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Women’s Clothing Industry Report Essay

This industry includes establishments primarily engaged in the retail sale of a general line of women’s ready-to-wear clothing. This category also includes establishments primarily engaged in the specialized retail sale of women’s coats, suits, and dresses. Custom tailors primarily engaged in making women’s clothing to individual order are classified in SIC 5699: Miscellaneous Apparel and Accessory Stores.

Industry Snapshot

In 2005, $36.7 billion was spent at stores devoted exclusively to women’s apparel, a jump of more than $2 billion from 2004 and more than $4 billion from 2003. While the discounters, namely Target and Wal-Mart, were continuing to do well, the more upscale stores were seeing a new surge in spending. While consumer demand for luxury and high quality items was high, most of the purchases in this category were made for those items either from lower-priced brands or items on sale. In the mid-2000s, those employed by the industry were mostly working as sales associates, who are responsible for performing customer service and a variety of operational duties such as setting up displays and organizing stock.

Store managers oversee sales, operations, and personnel functions. Merchandisers work with the apparel manufacturers to select apparel for the retailer and control merchandise expenses. According to the U.S. Census Bureau, women’s clothing stores reported combined sales of $38.5 billion in 2008. As the economy continued to struggle sales fell 7.6 percent to $35.6 billion in 2009. As sales declined, Women’s clothing stores were adapting to the downturn by focusing on “recession-friendly prices,” and opening up more discount outlets. In fact, there were 345 outlet stores slated to open in 2011, according to the November 2009 Retail Forward report.

Organization and Structure

The structure of the U.S. retail industry, including women’s clothing stores, has changed significantly since the early 1990s, moving from a production-driven market to a consumer-driven market. Nontraditional retailers, such as discounters, off-priced stores, and factory outlets, fared well. Because of continuing competition from nontraditional retailers, department stores such as J.C. Penney and specialty stores such as The Limited increased their focus on private labels. In the mid-1990s, consumers demanded more convenience and quicker service from growing no-store retailing, particularly in direct-mail order, television, and online shopping.

An Internet shopping study by Ernst & Young LLP reported that the number of retailers selling online tripled in 1998 to 39 percent. The online market was estimated to reach $13 billion in sales at the end of 1999. The relationship between larger retailers and suppliers significantly intensified because a growing number of retailers were taking on entrepreneurial roles traditionally performed by apparel producers. Larger retailers and direct-mail order companies were making decisions in areas such as product design, fabric selection and procurement, and apparel production, which in turn influenced production scheduling, pricing, and delivery dates.

Background and Development

Women’s clothing stores were introduced in Europe in the late 1700s–slightly later in the American colonies–at a time when productive capability, population, and prosperity allowed clothing production to move out of the house and into the factory, and clothes to move into retail stores. Around this time, seamstresses began opening shops offering custom-made hats, dresses, cloaks, or other garments. These garments of the latest fashion were for those who could afford to hire out the work of stitching. Trading posts in the frontier areas carried cloth and some ready-made apparel. The invention of the sewing machine, the rise of mass production, and the proliferation of retail stores by the late nineteenth century led people first to sample and later to rely on ready-made clothing for sale as a reliable means of obtaining fashionable clothing. In the 1890s, ready-to-wear clothing came into its own, and by the turn of the century ready-made women’s wear was available in abundance in the United States. By the 1920s, it was considered more fashionable to buy clothing from a store than to make it at home.

For many years, the department store and the downtown women’s shop were the mainstays of women’s wear retailing. Department stores offering a vast selection of goods and specialty stores catering to unique tastes dotted the urban landscape. For those with enough money, shopping became a social event. Along with the growth of women’s clothing retailing came the increasing importance of fashion. The women’s apparel industry established a voice in government through the National Retail Federation (NRF), the trade group representing the entire spectrum of the nation’s retail industry. In the early and mid-1990s, the NRF lobbied the U.S. Congress on issues such as minimum wages and the proposed health care plan. The NRF was opposed to an increase in the minimum wage on the grounds that many retailers would have to close down operations or fire staff to meet expenses with a higher wage base. In 1994, Women’s Wear Daily reported that the NRF opposed the Clinton administration’s proposed universal health coverage on the grounds that more than 700,000 jobs would have to be eliminated in all retailing.

