It’s the style and not the price tag that’s catching the eye of U.S. consumers again, as buyers abandon needs-only shopping and gravitate to designer underwear and cocktail dresses.
Chief executive officers at Bloomingdale’s, HSN Inc. and Warnaco Group Inc. said they are seeing renewed interest in fashion as customers snap up pricier Calvin Klein underwear and Naeem Khan clothing.
“If it’s fashion-right, that’s 80 percent of the ballgame right now,” Michael Gould, Chairman and CEO of Bloomingdale’s, said yesterday in an interview with other consumer executives in New York. “It’s not about price,” he said.
This year has brought a rebound in luxury purchases after retailers and their suppliers saw spending plummet. In 2008 and 2009, consumers restricted buying to necessities as they coped with the worst financial crisis since the Great Depression.
“Some of our best-selling products in the United States right now are some of our most expensive,” said Joseph Gromek, president and CEO of Warnaco, which sells its merchandise to retailers, and operates about 1,100 Calvin Klein stores. A pair of its Calvin Klein X pink men’s briefs sells at Bloomingdale’s, a unit of Macy’s Inc., for $26.
Until late last year, “functional trumped emotional,” with strong sales of cooking, fitness and technology merchandise, said Mindy Grossman, chief executive of HSN. More recently, her company, which owns Home Shopping Network and Cornerstone Brands catalogs, sold out of its Timeless line by designer Khan, who has dressed Michelle Obama.
“We had to end the show early,” Grossman said. The collection had items priced from $200 to $500, including a $400 beaded silk cocktail dress.
While spending is recovering, factors such as high unemployment and a potential rise in interest rates mean “anybody that thinks we’ll return to the levels of 2006 and 2007 is smoking dope,” Gilbert Harrison, chairman and CEO of investment bank Financo Inc., said yesterday in a telephone interview.
“We’ve gone through a crisis and people overspent,” he said. “You’re not going to see this again for many years.”
Lower-income consumers are still struggling and worried about their jobs, Matt Rubel, chairman and CEO of Collective Brands Inc., said yesterday in a telephone interview.
“It’s the upper-income level consumer that has pent-up demand and I think they’re back,” said Rubel, whose company owns Payless ShoeSource and Stride Rite. “There are certain portions of the market that are still challenged.”
Still, the executives said they are preparing for growth, whether through new technologies, stores or acquisitions.
“No one is saying what the customer is going back to, but the customer certainly has come back to wanting to spend something,” Bloomingdale’s Gould said. “Fashion-right and newness. Throughout the store, we can see that.”