Academy Awards Alert! Why You Might Be a Fashion Criminal

Impressions of MAGIC

Show floors visited: MAGIC, PROJECT, Workroom, Off-Price, Platform, Pool

Attitude of the exhibitors toward the 'traffic' depended upon the expectations of the exhibitor. Most of the newer 'hot' contemporary companies thought the show's traffic was positive because they were seeing more retailers and press people. The retailers in this space were looking for something new and reaching out to view the lines they may not have shopped before. The show, however, was disappointing for the long-time exhibitors expecting to 'write' orders based on past experiences, and who did not make appointments.

There was a cautious approach by the vendors at every level due to price increases of source materials. The specialty store retailers are realizing they will have to charge higher prices for the merchandise that will be coming in from their current vendors. This is another driver for the retailers 'shopping' frame of mind: The retailers are getting ahead of the curve by seeking alternatives, and are sampling new down-market vendors. This is the case unless they have established a 'must have' brand within the store or the department.

Even the higher priced lines (not quite 'luxury') know that the consumer has price on his/her mind. The vendors who are accustomed to higher margins for their fashion merchandise are caught in the middle of the re-thinking that is going on.

The cautious approach was echoed by retailers buying much closer to need. There was much more activity in the booths where bright colors and summer-y styles were being shown, than where transitional and fall merchandise in dark colors were in view.

Another impression is that the retailer is cautious as to the individual or company with whom they are dealing. With no specific trend as the most important one right now, retailers are selecting the vendor with the best reputation and track record for on-time delivery and service within their buying plan strategies. Conversely, when a new speck on the horizon (the return of 'preppy') is talked about, the knowledgeable retailers go back to those brands synonymous with that look (i.e.: Pendleton, Timberland, etc.)

As Roth Capital Partners' Senior Research Analyst Liz Pierce writes, "The obvious question being will price increases lead to demand destruction and if so, who in the supply chain will bear the brunt of the increase? At this point we think it is too early to tell, but we did hear that more and more retailers have accepted the reality of the situation and have started to raise prices, especially on newer and non-basic items."

The Off-Price show also showed the effect of the current economy. There was a clear lack of 'newer' merchandise available, whereas in recent years there was copy-cat availability throughout. Perhaps because there is nothing 'hot' to copy. On the other hand, it could be that vendors of all stripes and sizes are controlling inventory, mindful of the costs of over-cutting.

Ilse Metchek
CFA President

The TALA Cotton Report

(courtesy of the Textile Association of Los Angeles)
Cotton Report:
The Issue - “We are consuming more cotton than we are producing worldwide.”
The issue of supply and demand is causing turmoil in pricing for mills, vendors and retailers, according to Kim Glas, U.S. Deputy Assistant Commerce Secretary for Textiles and Apparel.. The market for cotton is booming but cotton supply hasn’t increased.
Factors causing the surge in cotton prices:
 Poor weather conditions in China, with damaged crops – China is the world’s top producer of cotton
 The Indian government implemented a short term ban in April (which was lifted on May 25th) on raw cotton exports in a bid to lower domestic cotton prices, following shortages in the country because of unusually high exports. India is the No. 2 cotton producer
 Factories in Asia that closed because of the recession
 World consumption for cotton is forecast (for 2010 -2011) to exceed production for the fifth straight year; the first time this has happened in 50 years.
 According to the U.S. Department of Agriculture, shrinking cotton inventories will drive availability to the lowest level in 16 years,
 Cotton mills in Pakistan might shut. Pakistan relies on Indian imports for domestic demand, and Pakistan is the world’s fourth-biggest cotton producer. However, an increase of approximately 27% has been recorded in prices of Indian cotton and, because of the increase in import prices, Pakistani importers might cancel their orders. On May 12th, Pakistan’s Ministry of Textiles imposed a 15% regulatory duty on the country’s yarn shipments. Exports of cotton from Pakistan are limited to a maximum quantity of 32000 tons.
Cotton prices in China are nearing their historical peak, squeezing garment manufacturers just as they head into the important summer buying season. “The peak of the buying season is in two months time. If the crop has not improved, we may see another 20% hike,” said Willy Lin, chairman of the Hong Kong Knitwear Exporters & Manufacturers Association.
“The increase in cotton goods will begin to trickle down to consumers for holiday selling,” said Jonathan Greller, senior vice president and general merchandise manager of men’s, children’s and intimate apparel at Lord & Taylor. “For spring 2011, we are seeing 5% to 10% increases in retail prices for like programs.”