At that time only 35 percent of retail workers received health care benefits. The NRF supported a plan that emphasized offering health coverage but did not require employers to pay for that coverage and allowed for the creation of purchasing pools for group insurance. Heading into the twenty-first century, dedicated women’s stores faced renewed competition from alternative retail venues offering specialty or general line women’s apparel in addition to other product lines. Sporting goods retailers were devising new strategies to increase women’s apparel business. In 1995, women’s apparel ranged from 10 percent to 40 percent of store merchandise. Sporting goods retailers saw strong potential in the women’s apparel market. Retailers increased floor space to accommodate women’s products; set up women’s departments; increased stock of best-selling brands; and held store events to draw more female customers. Department stores also responded to the increased demand for women’s apparel and began repositioning themselves to win back the customers they had lost to more focused outlets like The Gap and The Limited.

Such retailers as Bloomingdale’s and Dayton Hudson revamped the women’s apparel collections. The large-sized women’s clothing market grabbed the attention of clothing retailers in the mid-1990s with sales reaching $20 billion and claiming 24.7 percent of the market. The key factors that influenced these sales were an increase in fashions featuring younger silhouettes and the use of better fabrics. Lane Bryant, a division of The Limited Inc., brought in more fashionable clothes and worked to change the perception of large-size fashion. “Our customer wants to wear the exact same fashion her skinny friends wear,” noted Lane Bryant’s chief executive Jill Dean in a 1999 Wall Street Journal interview. One of the hottest growth areas in retailing during the late 1990s was discounting. Clothing retailers saw an opportunity to bring fashionable clothes at reasonable prices to the masses. In 2002, Target was the country’s third-largest discounter and a $40 billion division of the Dayton Hudson Corporation. Nearly 35 percent of Target’s sales come from the clothing department. Old Navy, a division of The Gap, was launched in 1994 to compete with stores like Sears and Target with this concept in mind.”

As the United States initiated the war with Iraq in March of 2003, the U.S. economy remained soft and consumers remained cautious. As a result, the clothing industry reported sales numbers below those previously forecasted, down 6 to 7 percent rather than the anticipated 3 to 4 percent for the month. The retailers with the most success–or least amount of decline–were those that offered moderate-priced, affordable sportswear that combined the right amount of fashion with value. By the end of 2003, the industry saw increased spending again, a trend that continued into 2004. Dresses, skirts, and tailored clothing all declined in overall sales and units sold, but increases were seen in lingerie, suits, swimwear, and knit shirts. Tops were hailed as the new accessory in 2005, and women were being bolder about choices in this division, while preferring more versatile, classic apparel items in other categories such as slacks.

The so-called “career/casual” market was on the upswing, as women looked for clothing that could easily make the transition from work to leisure. While fashion was important in the mid-2000s, so was the desire to simplify. Although higher-end, upscale items were increasing in demand, women still looked for the bargain, leading to an increase in the “affordable luxury” category as well. While overall spending was up, the average price per item was down. Retailers also continued to target junior shoppers as a consistent source for revenues. Young consumers, who tend to have more disposable income than older shoppers, spend more money on clothing and are more conscious of fashion trends. In 2007, those junior shoppers were interested in buying dresses, as were most other women.

According to a report by The NPD Group, revenues from sales of dresses increased 30.4 percent overall for the 12-month period ending in April 2007. For juniors, the jump was 53.3 percent, while the sales of “misses” dresses rose 33.1 percent and the sale of “petite” dresses 31.6 percent. During that 12-month period, sales of women’s apparel in general increased 5.1 percent. Even with positive signs in sales heading into the late 2000s, an uncertain economy had one of the stronger chains slimming down to improve profitability. Despite net sales that rose 2.3 percent in 2007 to approximately $2.4 billion, Ann Taylor Stores Corporation announced in January 2008 that it planned to close 117 stores from 2008 through 2010 as a restructuring of the business.

