Saturday, May 25, 2019

Retailers reeling, more trouble in store | Advertising Age

Retail took a beating last week: Kohl’s, JC Penney and Nordstrom reported sales declines, while Ascena Retail Group announced the shuttering of its 650-unit Dress Barn chain. 

And more bad news is yet to come. A group of 170 shoe companies last week urged President Trump to reconsider a proposal that would add a 25 percent tariff on shoes from China. “We can assure you that any increase in the cost of importing shoes has a direct impact on the American footwear consumer,” the letter read.

That consumer is already feeling the tighter laces, evidenced by recent reports. Specialty brands catering to the middle-class consumer in particular are getting squeezed.

As of mid-May, the announced retail closures in the U.S. already surpassed the 2018 total, according to Coresight Research, which estimates the shutterings to reach 12,000 by the end of the year.

Despite an uptick in consumer confidence—the Conference Board’s index rose in April after a drop in March—shoppers are becoming more conscious of their spending on apparel. “Consumer confidence may be high, but there’s a lot of uncertainty,” says Gabriella Santaniello, founder of retail consultancy A Line Partners. 

The twin trends of buying second-
hand or renting clothing, part of a larger movement toward sustainability by millennials and Gen Z, are creating more pressure. 

This summer, Urban Outfitters will introduce Nuuly, a new subscription service in which consumers can rent clothing and accessories. The ever-popular Rent the Runway in April expanded its own subscription offerings into kidswear.

Experts say brands that offer a broad selection of categories, more convenience and value will win.  

Greg Portell, lead partner in the global consumer and retail practice of A.T. Kearney, says “the companies that are able to meet the needs of those [middle-class] consumers are in a position to do better. That’s why Target, Walmart and Amazon are strong.” 


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