Cotton is about 35% of world fiber use and is produced in 80 countries worldwide. However, U.S., China and India together provide two-thirds of the world’s volume.
The U.S. cotton industry generates more than $25 billion in products annually, according to the Economic Research Service of the USDA.
The USDA (US Department of Agriculture) estimates that world cotton output would reach 113.9 million bales in 2011 compared with 102.9 million bales in 2010. At the same time, global consumption would be increasing to 119.1 million bales in 2011, from about 115.9 million in 2010.
There are reports that some foreign suppliers are hoarding cotton stocks with the intention of selling to the highest bidder, which will add to confusion in the marketplace over the correct price of cotton per pound .
Mills, manufacturers and retailers are certainly concerned about this situation. The price of cotton is fluctuating substantially. With cotton prices so volatile, the businesses along the pipeline will have to absorb the increases….with greatest effect on the manufacturers.
Additionally, due to consumer interest in “green” products and the expansion of organic cotton programs by retailers and brand managers, the Organic Exchange predicts the global organic cotton market will grow to about $5.1 billion in 2010 and $6 billion in 2011. The organic cotton market has increased by an average of 40 % annually since 2001. Production of organic cotton in 2008-09 grew 20%, and currently, twenty-two countries now grow organic cotton.

Source: Women’s Wear Daily
Fibre2fashion.com
Just-style.com

Industry Predictions for Retailing

‘2010 Industry Predictions for Retailing”
Market Tuesday Seminar
February 9th, 2010

An expert panel discussed the following issues:
• Credit: Where to get it - How to use it!
• Examining new value for ‘Point-of-Sale’ (POS) Systems
• Strategic Planning to Ensure Profitability

Panelists –
• Bruce Campbell, Partner, Black Retail Consulting
• Stella Campbell, Owner, Sugar Stores
• Chester Ritchie, Executive Vice President, Cam Commerce
• Gene Schwartz, Senior Vice President, CIT Group

Moderator –
• Ilse Metchek, President, California Fashion Association

The Relevance of 'Fashion'

To paraphrase an old adage, “when one door opens, another one closes”. Most of the recent articles and quotes from expert fashion reviewers seem to be missing the point. Yes, there is the internet, giving anyone who cares instant access to runway styles and fashion advice, and, yes, it is “a platform for a new generation of style arbiters”, as Booth Moore stated in her article in the Los Angeles Times on Sunday, September 13. The question is ‘who’ cares? The consumers with the most disposable income are not those who depend upon the style arbiters; they are going to buy what they need, if they see what they want at the right time, based on a reasonable trend assessment and its relevance to their lifestyles.

The reality is that the general buying public is no longer obsessed with the world of fashion, and is getting bored with looking at the same airbrushed faces; female and male. Fashion magazines, once the bible of ‘what to wear for the next season”, are struggling financially because their advertisers are looking for the return-on-investment. Clearly, if the readership was responding to the visuals in the magazine, advertisers would re-think their marketing dollars. But the readers are not buying what they are showing! Those who are obsessed with being ‘in’ are not equating the fact that one can buy a new printer/copier for the cost of a Marc Jacobs T-shirt. ....and a Coach handbag clearly has replaced a Vuitton as the ‘aspirational’ purchase of the day.

The phrase, ‘global strategy’ is a misnomer in this new phase of branding and merchandising. One fashion viewpoint does NOT fit all! Luxury brands are finding that the world of fast-fashion and pop culture are stealing their status as arbiters of style...especially when runway coverage depends on regurgitating ‘sharp-shoulders’, bell bottoms, and back-to-the-future silhouettes for editorial news. It becomes increasingly clear that everything old is not new again.

