understanding the us fashion market

UNDERSTANDING THE U.S. MARKETUNDERSTANDING THE U.S. MARKET

Presentation to Peruvian Exporters

June 12, 2012

Presented by Ilse Metchek, President

U.S. Retail Marketing Channels

Distribution & Shopping Patterns

Requirements for Successful Brand Entry

Peru’s Global Competitiveness

Going Forward

Los Angeles: Where Trends Happen

OutlineOutline

U.S. Retail DistributionU.S. Retail Distribution& Shopping Patterns& Shopping Patterns

U.S. DISTRIBUTION U.S. DISTRIBUTION METHODS METHODS FORFOR APPAREL APPAREL

Department Stores – inventory includes ‘hard goods’, i.e., furniture, cookware, etc…………………

Macy’s JCPenney, Sears

Specialty Chains – just apparel and accessories Saks, Nordstroms, Neimans, Barneys

Mass Merchants……………………………………… Walmart, Target

Discount Chains...…………………………………… T.J. Maxx, Ross, SteinMart,

Catalogs – Direct Mail….……………………………. J. Crew, Boston Proper

Independent Specialty Stores ….………………….. Fred Segal, Ron Herman, Kitson, Bergdorfs

Design-to-Consumer ………………………………… Gap, Forever 21

Online – Internet ……………………………………… Gilt Groupe, Bluefly, Amazon

Home Shopping Networks…………..……………… QVC, HSN

Distributors / Jobbers……………..………………… Independent Outlets & Distribution Companies

SPECIALTY STORES

WEB VERTICAL STORE

TV

DEPARTMENT STORE

MOBILEPOP-UPSTORE

KIOSK

CATALOGMastering the Multi-ChannelWorld

Total Apparel Sales by Retail Channel

1.0%8.5%

12.4%

Market Share of Total ChannelsMay 2010 – April 2011

Source: The NPD Group, Inc. based on projections from consumer panelist datavia Women’s Wear Daily, July 2011

Total Apparel SalesTotal Apparel Sales

$107.61 billion$52.82 billion

$32.3 billion

Women

Men

Children

Total Sales: $192.73 billion

Source: The NPD Group, April 2011

US: Retailers’ May 2009US: Retailers’ May 2009

Source: RetailSails, June 2009

RetailerSales

Same-Store Sales (+/-)%

(+/-)%

Macy’s -9.4% -9.1%

Nordstrom -8.8% -13.1%

Kohl’s 4.1% -0.4%

Saks -25.9% -26.6%

Limited Brands -6.4% -7.0%



RetailerSales

Same-Store Sales (+/-)%(+/-)%

Macy’s 2.6% 1.4%

Nordstrom 7.8% 3.7%

Kohl’s 6.6% 3.5%

Saks 6.9% 5.8%

Limited Brands 6.2% 5.0%



RetailerSales

Same-Store Sales (+/-)%(+/-)%

Macy’s 8.50% 7.40%

Nordstrom 12.90% 7.40%

Kohl’s 2.50% 0.80%

Saks 17.30% 20.20%

Limited Brands 6.00% 9.00%


RetailerSales

(+/-)%Same-Store Sales

(+/-)%

Macy’s 4.0% 4.2%

Nordstrom 9.3% 5.3%

Kohl’s -2.6% -4.2%

Saks 3.7% 4.0%

Limited Brands -6.3% 6.0%


E-Commerce Share of Specialty Apparel Sales

10.1%

16.4%18.1%

20%

Source: NPD January 2012

Required for Successful Brand Required for Successful Brand EntryEntry

Brand Entry ReviewBrand Entry Review

To develop ‘brands’ for entry into the U.S. market, an international fashion producer should:

• Establish a U.S. corporation.

• Quote prices as ‘landed, duty-paid in U.S.’

• Customer Service office in the U.S.

U.S. RETAIL CHANNELSU.S. RETAIL CHANNELS

To Get the Product to the Consumer...

Limited Marketing Channel (Branded & Private Label) Manufacturer ____ to Retailer ____ to Consumer

Extended Marketing Channel Manufacturer ____ to Wholesaler ____ to Retailer ____ to Consumer

Direct Marketing Channel (Vertical Retailing)

Manufacturer ____ to ____ Consumer

Fashion Marketing Options For Fashion Marketing Options For BRAND IDENTITYBRAND IDENTITY

National ad campaign to establish an image.

Regional sales campaign with in-store promotions.

Product Placement – ‘celebrity’ sightings are the key for some trend setting categories - requiring appropriate ‘public relations’ specialists.

SOCIAL MEDIA !!!!

Innovation Innovation && Good Design Good Design Is Not EnoughIs Not Enough!!

• Sizing - not standardized. Some retailers have clear specifications.

• Labeling Requirements - Chemical testing is required for all merchandise by some states.

