Tom Shay's e-ret@iler conversations

This conversation is an interview of Joe Siemer, president of Siemer Enterprises. We discuss trend in products, a challenging retail atmosphere, and Cardinal baseball.

I thought our blog readers would want to see this article about clothing sales. The point I want to make about this article is that it substantiates that not everything in the industry is going bad. And in addition to a category, men’s clothing doing well, an individual store can also be the exception – regardless of what you sell.

Menswear Sales Outpace Women’s Business

The Tampa Tribune

Published: August 10, 2008

NEW YORK (AP) – Steve Hale has discovered a reason to splurge on clothing again: the slim silhouette in suits to shirts that’s replacing the baggier fits of past years. But his wife, Cathy, has slashed her monthly apparel spending, saying she’s “bored” by what’s out there.

In tough economic times, men are traditionally the first to cut back – but the Hales represent a new phenomenon in retailing: Over the past year, men have been on a clothes-buying spree, while women have pulled back even more.

“I did feel for a long period that there wasn’t anything new to buy,” said Steve Hale, a 37-year-old financial consultant who had stuck with the business casual uniform of khakis and dress shirts since the late 1990s. “But I really like the slim fit. It’s not so roomy, not so bulky, and it’s a lot cleaner.”

The lopsided fortunes – solid sales gains in menswear and a deepening funk in the far larger women’s clothing business – is creating a rare sales disparity that hasn’t been seen in years, according to David Wolfe, creative director of The Doneger Group, a buying office.

Fashion observers say the main catalyst fueling menswear buying is the slimmed-down styles shown on the runways a few years ago by designer Thom Browne that have recently garnered mass appeal. The look is being popularized by AMC’s award-winning series “Mad Men” about ad executives in the 1960s.

Over the past year, the fashions, from body-conscious suits to leaner khakis, have been heavily promoted by an array of stores from conservative haberdashery Brooks Brothers to department stores like Macy’s and Bloomingdale’s.

Executives from those stores said menswear sales began outpacing women’s wear last year. They wouldn’t give exact figures because of competitive reasons. But the disparity has been widening, said Marshal Cohen, chief industry analyst for research company NPD Group Inc. According to NPD’s most recent data, menswear sales rose 0.8 percent in the year ended in May, while women’s wear sales fell 3.5 percent. In the three months ended in May, women’s wear sales dropped 3 percent, while menswear sales rose 2.3 percent.

With women’s fashions accounting for 65 percent of the $155 billion adult apparel market, the rising fortunes of menswear – accounting for just half the size of women’s wear – hasn’t significantly helped lift overall sales. For the year ended May, adult clothing sales fell 2 percent.

Still, fashion pundits like Wolfe hail the trend as the biggest change in men’s fashion in more than a decade, since the relaxation in business dress codes enticed men to fill up their wardrobes with everything khaki. Major menswear brands like VF Corp.’s Nautica and Levi Strauss and Co.’s Dockers have reworked their fits. Pants, for example, have less material in the seat and thigh and have no pleats; suit jackets have higher armholes with narrower and shorter sleeves.

“You can throw out all the rules,” said Cohen. Even in tough economic times, “this is a trend that you have to buy, otherwise you look outdated.”

“Suddenly, a pair of cargo pants and a polo shirt doesn’t look good anymore,” said Wolfe, who sees the change being embraced by men in their 20s to men over 50 who don’t want to look past their prime.

“Women’s wear has painted themselves in a corner. By offering too many options and with everything a trend, it is very easy not to buy anything,” Wolfe said.

Designers of women’s wear may have seen the new trend in the men’s market and taken inspiration for a slim, sophisticated ’60s shape for fall – Michael Kors and Peter Som have both cited “Mad Men” as inspiration for their women’s clothes.

The sluggish economy is playing a role too. Higher gas and food costs and fiscal uncertainties have clearly made both men and women cut back on in-today, out-tomorrow trends like wild printed tops. But the threat of layoffs has also forced many employees to dress more formally as a way to hold on to their jobs and look more serious, Cohen said. Women can go back to their closets to find dressier and classic alternatives, but men now have a reason to buy.

“I am dressing up a bit more,” said Steve Hale. “If you are keeping up with fashion, people notice and it gives them more confidence” that the financial industry is going to turn around. He said he now spends about $500 a month on clothes, more than twice as much as he spent previously.

Jonathan Singer, 26, who works in high-tech marketing, credits his new wardrobe to helping him land a better-paying job. The Boston resident spent about $2,000 over the past six months on a slimmer-fit suit from Benetton as well as slender shirts from Diesel and French Connection. In the past, he had spent about $300 every six months.