In plain English, the bigger the boom, the bigger the bust. Every economic crisis since the 40s had striking similarities to the current environment. These prior episodes were followed by a multi-year credit expansion, culminating in a banking system crisis, followed by credit contraction - all the result of borrowers emboldened to increase their indebtedness and lenders prepared to stretch their balance sheets. Some economists are predicting that we will not return to the inflation-adjusted peak until 2016. The key risk to our industry may come from the law of unintended consequences. Current pessimism about the earning capacity of an individual or a small business could become so acute that firms and households refuse to borrow, even when credit is available...the paradox of thrift.

To open the door for fashion related companies requires a total re-invention of the way business is being done, including new credit mechanisms, and a focus on the customer, both retailer and consumer, with CASH to spend.

Whatever happened to 8/10- E.O.M.?

Industry Voices: Fashion's Future - News

Industry Voices: Fashion's Future - News

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FASHION'S FUTURE

America’s recent fashion history has seen a relentless tilt to the west – of people, ideas, commerce, and even trend power. New York and Los Angeles are the twin poles of U.S. fashion, but very different ones. For most of the last twenty years, L.A. has been the brainier, sexier, trendier of the two: its entrepreneurs and its innovations, its fads and foibles, its marvelous clutter of jeans, activewear, swimwear, surfwear, jeans, etc have spread around the world. New York, still the bastion and darling of the fashion press, has trailed behind in the world of innovation; its cliché has been a conservative applause to the same small group of ‘elite’ names. But twins can change places. Is that happening now?

It is easy to find evidence that California style is in a funk. The banks have stopped funding creativity; they certainly are not taking any chances in this squirrelly economy – and the buyers, from the large retailers and specialty store chains alike, cannot afford to place their bets with new resources that might not be able to deliver when promised. The retailers’ lines of credit depend on-time delivery, complete, saleable damage-free shipments, with accurate documents now demanded by technical and governmental requirements.

Back in the golden age of the 1960s and 70s, our community offered those ‘up-and-comers’ a shot at the American dream – not just for the mouth-y high-fliers who gave great parties. There was a complete cross section of an industry cluster; with an enviable infrastructure. These days, more than 87% of the $39 billion shipped, in apparel and textile finished products, are made elsewhere. Every year, more companies leave the business than enter it.

Not only that, but most analysts and poll-takers rank Los Angeles AND California the very worst region to do business in, for each of the past four years. Add to that, a very laissez-faire attitude toward the industry by our public officials and our uber-industry groups, with no concern for the over-riding issues that affect our business, and the 100,000 plus people employed in it.

By contrast, New York’s legislators understand the importance of their fashion industry, and have tried to revive the trend of encroaching real estate in their once-flourishing ‘garment district’. A valiant effort is underway; we’ll see how it plays out.

Meanwhile, it has never paid to bet against an industry with as many inventive people as we have here. Even if California is in the dumps, it still boasts an unequalled array of sunrise start-ups, and the most agile venture-capital entrepreneurs on the fashion planet. Our technology providers are telling us that they are (strangely) seeing more and more start-ups – with more creative products, and more original ideas. Additionally, the smart business operators are examining the way they do business; being much more price conscious, cross training their personnel, analyzing every SKU, investing in technology, etc. The businesses surviving during these economic tough times will only emerge stronger and leaner, with more exciting product.

The California fashion industry has an awesome ability to reinvent itself – as it did when everything stopped right after 9/11.

Perhaps this new ‘crisis’ brought about by the troubled assets of our largest lender will promote what the politicians call ‘structural reform’. The truth is that we can learn from other apparel production centers and other business models. There is no perfect model; it is our genius to have 7000 companies competing to find out what works best. The relentless competition of clever new firms from San Diego to San Francisco will pull our west coast fashion industry out of its current gloom. All the world still wants the ‘California look’ – whatever that is!