Aug. 1 (Bloomberg) -- Angela Ricci is shopping for lacy tops, ruffled skirts and floral dresses to wear when she begins her senior year of high school in Pittsburgh. One thing she won’t be buying: jeans.
“I want to show a new kind of style and make a better impression,” said Ricci, 17. “I think that my generation is inspired to dress up a little more.”
Teens like Ricci are following the example of television shows such as “Gossip Girl” -- in which actress Blake Lively prances to class in couture -- as they head to stores to stock up for the new school year. Retailers, stung by slowing sales growth and record cotton costs, are obliging with blouses and dresses that sell for higher prices.
Spending on clothing and shoes in the back-to-school season, the second-largest sales period of the year for retailers, may rise to $28.8 billion in the U.S., up 3.6 percent from $27.8 billion a year earlier, according to the New York-based International Council of Shopping Centers.
Dressy clothes would be a bright spot in a slower-growing back-to-school season. Total back-to-school purchases, including books and electronics, may increase 2.9 percent, decelerating from 5 percent growth a year earlier, the council said.
Parents’ clothes spending may go increasingly toward dressier garments and items children don’t already have, said Ellen Davis, vice president of the Washington-based National Retail Federation.
‘Think Beyond Denim’
“Retailers have encouraged shoppers to think beyond denim for a while because they can market nicer merchandise at a higher price point,” Davis said. “For the past few years we’ve also seen this trend on television and other culture of people trying to look nicer and dress up.”
The change in tastes is coming at the right time for fashion chains, which could use the boost from higher-priced garments, she said.
U.S. consumer spending rose 0.1 percent in the second quarter, the smallest gain since the recession, the Commerce Department said July 29. Average sales growth among the 23 largest North American apparel retail chains by market value slowed to 11 percent in their most recent quarter from 14 percent a year earlier, according to data compiled by Bloomberg.
Cotton prices, which have climbed 32 percent in the past year and reached a record $2.197 a pound in March, may make denim jeans just as expensive to produce as khakis or blouses, Davis said. The apparel retailers’ average gross margin -- the percentage of revenue left after the cost of goods sold -- narrowed to 43.7 percent in the most recent quarter from 44.3 percent a year earlier, according to Bloomberg data.
“Retailers much prefer this trend to the flannel pants and casual wear of a few years ago because the profit margins are much higher,” Davis said in a telephone interview. “Parents are willing to spend a little more on clothes that they think are nicer.”
At Abercrombie & Fitch Co.’s stores, a polyester blouse with lace detailing sells for $98, compared with $30 for a t-shirt. The store, known for teen clothing and its signature cologne, has introduced a “soft and pretty” section of its website offering skirts, cardigans and dresses.
Gap’s back-to-school collection for girls features a “posh” London chic look, including $45 ruffled jackets and $49 tiered skirts inspired by Kate Middleton, the wife of the U.K.’s Prince William, said Seth Farbman, chief marketing officer.
Little Miss Proper
Gap’s featured ensembles on its website include floral dresses and skirts with names like “Little Miss Proper” and “High-Posh Society.”
“The look now is a little more dressed-up,” Farbman said last week. “Even the denim doesn’t necessarily look like the jeans you’d expect.”
Many of Gap’s jeans are made from softer material in colors like pink, sand and black.
Sears Holdings Corp. also is featuring preppy fashions over casual wear, pushing back-to-school gear from MTV star Audrina Patridge and reality socialite Kim Kardashian. The department store, which is offering $38 polo shirts and $30 Dockers pants, introduced a “Varsity Prep” line.
“Young customers increasingly appreciate trend fashion perspectives from the top lines, and we are trying to enhance our clothing lines to be in-line with more runway styles,” said Tom Aiello, marketing vice president at Sears.
J.C. Penney Co. is pushing a “flirty femme” look complete with ruffled dresses and shrugs, said Liz Sweney, senior merchandise manager.
Retailers began promoting back-to-school items in July this year, which is unusually early, hoping to lure shoppers before the competition and while the weather is still warm, Davis said. Lacy blouses and polo shirts are easier to sell in the sweltering heat, when many promotions now begin, said Betty Chen, an analyst for San Francisco-based Wedbush securities.
“With heat waves and droughts hitting much of the U.S. this summer, shoppers are unlikely to shell out for hot bottoms like denim and will instead spring for lighter clothing they can wear immediately,” Chen said.
Television shows influence what kids wear, and the preppy tradition is likely to continue for some time, Davis said.
“Retailers like it, it’s what celebrities are doing, so I expect that denim won’t be the back-to-school staple it once was,” she said.
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