“It always pays to look good,” he said. “I had looked in the mirror and never was impressed. I looked like a little kid who was waiting to grow into his clothes.”

Now, he says, “I feel extremely confident in the way I look. Everyone has noticed.”

Men’s interest in updating their wardrobes is forcing merchants to rethink how to market to them. They’re seeing a growing number of men shopping for themselves, instead of relying on their wives and girlfriends to buy for them.

Bloomingdale’s is rolling out separate areas in the men’s department that incorporate tailored clothing with other accessories like ice buckets and gadgets like GPS systems and high-end shaving tools. Meanwhile, Macy’s has adding more exclusive lines like tight-fitting Emporio Armani underwear.

Alex Guerrero, vice president of men’s merchandising at Dockers, said the company is heavily featuring the new fits – a slim-cut khaki pant, tested last summer, as well as a newly unveiled straight cut, which was introduced in May and has broader appeal, at department stores this fall alongside its usual fits – relaxed and classic. About 70 percent of the business is still in the classic and relaxed fits, which is its most generous cut.

The slim and straight styles fit like jeans, while the relaxed and classic fits are more like trousers. For fall, Dockers has also trimmed down its classic shirts and suit separates.

And what about those men who aren’t, well, slim? Retail executives insist the new silhouettes aren’t just for the skinny.

“It still fits guys who eat meatballs,” said Stuart Goldblatt, Macy’s senior vice president of merchandising for men’s and children’s clothes.

We are going to post our YouTube video from last month’s visit to Macy’s in New York on our blog. And in their August 6 issue, the Pittsburgh Tribune-Review has a similar observation.

Department stores’ survival may hinge on differentiation

By Rick Stouffer
TRIBUNE-REVIEW
Wednesday, August 6, 2008

Department stores may not survive unless they focus on differentiating themselves from the competition, many retail experts believe.

“Department stores have become retail’s dinosaurs; I don’t know if they’ll survive,” said Audrey Guskey, associate professor of marketing at Duquesne University’s Palumbo-Donahue School of Business. “Department stores just aren’t ‘the thing’ for shoppers in their 20s and 30s.”

Boscov’s, a Reading-based department store chain, said Monday it filed for Chapter 11 bankruptcy and would immediately close 10 of its 49 stores, including stores at Monroeville Mall and South Hills Village, blaming slow sales and the poor economy.

Battered since the 1960s by discounters, forced to compete against specialty retailers and recently thrust into doing business on the Internet to stay current, the nation’s department stores are in a tenuous position.

For more than 70 years, stores with names such as Gimbel’s, Joseph Horne Co., Kaufmann’s and Marshall Field were popular because they were all-encompassing in their merchandise selection, experts said.

“The department stores felt they had to have restaurants, some of which made money, but many which didn’t. They had to have fashion shows, sponsor parades, offer free delivery, free alterations, free baby-sitting,” said Jan Whitaker, a consumer historian based in Northhampton, Mass., who has written a book on department stores.

“People used to gauge their cities by their department stores,” Whitaker said. “They weren’t just businesses — they were places.”

“Department stores provided an environment that was one-stop shopping,” said Monica Tang, a retail strategist for consulting firm Kurt Salmon Associates in San Francisco.

The problem was, over time the chains began offering the same merchandise, the same labels. There was little, if any, differentiation, Tang said.

“Consumers began seeing all the department stores carrying all the same brands when they wanted different products and different brands,” Tang said.

Smaller, specialty stores, that carry only clothes, or furniture, or shoes and offered exclusive brands became shoppers’ favorites.

Then the discounters, Kmart, Wal-Mart and Target, emerged on the retail scene, giving department stores competitive pricing pressure they had not previously seen.

It took a shock to the retail industry to open department store executives’ eyes to the need to make themselves different if they were to survive.

“When Federated Department Stores acquired May Department Stores (in 2005), that really shook up the department stores,” said Kelly Tackett, senior retail consultant at TNS Retail Forward in Columbus, Ohio.

“That was the inspiration for changes in the department store’s merchandise assortment. They began adopting the practice of the specialty stores — offering exclusive brands and their own private brands, to differentiate themselves from the competition.”

Some department stores understood being different was the only way to survive against the plethora of competitors, Tackett said. J.C. Penney Co., for one, focused on improving the shopping experience and learned to partner with other brands in categories where it wasn’t strong.

“Penney’s partnership with (skin, hair care, fragrance and makeup retailer) Sephora by Penney’s own data shows it’s brought customers into the store,” Tackett said.

Today, all retailers must battle Internet shopping, retail experts said. Most chains have a Web site that allows the shopper to make a merchandise selection, order and then have their goods delivered to the home. Some retailers, such as electronics giant Best Buy, allow customers to order online, then pick up purchased items at the nearest store, saving time and money.

