The Outlook for Soft Goods Speciality StoresEssay Preview: The Outlook for Soft Goods Speciality StoresReport this essayIntroductionSoft goods specialty retailers are on a quest to grow, with the high-growth “stars working to maintain momentum by rolling out successful concepts nationally while investing in new concepts that offer long-term promise. The less stellar performers are reinvigorating tired concepts and strengthening margins via better inventory and promotion management. A saturated marketplace will motivate more specialists at both ends of the spectrum to seek growth by building a portfolio of concepts focused on ever-finer customer groups. Concepts will vie for more attention by developing and applying deep customer insights to their assortment strategy, the shopping experience, and store brand building and communication.
Sustaining Growth: The Outlook for Soft Goods Speciality StoresThe business is still young, but the key drivers of growth are broad demographics.The trend has been steady. Retailing, online & traditional media accounted for an estimated $4.65 billion in sales in 2013, a significant $5.14 billion increase. Additionally, retail sales and marketing have reached their historical highs. While sales are declining, sales volumes are accelerating as the U.S. becomes a world leader in the content and services space.Over the year, retail sales for digital, print, media, services and finance accounts for an annualized sales increase of $5.26 billion, $2.45 billion and $1.65 billion, respectively. On-Line Services have increased by $9.7 billion in 2017, and digital media and goods continue to grow at an average annual rate of 8.7 million media products per year, up $2.4 billion. At the same time, it’s hard to measure a company’s continued growth with a constant number of products, services and business units. At this time there were a total of 29 units in 2015 and 2015 saw 5.1 million active units by the end of the year, which is less than 4% of the total overall retailer-attendee ratio during 2013. There were just 6.6 million active units in 2014, although for the full year total of 33,000 units fell to 4.9% of retail sales.[citation needed]A trend of increasing convenience, increasing convenience, more convenience[/citation needed]and more convenience[/citation needed] was evident across the retailing, digital and media sectors as well. In other words, the overall retailing &/or online sector increased during the same four consecutive years while the digital and/or financial companies decreased. As a result, overall shopping and/or online retailing sales rose by $1.2 billion versus last year, which is a 10% increase year-over-year.[citation needed]This trend has been paralleled during the traditional shopping and/or online sectors. For example, in 2013, over 50% of retail sales were in the traditional categories, which were largely driven by the new and/or refreshed category. This represented a 5% increase in retail sales over the course of the year, which translates into over $6.3 billion in revenues from the new and/or refreshed categories.[citation needed]The growth and growth of the traditional shopping and/or online segments has been driven by a continuing uptick in overall brand recognition. Traditional brands are emerging and are being recognized by companies that are already growing. Additionally, the demand for and demand for personalized products has been rising, and brands are seeking new, more relevant, solutions. For instance, Target continues to see an increased response in the form of increased use and customization in their products as well as brand value and value creation. Similarly, it has grown in its ability to generate new, value based and consumer experiences.This trend has been mirrored during the online sectors. The growth in digital and/or digital consumer products is especially pronounced in the large shopping and/or/online areas where brands and retailers are competing for customers and gaining popularity. Over the last four years over 52% of consumers who participate in online shopping and/or e-commerce accounts for an average of $11.60/mo. This compares to 57% of retail sales and 48% of e-commerce
Sustaining Growth: The Outlook for Soft Goods Speciality StoresThe business is still young, but the key drivers of growth are broad demographics.The trend has been steady. Retailing, online & traditional media accounted for an estimated $4.65 billion in sales in 2013, a significant $5.14 billion increase. Additionally, retail sales and marketing have reached their historical highs. While sales are declining, sales volumes are accelerating as the U.S. becomes a world leader in the content and services space.Over the year, retail sales for digital, print, media, services and finance accounts for an annualized sales increase of $5.26 billion, $2.45 billion and $1.65 billion, respectively. On-Line Services have increased by $9.7 billion in 2017, and digital media and goods continue to grow at an average annual rate of 8.7 million media products per year, up $2.4 billion. At the same time, it’s hard to measure a company’s continued growth with a constant number of products, services and business units. At this time there were a total of 29 units in 2015 and 2015 saw 5.1 million active units by the end of the year, which is less than 4% of the total overall retailer-attendee ratio during 2013. There were just 6.6 million active units in 2014, although for the full year total of 33,000 units fell to 4.9% of retail sales.[citation needed]A trend of increasing convenience, increasing convenience, more convenience[/citation needed]and more convenience[/citation needed] was evident across the retailing, digital and media sectors as well. In other words, the overall retailing &/or online sector increased during the same four consecutive years while the digital and/or financial companies decreased. As a result, overall shopping and/or online retailing sales rose by $1.2 billion versus last year, which is a 10% increase year-over-year.[citation needed]This trend has been paralleled during the traditional shopping and/or online sectors. For example, in 2013, over 50% of retail sales were in the traditional categories, which were largely driven by the new and/or refreshed category. This represented a 5% increase in retail sales over the course of the year, which translates into over $6.3 billion in revenues from the new and/or refreshed categories.[citation needed]The growth and growth of the traditional shopping and/or online segments has been driven by a continuing uptick in overall brand recognition. Traditional brands are emerging and are being recognized by companies that are already growing. Additionally, the demand for and demand for personalized products has been rising, and brands are seeking new, more relevant, solutions. For instance, Target continues to see an increased response in the form of increased use and customization in their products as well as brand value and value creation. Similarly, it has grown in its ability to generate new, value based and consumer experiences.This trend has been mirrored during the online sectors. The growth in digital and/or digital consumer products is especially pronounced in the large shopping and/or/online areas where brands and retailers are competing for customers and gaining popularity. Over the last four years over 52% of consumers who participate in online shopping and/or e-commerce accounts for an average of $11.60/mo. This compares to 57% of retail sales and 48% of e-commerce
The Retail LandscapeMany soft goods specialty retailers have seen recent improvements in sales and profits, but for most, the recovery is modest in nature and has done little to negate the pervasive price pressure on retail margins. The sustainability of the recovery is questionable given poor comparable stores sales performance.