Current Conditions

“Retailers are crafting marketing and merchandising campaigns around the new normal, making a bid for female shoppers still shell-shocked by the biggest economic downturn since The Great Depression.” Consequently, consumer spending patterns have been changing and will likely continue to evolve. The average consumer was shifting to fewer purchases. One market research firm that follows the industry reported sales of women’s clothing fell 2.8 percent in 2008 and 4.9 percent in 2009. Industry watchers don’t see the downward trend changing anytime soon, especially since income levels were on the decline and the unemployment rate remained at high levels and apparel in general being a discretionary purchase was suffering because of the weak economy.

In one survey conducted by ShopperScape by Ohio-based Retail Forward based on all age groups and income levels found over half of women shoppers will replace only their “worn out” clothing. Additionally, when it comes to buying clothing, shoes, and accessories the mentality was to “trade down” selecting the less expensive brands. Additionally, women shoppers were much more value oriented then in years past. The mentality to “shop till you drop” was now labeled “frugal shopper” seeking out the less expensive designer replicas. Some women’s clothing stores underwent significant restructuring downsizing throughout the late 2000s. One industry leader, Ann Taylor Stores including their LOFT stores shed 60 stores in 2008, followed by another 42 stores in 2009 with about another 72 announced to close in 2010. Of the estimated 174 store closures, half would be Ann Taylor Stores and about half would be LOFT stores.

Industry Leaders

Some of the leaders in the women’s clothing store retail industry in the United States were The Gap, Inc., Limited Brands, Inc., Charming Shoppes, Inc., Talbots, Inc., Ann Taylor Stores Corporation, and the Dress Barn, Inc. The Gap, founded in 1969 by Don and Doris Fisher in San Francisco, has become an international specialty retailer offering men’s, women’s, and children’s casual clothing and accessories. The Gap operated thousands of stores in six countries, including The Gap, GapKids, Baby Gap, GapBody, Banana Republic, and Old Navy Clothing Co. The Gap has stores in the United States, Japan, the United Kingdom, Canada, France, and Germany. The company reported $15.9 billion in revenues for 2007. The Gap expanded quickly in the 1980s, purchasing the Banana Republic chain in 1983, launching GapKids, and BabyGap in 1986, and opening its first overseas store in London in 1987. By 1990 The Gap was one of the most successful apparel retailers and the second largest clothing brand in the United States. One of the biggest successes for The Gap was the Old Navy division, launched in 1994.

In less than three years, The Gap opened 282 Old Navy stores and hit sales of $1 billion. Gap Online was introduced in November 1997. Limited Brands, Inc., the top U.S. women’s apparel retailer, was founded in 1963. Limited Brands, Inc. shed its Express and The Limited apparel chains to focus on its Victoria’s Secret and Bath & Body Works stores. The company operated 2,900 specialty stores in North America in 2007. Sales for 2007 reached $10.7 billion. The leader in plus size apparel, Charming Shoppes, Inc., had Fashion Bug and Catherine’s Plus Size stores, and had acquired Lane Bryant from Limited Brands in 2001. The company reported 2007 sales of $3.1 billion. Talbots, Inc., with nearly 1,380 stores carrying traditional clothing and accessories, reported $2.2 billion in 2007 sales. Ann Taylor Stores, which catered to customers looking for upscale, classic clothing, reported 2007 sales of $2.4 billion. The Dress Barn catered to the professional woman on a budget.

The company had $1.3 billion in 2007 sales. With 2,100 stores globally, The Gap reported revenues of $15.7 billion in 2008, falling to $14.1 billion in 2010 with 135,000 employees. Limited Brands, Inc. also saw their revenues decline fro $10.1 billion in 2008 to $8.6 billion in 2010 with 92,100 employees. From a reported $3 billion in sales for 2008, Charming Shoppes, Inc.’s revenue plummeted to nearly $2.1 billion in 2010 with 27,000 employees. Talbots, Inc.’s total number of stores fell from 1,380 in 2007 to 580 in 2010, as did its revenues from nearly $2.3 billion in 2008 to $1.2 billion in 2010 with 9,100 employees. Ann Taylor Stores reported revenues of $1.8 billion in 2010, well below the reported revenues of nearly $1.4 billion in 2008. The company employed 18,800 people. The Dress barn reported revenues of $982 million in 2010.


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