No one knows if department stores can survive, even with consolidation and efforts to set themselves apart. Some industry watchers say a reintroduction of top-notch service, like today’s Nordstrom’s, is key.

“It’s very important that retailers become engaged with the consumer,” said Tara Weiner, managing partner with Deloitte LLP in Philadelphia. “Key executives need to know how their associates are working; they need to work with sales associates so that they do it right. It’s definitely a buyer’s market out there.”

My belief has always been that politics and small business are like mixing gasoline and water – it is a dangerous combination. Not just from the standpoint that you would irritate the customers that had opposing views, but more importantly from the standpoint that it means you are taking your attention away from your business.

My political viewpoint is that a small business owner can do more to affect the lives of themselves, their family, their employees, and their customers, by paying more attention to the proper operation of their business and how they can have a positive affect on their community. This as compared to being politically active.

Did I stir anyone up with this? Here’s a story from the Wall Street Journal of how the biggest retailer is being active.

Wal-Mart Warns of Democratic Win

Wal-Mart Stores Inc. is mobilizing its store managers and department supervisors around the country to warn that if Democrats win power in November, they’ll likely change federal law to make it easier for workers to unionize companies — including Wal-Mart.

In recent weeks, thousands of Wal-Mart store managers and department heads have been summoned to mandatory meetings at which the retailer stresses the downside for workers if stores were to be unionized.

According to about a dozen Wal-Mart employees who attended such meetings in seven states, Wal-Mart executives claim that employees at unionized stores would have to pay hefty union dues while getting nothing in return, and may have to go on strike without compensation. Also, unionization could mean fewer jobs as labor costs rise.

The actions by Wal-Mart — the nation’s largest private employer — reflect a growing concern among big business that a reinvigorated labor movement could reverse years of declining union membership. That could lead to higher payroll and health costs for companies already being hurt by rising fuel and commodities costs and the tough economic climate.

The Wal-Mart human-resources managers who run the meetings don’t specifically tell attendees how to vote in November’s election, but make it clear that voting for Democratic presidential hopeful Sen. Barack Obama would be tantamount to inviting unions in, according to Wal-Mart employees who attended gatherings in Maryland, Missouri and other states.

“The meeting leader said, ‘I am not telling you how to vote, but if the Democrats win, this bill will pass and you won’t have a vote on whether you want a union,’” said a Wal-Mart customer-service supervisor from Missouri. “I am not a stupid person. They were telling me how to vote,” she said.

“If anyone representing Wal-Mart gave the impression we were telling associates how to vote, they were wrong and acting without approval,” said David Tovar, Wal-Mart spokesman. Mr. Tovar acknowledged that the meetings were taking place for store managers and supervisors nationwide.

Wal-Mart’s worries center on a piece of legislation known as the Employee Free Choice Act, which companies say would enable unions to quickly add millions of new members. “We believe EFCA is a bad bill and we have been on record as opposing it for some time,” Mr. Tovar said. “We feel educating our associates about the bill is the right thing to do.”

Other companies and groups are also making a case against the legislation to workers. Laundry company Cintas Corp., which has been fighting a multiyear organizing campaign by Unite Here, relaunched a Web site July 14 called CintasVotes. The site instructs visitors to take action by telling members of Congress to oppose the legislation.

“We feel it’s important that our employee partners fully understand the implications that the Employee Free Choice Act could have on their work environment and benefits,” said Heather Trainer, a Cintas spokeswoman.

Business-backed organizations are also running ads aimed at building opposition to the bill, including the Coalition for a Democratic Workplace, which counts several hundred industry associations as members. Another group, the Employee Freedom Action Committee, is run by former tobacco lobbyist Rick Berman. The groups, which aren’t affiliated with each other, say they have a total of $50 million in funding. Neither will disclose which companies or individuals have provided funding.

The U.S. Chamber of Commerce has made defeat of the legislation a top priority. In the past six months, it has flown state and local Chamber members to Washington to lobby members of Congress. On Thursday, the Chamber began airing a television ad in Minnesota and plans to run ads in other states as part of a broader campaign.

The bill was crafted by labor as a response to more aggressive opposition by companies to union-organizing activity. The AFL-CIO and individual unions such as the United Food and Commercial Workers have promised to make passage of the new labor law their No. 1 mission after the November election.

First introduced in 2003, the bill came to a vote last year and sailed through the Democratic-controlled House of Representatives, but was blocked by a filibuster in the Senate and faced a veto threat by the White House. The bill was taken off the floor, and its backers pledged to reintroduce it when they could get more support.