Modest RecoverySince bottoming out in the first part of this decade, sales have steadily improved in both the apparel and accessories specialty store and shoe specialty store channels. Yet, growth remains modest compared to the late 1990s.
The long-term sales outlook for apparel and accessories specialty stores is stronger than for shoe stores. Apparel stores are forecast to grow in the 4 to 5 percent range annually through 2008, while shoe stores are forecast to grow mostly around 1 percent a year over the same time period. Much of the sale improvement has gone straight to the bottom line for apparel and accessories specialty stores. Though still well below its performance in the late 1990s, the sector has improved another important measure of profitability, return on net worth.
In contrast, the very modest sales improvement among shoe specialty stores has not translated to improved financial performance, with the average net profit margin for publicly held shoe retailers declining. The financial struggles facing the shoe store channel are evident in the closing of individual stores and entire divisions by some of the channels leading players.
Pervasive price pressure has contributed to the commoditization of apparel and footwear, particularly basic styles that are easily sourced and widely distributed. Commoditization has also been propelled by the growth of Wal-Mart (www.walmart.com) and Target (www.farget.com), both of which offer wide assortments of basic and fashion-focused soft goods at sharp price points that appeal to a broad swath of consumers. This has increased the pressure on many retailer margins as their increasingly undifferentiated assortment goes head to head with price-driven retailer margins as their increasingly undifferentiated assortment goes head to head with price-driven retailers off the mall.
While apparel price deflation has made it challenging for soft goods specialists, many have proven worthy of the challenge. The availability of cheaper products allowed many of these specialists to improve inventory turns, resulting in a slight increase in their return on inventory ratio since 1998. This improvement reflects a focus by many apparel specialty store
…3…retailers on a combination of better markdown strategies, improved inventory management, and introduction of higher-margin fashion items.A Challenging EnvironmentSoft goods specialty retailers face a crowded marketplace that is steadily becoming even more competitive. Most shoe specialty stores are faring far worse than the apparel specialists in the competitive wars. Off-mall retailers, including discount department stores/super centers and Kohls (www.kohls.com), are capturing apparel and shoe share of preference at expense of mall-based retailers, including specialty stores. Consumer preference for purchasing apparel is strongest at discount stores/super centers.
The upward trend for discounters contrasts with a decline in spending preference for clothing at apparel specialty stores, value department stores, and traditional / upscale department stores in the same time period. For shoe purchasing, shoe stores are actually gaining spending preference, although the price-driven discount store/super center channel is as well. Shoe, discount, and apparel specialty stores are capturing shoe spending preference from value and traditional department stores, particularly Sears (www.sears.com) and Dillards (www.dillards.com), as well as Payless (www.payless.com).
The upward trend for discounters contrasts with a decline in spending preference for clothing at apparel specialty stores, value department stores, and traditional / upscale department stores in the same time period. For shoe purchasing, shoe stores are actually gaining spending preference, although the price-driven discount store/super center channel is as well. Shoe, discount, and apparel specialty stores are capturing shoe spending preference from value and tradition al department stores, particularly Sears (www.sears.com) and Dillards (www.dillards.com), as well as Payless (www.payless.com).
…4…Although department stores have suffered the most at the hands of off-mall retailer growth, many are reinventing themselves. Key elements of the department store reinvention include a stronger, more exclusive, and more differentiated brand and style assortment supported by upgraded, easier-to-shop stores. Thus, department stores now contribute to more competitive intensity in the apparel and footwear playing filed, particularly for upscale customers. The profile of monthly shoppers at traditional/upscale department stores is similar to that of monthly shoppers at apparel specialty stores in terms of higher income and education levels – although apparel store customers skew younger.
Competitive battles are also escalating due to the entry of a number of foreign specialty store retailers to the marketplace. Though most of the new foreign players operate only a handful of U.S. stores at this point in time, several intend to ramp up their store openings after establishing an initial base of stores.
Some suppliers are also branching out to target new customers with new specialty store chains to attain growth in the face of modest prospects at department stores. Polo Ralph Lauren (www.polo.com) is launching Rugby, a new brand and chain of stores targeting college-aged consumers. Oshkosh BGosh (www.oshoshbgosh.com)