Industry Surveys

NOVEMBER 29, 2007 / APPAREL & FOOTWEAR INDUSTRY SURVEY
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wholesale, catalog, and Internet sales, as
well as through their own retail stores.
Within the wholesale channel, manufacturers
often try to sell to various types of retailers,
including department stores,
specialty stores, discount stores, and national
chains.
In the past decade, many manufacturers
have opened their own retail stores, reducing
their dependence on the wholesale
channel while potentially increasing sales.
This strategy has benefits — it permits
manufacturers to showcase an entire line of
products, enhance brand awareness, test
new products, and directly collect customer
feedback — but it also carries the risk of
alienating retailers who carry the same
merchandise. Some manufacturers have
also established outlet stores to move older
inventory. For instance, Liz Claiborne operated
399 specialty retail stores and 336
outlet stores as of December 30, 2006.
Specialty retailers the most important channel
Consumers buy apparel and accessories
from a variety of retail outlets. Based on
data from the NPD Group, a market research
firm, specialty stores accounted for
30.8% of apparel dollar purchases by consumers
in 2006, followed by mass merchants
(19.9%), department stores (16.2%), national
chains (14.6%), off-price retailers (7.5%),
direct mail/e-tail pure plays (5.1%), factory
outlets (1.7%), and all other retailers (4.2%).
(“All other retailers” is a category consisting
of warehouse stores, dollar stores, company
stores, and miscellaneous retail outlets.)
APPAREL STORE VS. DEPARTMENT STORE SALES
(In billions of dollars)
180
160
140
120
100
80
60
40
20
0
Apparel stores
Discount
department stores
1995 96 97 98 99 00 01 02 03 04 05 06 E2007
E-Estimated.
Source: US Department of Commerce.
Conventional and national
chain department stores
Differences exist in the distribution mix for
men’s, women’s, and children’s items. For
example, more women’s apparel than men’s
is purchased in specialty and department
stores. Men’s apparel is more prevalent in
discount stores and general merchandise
chains. In the children’s segment, a considerably
higher portion of apparel is purchased
in discount stores. Because children
quickly outgrow their clothing, parents are
less inclined to spend a lot of money on a
single item and, therefore, more inclined to
shop at discount stores.
Fashion is increasingly responsive to the
styles sought by the preteen and teen markets,
whose influence is rising. When promoting
a product, however, manufacturers
and retailers must not only take the user into
account, but the shopper as well. For example,
many men’s apparel items actually are
purchased by women.
Direct to consumer: Internet and catalog
Although the Internet accounted for
about 6.5% of total apparel, footwear, and
accessories sales in 2006, according to research
firm Forrester Research, we believe
that it has strong potential for growth as a
distribution channel. The Internet permits
consumers to shop from anywhere at any
time they wish and to make easy price comparisons,
conveniences that shoppers seem
to appreciate.
Manufacturers use Internet sites for marketing
and informational purposes, as well
as to make sales. The Internet enables apparel
and footwear brands to customize
merchandise to shoppers’ specific needs,
which enables firms to achieve better pricing
along with developing a more emotional
bond with the consumer. Both Nike Inc.
and Polo Ralph Lauren are at the forefront
of this strategy.
Selling by catalog is another important
method of distribution. Before the advent
of the Internet, it was the primary way to
shop at home. Today, however, most retail
apparel brands combine catalog sales with
e-commerce sales under the moniker “direct
to consumer.” This is part of an overall
branding strategy to meet consumers’ needs
24/7 and, thereby, strengthen the emotional
bond that is part of the branding experience.
Catalogs are a form of advertising or direct
marketing, bringing the product to the