The November election could bring that extra support in Congress, as well as the White House if Sen. Obama is elected and Democrats extend their control in the Senate. Sen. Obama co-sponsored the legislation, which also is known as “card check,” and has said several times he would sign it into law if elected president. Sen. John McCain, the likely Republican presidential nominee, opposes the Employee Free Choice Act and voted against it last year.

Wal-Mart’s labor-relations meetings are led by human-resources managers who received training from Wal-Mart on the implications of the Employee Free Choice Act.

Fine Legal Line

Wal-Mart may be walking a fine legal line by holding meetings with its store department heads that link politics with a strong antiunion message. Federal election rules permit companies to advocate for specific political candidates to its executives, stockholders and salaried managers, but not to hourly employees. While store managers are on salary, department supervisors are hourly workers.

However, employers have fairly broad leeway to disseminate information about candidates’ voting records and positions on issues, according to Jan Baran, a Washington attorney and expert on election law.

Both supporters and opponents of the Employee Free Choice Act believe it would simplify and speed labor’s ability to unionize companies. Currently, companies can demand a secret-ballot election to determine union representation. Those elections often are preceded by months of strident employer and union campaigns.

Under the proposed legislation, companies could no longer have the right to insist on one secret ballot. Instead, the Free Choice, or “card check,” legislation would let unions form if more than 50% of workers simply sign a card saying they want to join. It is far easier for unions to get workers to sign cards because the organizers can approach workers repeatedly, over a period of weeks or months, until the union garners enough support.

Employers argue that the card system could lead to workers being pressured to sign by pro-union colleagues and organizers. Unions counter that it shields workers from pressure from their employers.

On June 30 the National Labor Relations Board ruled that Wal-Mart illegally fired an employee in Kingman, Ariz., who supported the UFCW and illegally threatened to freeze merit-pay increases if employees voted for union representation. The decision came eight years after the organizing campaign failed, and four years after the case was originally heard.

“We’ve always maintained the termination was not related to the union and that there was nothing unlawful about an answer provided an associate about merit pay,” said Mr. Tovar, the Wal-Mart spokesman. “Following the decision, we were considering offering reinstatement, but that is on hold, since the [union] appealed the decision.”

Unions consider the Employee Free Choice Act as vital to the survival of the labor movement, which currently represents 7.5% of private-sector workers, half the percentage it did 25 years ago. The Service Employees International Union said the legislation would enable it to organize a million workers a year, up from its current pace of 100,000 workers a year.

The Underdogs

The business-backed lobbying groups are running ads in states where a win by a Democratic Senate candidate would boost support for the legislation in the Senate, saying the loss of secret ballots exposes workers to bullying labor bosses. In one, they use an actor from the “Sopranos” TV series about mob life to hammer home their point.

Business groups say they’re the underdogs since they will be outspent by unions by a wide margin. Labor has pledged to spend $300 million on the election and securing passage of the Employee Free Choice Act, compared with under $100 million by business groups, according to Steven Law, chief legal officer of the U.S. Chamber of Commerce. The Chamber’s strategy is to focus on the Senate, where labor needs eight more supporters of the legislation to reach the 60 votes needed to overcome a filibuster.

“This is a David-and-Goliath confrontation, but we believe we’ll have enough stones in the sling to knock this out,” said Mr. Law.

Wal-Mart is a powerful ally. Through almost all of its 48-year history, Wal-Mart has fought hard to keep unions out of its stores, flying in labor-relations rapid-response teams from its Bentonville, Ark., headquarters to any location where union activity was building. The United Food and Commercial Workers was successful in organizing only one group of Wal-Mart workers — a small number of butchers in East Texas in early 2000. Several weeks later, the company phased out butchers in all of its stores and began stocking prepackaged meat. When a store in Canada voted to unionize several years ago, the company closed the store, saying it had been unprofitable for years.

Labor has fought back with a campaign to portray Wal-Mart as treating its workers poorly. The UFCW helped employees file a series of complaints about the company’s overtime, health-care and other policies with the National Labor Relations Board. Dozens of class-action lawsuits were filed on behalf of workers, many of which are still winding their way through the courts.

Wal-Mart has been trying to burnish its reputation by improving its worker benefits and touting its commitment to the environment. On the political front, it’s hedging its bets, spreading its financial contributions on both sides of the political divide.

Twelve years ago, 98% of Wal-Mart’s political donations went to Republicans. Now, as the Democrats seem poised to gain control in Washington, 48% of its $2.2 million in political contributions go to Democrats and 52% to Republicans, according to the Center for Responsive Politics, a nonpartisan organization that tracks political giving.