The Big Picture
After a slow start in the first quarter, analysts believe that the U.S. economy is improving in the current quarter and could reach a growth rate of 2.5% for March through June. And while increased hiring is expected to spur consumer confidence in the latter part of this year, consumers today still face climbing gas prices, which are expected to raise prices across the board by fall.
For now, many retailers are still posting gains but as we get deeper into the recovery it will become more difficult to make the same kind of numbers. Our best advice is to plan conservatively and really pay attention to the categories that are trending in your own business.
April’s Mixed Bag
A late Easter–which caused a late start to the spring season–clearly affected women’s wear sales in April, as they slid by 6%. Chances are, many women purchased spring items very early in the season and then had to wait to wear them because of inclement weather in many regions. This may have kept them from purchasing later in the season. Ready-to-wear took the greatest loss, falling by 11%, while dresses slipped 6%.
In contrast, menswear did surprisingly well, posting a 5% gain. Suits were up a whopping 18%, while sport coats posted a 12% gain, indicating that men were getting ready for some formal spring events. Jeans, on the other hand, fell by 7%.
(For more in-depth trends, see our Trends-by-Class page.)
Early indications are that May’s business has been a little soft, and Memorial Day weekend marked the start of serious markdowns. Our best advice is to stay in step with your markdowns and do as much business as you can before the June–July slowdown.
There is no doubt that rising cotton and fuel costs will lead to price increases this fall and beyond. Although unemployment is improving slightly, it’s likely that many mid-tier stores will be squeezed in the months ahead. And since few stores have extra margin to give away, they will have to hand over the price increases to consumers.
We believe that fall will still come out positive, but you have to be extra careful about Spring 2012. We’ve seen two years of double-digit spring growth, and we are unlikely to get a third. Make sure you don’t overbuy and be more conservative on your sales plans. The one thing you should not be conservative about is trying new vendors and products– newness is the only thing that will help you drive sales.
Blacks Bottom Line
For all practical purposes, SP/SU’11 is behind us–now you have to focus on your action plan for fall and making sure you receive timely deliveries.
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