Is Apparel Doomed This Year? interviews some of our favorite analysts about the state of apparel in today’s retail environment, and it’s not pretty. Apparently, consumers just aren’t buying clothes because they NEED to buy food and gas, which are both rising in cost and taking precedence over the newest Abercrombie T-shirt.

A quote by C. Britt Beemer, an analyst at America’s Research Group, is telling. “I’ve done research for 29 years, and what I’m seeing today I can’t compare to anything I’ve seen before,” he said.


One analyst blames the problem on overexpansion by stores, while another points out that all retail sectors (except supermarkets) are taking a big hit. A prediction floated in the article is that things won’t get better for another 13 months, when next year’s tax returns come in.

doomed for now?

3 Responses to “Is Apparel Doomed This Year?”

  1. 1 Nancy H April 28, 2008 at 11:31 am

    It makes sense that clothing stores will suffer – when a month’s worth of gasoline costs more than a Coach bag, or a new outfit from Ann Taylor. I’m spending more time at Target, Marshall’s, and TJ Max, hoping to find that one great buy that looks decent enough to wear to work. That and mail-order, where I can take advantage of “bulk” buying discounts on blouses and slacks (and free shipping). Places like Kohls and Mervyn’s are probably going to be fine, but the higher end retail – forget it. Who can afford to wear designer label clothes and still eat – much less drive to work? Sadly, the only way I’m going to be wearing designer clothes this year is if I pick something up at a “going out of business” sale.

  2. 2 Dana S May 1, 2008 at 11:12 am

    If Mr. Beemer began his research career 29 years ago, then he actually has seen something very like current market conditions.

    I began in retail real estate in 1981, during a very ugly recession. Not all of the underlying economic fundamentals were the same. Credit was not so much restricted as it was unaffordable. Inflation was pushing double digits, as was unemployment. But the impact on retail was pretty much the same. Then, savvy retailers who delivered value on the low end and the very high end survived and prospered. The middle languished, the stupid went bankrupt, and there was a lot of consolidation.

    I saw the phenomenon repeat in the early nineties, albeit with a shallower bottom and a less spectacular subsequent climb.

    We’ve run a longer cycle this time. We’ve accumulated more marginal retailers, and the resulting dilution of sales is worse. This could take a while, and unfortunately, some decent operators will get wiped out with the bad.

  3. 3 TeenyTiny May 5, 2008 at 2:40 pm

    Anything related to Home, Apparel, or Restaurants, will all be hurting, especially. Stick to the meat and potatoes (non-discretionary) retailing for awhile, that’s my advice.

    The housing boom and growth boom is done, done done in the US. The subprime crisis has led to the present credit crunch which is causing the lenders and Wall Street to clamp down on both the Tenants’ expansion plans as well as simultaneously clamping down on the Landlords’ Leasing Budgets and New Shopping Center Developments. Wall Street Mortgage Backed Securities have not only fueled housing, they’ve fueled the Go Go days of the last 5 years in Retail Real Estate. I knew it was coming to an end when in 2006 all of the Landlords were throwing the most outlandish parties at ICSC (International Council of Shopping Centers) just like it was 1929 before the Crash: Apple Martinis, caviar, large prawn shrimp for thousands of guests. It reminded me of the book “The Crash of ‘29″. When I got up during one of the Q & A sessions of ICSC with a panel full of developers, they were all quite in disagreement with my pointing out that the storms were on the horizon: cash cramped consumers, poorly underwritten loans, revisionist broker/developers (a sure sign of a bloated market is when any half witted broker overnight remakes himself into a developer and can actually talk someone else into lending him the money).
    So, in summary, this is just the beginning for Apparel and pretty much all the other retailers, except for Tax Service entities, like Jackson Hewitt Tax Service. Again, stay out of Home, Apparel, or Restaurants.

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