• Shipping costs should be factored in the wholesale selling price, not ‘FOB Callao’. (Don Nunnari)

• US Customs - Current requirements are being fully enforced. (Tom Gould)

• Intellectual Property - Confirmation of valid trademarks must be established. (Crystal Zarpas)

● ‘Style’, Marketing, and Delivery will determine success. There is intense global competition for decisions based on price without profit!

● Be aware of regional preferences for global brand development and marketing strategies. One strategy does NOT fit all markets.

Financial Financial Realities… Realities…

Peru’s Entry into U.S. Peru’s Entry into U.S. Market Market

&&

Global CompetitivenessGlobal Competitiveness

Textiles YTD 2012

2011 2010 2009

All US Ports 6,064,000 22,916,000 21,840,000 16,686,000

L.A. District Ports 103,000 500,900 892,600 806,700

Apparel

All US Ports 161,550,000 711,900,000 661,650,000 598,960,000

L.A. District Ports 12,640,000 37,193,000 44,154,000 52,656,000

Source: LAEDC 06/07/2012

Peru’s Exports to the U.S.Peru’s Exports to the U.S.Apparel & TextilesApparel & Textiles

Textiles YTD 2012

2011 2010 2009

All Peru Ports 6,167,900 23,417,700 22,733,000 17,492,000

Apparel

All Peru Ports 174,199,800 749,095,000 705,808,000 651,616,000

Source: LAEDC 06/07/2012

U.S. Exports to PeruU.S. Exports to PeruApparel &Textiles Apparel &Textiles

Peru’s Global CompetitivenessPeru’s Global Competitiveness“Peru continues to move upward in the ratings”“Peru continues to move upward in the ratings”

• Top Tier: “Business Sophistication” o Economic stability – control of inflationo Friendly environment for entrepreneurshipo Less time needed to begin a businesso Efficiency gains in labor and financial markets

• Bottom Tier: “Global Market Efficiency”o Low level of innovationo Insufficient transport infrastructure networko Higher quality of educated employees requiredo Costs of organized crime and violence to Business

Source: “Global Competitive Index” of 142 CountriesSource: “Global Competitive Index” of 142 Countries

Going Forward...Going Forward...

Global Realities for ApparelGlobal Realities for Apparel

• U.S. Trends are crossing borders, creating a ‘transnational’ media culture – due to media and internet exposure.

• Hollywood ‘star power’ creates runway fashion and consumer interest....not Paris!

• The “democracy of consumption” – one does not have to be rich to be fashionable anymore.

Retailing in 2013Retailing in 2013

• Clients (Retailers and Manufacturers) will rely on technology and computers for purchases, but still need personal interaction and service!

• Brand Owners develop their own ‘specialty stores’ as a hedge against larger retailers and the internet.

The Landscape for The Landscape for MajorMajor U.S. Retailers in 2014U.S. Retailers in 2014

Source: Weintraub Associates, Inc., August 2011

Present Future

Retailers design and source for themselves

30% 45%

Low recognition brands 30% 15%

Major brand ‘giants’, ie: Jockey, Ralph Lauren, etc.

40% 40%

Los Angeles: Los Angeles: Where Trends HappenWhere Trends Happen

Los Angeles is #1 or #2 in Major ‘Design-Based’ Industries (By Employment)

Source: County Business Patterns - Los Angeles Economic Development Corp 2009

Apparel & Textiles 1) Los Angeles 2) New York

Architecture/Engineering 1) Los Angeles 2) New York

Food Manufacturing 1) Chicago 2) Los Angeles

Furniture 1) Los Angeles 2) New York

Health Services & Bio-med 1) New York 2) Los Angeles

Motion Picture/TV Production 1) Los Angeles 2) New York

Technology (including Aerospace) 1) San Jose 2) Los Angeles

Toys 1) Los Angeles 2) New York

Southern California Apparel: The Global Content Provider

The West Coast is much less conservative when viewing ‘new’ trends. There are no rules here….and no seasons.

Hollywood style dictates US street-scene fashion – not European or New York runways.

The multi-ethnic mix creates a unique environment for creative consumer product development.

Use of global sourcing, licensing, design services, technology and strategic alliances contribute to L.A.’s increased gross sales.

2010 1997

Apparel & Textile Industry Sales/Value of Shipments

$40.3 billion $22.8 billion

Total # Employed

Apparel & Textiles

128,148 207,318

Fashion Industry Value Fashion Industry Value to to the the L.A.L.A. Region’s Region’s EconomyEconomy

Source: Calif. EDD: Bureau of Census, LAEDC October 2011

Elle Magazine - Brazil Marie Claire - US

Democracy of Democracy of DesignDesign

Vogue - China

The California Fashion Association (CFA) is the Business-to-business forum for California's

Apparel and Textile Industries.

Please visit our website: www.CaliforniaFashionAssociation.org

Email: [email protected]

http://www.californiafashionassociation.org/