California Apparel News

The steady business of 2006 bodes well for the prospects of 2007. California Apparel News editors caught up with several industry executives to get their take on 2006 and their forecast for the coming year.

Import/Export

Trade in 2006 has had a very good year. There has been an increase in imports and exports. But 2007 looks like it will be challenging. There are possibilities of anti-dumping petitions being filed in apparel against Vietnam and an increase in customs enforcement of the rules of origin to prevent Chinese shipments from coming in illegally.—Robert Krieger, president of Los Angeles–based freight forwarder and customs broker Norman Krieger Inc.

Manufacturing

In 2006, we saw the consolidation of retail—and I don’t foresee that this is over. It will continue into 2007. As a manufacturer, I had to adjust to selling to one store for every two I had before, and that is challenging. We had to find routes into other retailers. Also, price was driven lower and lower, which put the additional challenge on manufacturers to find a way to do business at the [new] price point and still offer innovative product. Sourcing was a big focus. 2007 will be just as challenging. Stores are ready to do business with manufacturers who have proven themselves capable of offering service, product and price.—Moshe Tsabag, president and owner of Los Angeles–based juniors lifestyle brand Hot Kiss Inc.

Real Estate

I think the real estate market will take a breather in 2007. Apartments will continue to do well, as well as select retail projects. Well-located properties will continue to be in high demand. Investors need to reassess their profit margins if they are trying to currently acquire assets. Buyers are going to more markets outside of California trying to achieve better yields.

I think downtown will be fine. The shortage of housing is so extreme; and on a relative basis, there is not that much product coming on the market. There may be some pauses, and buyers will take a little more time in making their decisions. Most of the product is higher-priced and is located in South Park near the L.A. Live development. There is a clear shortage of condos in the $350,000 to $450,000 price range. This is why Santee Village is focusing on the buyers in this range.I think urban living is here to stay and will not be affected by interest rates any more than other housing.I think rates will stay low.

Downtown is finally creating a place that has a clear identity. To work, live and play in downtown is no longer a dream. It is a reality. Downtown is quickly becoming a destination and will help address the clear lack of housing choices in Los Angeles. The combination of L.A. Live, Grand Avenue and all the exciting mixed-use properties makes downtown a special place to be.—Mark J. Weinstein, chief executive officer of Santa Monica, Calif.–based MJW Investments, the company responsible for Santee Village, which bills itself as the Los Angeles Fashion District’s first modern housing development. Weinstein has also developed housing in Orange County, as well as a multi-use project in East Los Angeles next to the Sears Boyle Heights store.

Retail

Dresses boomed in 2006, and every sign shows that the trend will continue in 2007. My vendor base doubled because of this trend. I had a vendor base of 10 to 15 companies that I relied on in 2005. Now, I shop 30 to 40 vendors.—Ike Zekaria, vice president and co-owner of Vernon, Calif.–based retailer Windsor Fashions Inc.

Technology

I believe that [interest in technology] will be excellent going forward and is driven by two things. First, as the adoption of PLM [product lifecycle management systems] accelerates and apparel companies go “live” with their PLM projects, companies will start realizing the efficiencies that they had set out to capture. So, I believe the proliferation of PLM will broaden based on the reality that apparel companies must be able to deliver according to the new “fast fashion” paradigm while remaining steadfastly committed to lower production costs. The second driver in terms of technology investments has to do with the financial structure of apparel companies. The reality is that apparel brand companies are focused like never before on their economic valuation. This is because of the influx of private equity players that have entered the market. Apparel companies realize that a solid technical backbone that enables them to run efficient processes will foster higher valuations than those companies that don’t have a solid technological backbone. Technical infrastructure and how it maps to the strategy of the company is becoming an important part of the due diligence process of private equity investors.—David Rode, president of Lectra USA, a New York–based provider of design and production software as well as cutting-room machinery. The company’s West Coast office is based in Cypress, Calif. Its world headquarters are in Paris.