albou (Paul & Joe) and Behnaz Sarafpour. Target has continued the series this year with collections from Proenza Schouler, which launched in February, and Patrick Robinson, which launched in May. Libertine will be designing a collection that launches this summer, and British designer Alice Temperley will round out the year, with a line launching in October.
Apparel & Accessories
|2006 RETAIL SALES BY SUB-SEGMENT|
|FIGURES IN BILLIONS, % CHANGE OVER PREVIOUS YEAR|
|Source: The NPD Group/Consumer Tracking Service|
|Sears Holdings Corp.||10,072e||10,310e||(2.31)|
H&M, who launched one-off collections from Karl Lagerfeld in 2004 and Stella McCartney in 2005, launched a bridal-themed collection from Viktor & Rolf in stores last year. The Swedish fast-fashion retailer, which is continuing to amp up its retail store presence in the United States, said that it will launch a new one-off collection from Roberto Cavalli in select stores this fall. The company topped off last year by announcing a formal partnership with Madonna in December. Her line, M by Madonna, landed in all 1,300 stores in March.
Kohl’s made major headlines last August when it announced that it would launch an exclusive better women’s sportswear collection by bridal and ready-to-wear designer Vera Wang. The line, which will also include accessories and intimate apparel, will launch in all of Kohl’s stores and on its Web site this fall. In addition to apparel, Wang’s line will have a major presence in Kohl’s home department.
Last fall, Payless Shoesource lined up a deal with designer Laura Poretzky of fashion house Abaeté to design an exclusive shoe collection for select Payless stores, and since then, the company also has secured deals with designer Lela Rose and well-known stylist Patricia Fields, from the television show “Sex and the City.”
While many retailers thrived on the excitement brought about by the introduction of their own discount designer brands, others struggled to find the best fit for fashion in their stores. Wal-Mart, for example, started off the year strong with its fashion-forward Metro 7 brand. The line originally launched in 500 stores in fall 2005, but Wal-Mart reported that it sold so well that it had to cut back the number of stores that the line reached from 1,000 to 860 in February 2006.
However, by the holiday season, it was clear that the line had been overextended: Wal-Mart was forced to slash prices drastically on its Metro 7 merchandise in November and December. This year, the company has taken a “back to basics” approach, as it figures out just how far it can push the fashion envelope and what stores, if any, could support a greater presence of fashion apparel.
Macy’s Inc. (formerly known as Federated Department Stores) has been having trouble attracting former May Department Store customers back into some 400 newly renovated Macy’s doors. Despite initial assertions that the merger of the two companies was going smoothly, the company has recently admitted that, perhaps due to lack of promotions in former May stores, its newest Macy’s branded doors have been consistently below sales expectations.
It’s too early to tell whether the company’s newest designer brand, O Oscar, has made any traction. The company launched the line in just 150 Macy’s doors in February. However, the line is a relaunch of a failed more moderate line, also called O Oscar, that was made for May Co. stores and sold for only two seasons, in fall 2004 and spring 2005. The relaunched line could expand to 350 Macy’s doors—if it performs well.
Although neither Sears nor Kmart launched any designer brands last year or this year, both companies showed improvement in soft good sales last year, according to Sears Holdings chairman Eddie Lampert.
“The apparel businesses at both Kmart and Sears also showed continued improvement,” Lampert wrote in his shareholders letter in March. “Kmart is further along in partnering with our sourcing and design groups, and we believe that we have improved our offering…Sears’ apparel has turned around the decline that occurred in 2005 when it moved away from the styles our customers wanted to buy.”
JCPenney continued to make headlines in apparel last year, although it, too, did not launch any new designer brands. Instead, the company focused largely on its exclusive national and proprietary offerings. For example, the retailer reinvented its beauty business by launching boutique store-in-store shops with leading beauty retailer Sephora. JCPenney revamped its intimates business with a new in-house apparel brand, called Ambrielle, designed to go head-to-head with intimate apparel specialty retailers like Victoria’s Secret. Penney’s also announced a major store-wide partnership with Polo Ralph Lauren for a new line called American Living, which will land in all stores this fall.
Select Comfort is upgrading its Sleep Number 7000 and 9000 beds. The 7000 adds a new rayon and silk sleep surface, which is softened with aloe vera. The fabric also provides vapor and moisture transfer, so heat and sweat are wicked away from sleeping bodies for added comfort. The top-of-the-line 9000 bed now includes a bouclé yarn covering fabric, another vapor and moisture transfer material, to complement Outlast adaptive comfort technology, which is designed to balance a sleeper’s skin temperature for a superior quality of comfort.
A manufacturer, installer and retailer of window solutions, 3Day Blinds has entered into a licensing agreement with Laura Ashley Inc. to manufacture and retail a new line of Laura Ashley sheer window shadings designed to blend soft, light-diffused vanes and sheer fabrics. When raised, sheer window shadings virtually disappear into a headrail, maximizing window views. They come in a selection of 20 colors, with room darkening or light filtering fabrics available.
Westgate Interiors, a leading supplier of decorative fabrics and trimmings, is launching an extensive collection of bedroom ensembles, decorative pillows, table linens and accessories. The line debuted at the International Gift & Home Accessories Show in Dallas last month.