California Apparel News

If you can’t beat ’em, join ’em. That is becoming the popular mantra of retailers as the industry goes through a revolution, according to Marc Heller, president of CIT Commercial Services, a division of CIT Group Inc. in New York.

E-commerce has changed the way retailers sell so that the major bricks-and-mortar companies are looking at their individual stores, potentially closing what they consider unprofitable locations and investing in e-commerce to continue to grow their business, Heller noted in “E-Commerce Drives Retail Revolution,” a recent market intelligence report.

“The department stores are looking at leases as they come up and at stores that are under performing,” Heller said. “They are looking at ways to manage expenses and at the same time how to redeploy that money.”

Millennials [between the ages of 19 and 35] and teenagers do not shop in the same way that older consumers shop. “In apparel, millennials and teen consumers have different buying habits than their parents, which is reflected in millennials’ preference for buying one specific item, even when at a mall or a store, rather than shopping for multiple items,” Heller said. “This difference can be attributed to the fact that millennials are often accustomed to buying a specific item online rather than browsing for items in multiple stores. Consumers whose shopping behavior was established before the rise of e-commerce could be more likely to browse through a store or a mall, leading to the discovery of new items and greater sales.”

Other shopping trends in the retail industry include:

Experience over products: The apparel and accessories side of retail have slowed down. In the past, handbags, watches and leisurewear were booming. Those areas seem to be showing softness while consumers are spending more on restaurants, vacations and health spas.

Furniture remains strong: Furniture sales continue to do well. At the High Point., N.C., furniture show recently, business was brisk. Now the big question is whether Asian furniture suppliers will go direct-to-retail rather than using U.S. furniture companies to distribute in the United States.

Consumer-product companies pursuing M&A activity: Companies such as apparel ventures or shoe manufacturers that sell to retailers are looking to acquire similar brands and their companies to expand revenue. “It seems that organic growth is not easy in any business,” Heller said. “If you are a $100 million company and have your own warehouse, sourcing mode, and chief financial officer and the whole back office and you need another $15 million of volume, it costs a lot less to take on another company.”