Fast Fashion's Appeal. It's "safe" fashion.

Defining Fast Fashion

Do you know what Fast Fashion is? We asked a group of women who shop fast fashion concept stores (Uniqlo, H&M, Zara, Forever 21, etc.) and most were not familiar with the term. No biggie. The term is more industry jargon than a consumer-facing moniker.  Fast Fashion takes runway trends and quickly (and inexpensively) turns them into merchandise for trend-seeking consumers. 

The Appeal of Fast Fashion

Besides the obvious cost-savings and desire for trendy items, what is the appeal of these stores? Here's what women told us: 

• It's a safe way to try new trends. Let's say you're eying a one-shoulder, brilliant blue mini dress (a la Katy Perry) and you have quite a lovely badonk. Fast Fashion offers a cheap way to try out a trend and see if it actually "fits." Sometimes we women need to try an outfit out in the real world to decide if we like it, badonk or flat bottom. Better that "trial" item be something inexpensive according to Lori from California, a 30-something stay-at-home mom and budding fashion blogger. Lori tell us, "I enjoy toying with fashion. But I don't want to empty my wallet to do so." 

• Feel less guilty if it doesn't work out. If the brilliant blue mini dress gets positive feedback from the people who matter (namely, other women) then it's a go. If we hear crickets instead of compliments? The blue mess will get relegated to the Good Will pile. Who cares? It was only $20, and now it's a donation. As Lauren, a digital marketer in her 20s points out, "If I don't end up liking the outfit...I won't be upset because it didn't cost me as much money." 

• Less worry about ruining or losing items. Let's take our brilliant blue dress again. Say we get tagged by a lit cigarette. That's just the way it goes because "there is always a risk of it getting ruining while out," according to Emma, a 20-something creative. According to Emma and others, there's much less drama in ruining this dress than say, that JCrew number.

Quality/Risk Equation in Fast Fashion

Speaking of risk, women who shop fast fashion understand the potential quality discrepancy in these items. They realize that lesser quality fabrics, and stitching is probable when the costs are so low. However, many women like Samara a 20-something Media person, feel they can mitigate the risk by being selective. "I have had stuff from Forever 21 that falls apart in 1 washing. Then again, some stuff I've had for years. You have to be careful."

The Fast Fashion Controversy

It's not all just fun and cheap fashion with these retailers. The high-end fashion crowd (fashion designers, editors, industry vets) look down on these stores for their lack of quality merchandise and so-called knock-off designs. It doesn't stop with the bad opinion either: In the past few years Anthropologie, Diane Von Furstenburg, and Anna Sui have all taken retailer Forever 21 to court for copying their designs. 

In addition to the above allegations, some question how these inexpensive items can be made in a responsible manner (that is, fair pay, decent working conditions, non-hazardous materials, etc.). Fast Fashion retailers need to take notice on this specific issue because of the younger adults they target -- specifically the Millennial generation. Millennials tend to be more attuned to fair business practices than the generations before them. They might be lured in by cheap prices, but their conscience might keep them from buying. 

"This is always a sticky subject for me...the merchandise is mass-produced in low or no-pay sweatshops," posts kelseaalexis in response to an article in nymag.com. "However, since I am only 15, I don't exactly have the funds to buy the 'real' things all of the time, so I just resort to Forever21."

Fast Fashion's Cousin: Designer Collaborations

Designers Collaborations are exactly what they sound like: A known (or in some cases, an unknown) designer teams up with an established retailer like Target, H&M, and Kohl's and creates an exclusive collection for that retailer. Karl Lagerfeld tipped this trend back in 2004 with his H&M collection that had fashionistas flocking to the store for the limited edition designs. Other designers, like Vera Wang for Kohl's, have been lending their design cred for years. Even mainstream Macy's is getting in on the action with their latest announcement to bring these types of fashions into their stores. 

While Fast Fashion may have it's albatross, it seems that Designer Collaborations enjoy a much better reputation. Everyday women enjoy the access to these designers and consider these collaborations unique and original. They enjoy the ability to afford a designer label. Plus, the designers gain points for making their fashion more accessible. 


Fast Fashion makes sense with today's economic sensitivities
Fast Fashion has it's place in the retail world, especially as we are experiencing a renewed sense of frugality. There will always be a segment of people including Millennials and trend-seekers of all ages who will want up-to-the minute trends at a tremendous bargain prices. Low price drives the benefits we discussed earlier (safe way to try trends, less guilt, less worry). The additional benefit is that the low price of Fast Fashion also makes consumers feel like smart shoppers.    

It seems that Designer Collaborations will continue to have appeal as well and show no signs of slowing down. Designer Collaborations can provide Fast Fashion concepts more "legitimacy" as a fashion destination by providing a real designer behind the merchandise. 

[Image: Tom Clare / FreeDigitalPhotos.net]

"I'm Dreaming of a (cautious) Christmas"

While retailers experienced a decent back-to-school season this year, experts warn not to expect too much for the holiday season. Sales are predicted to be up, but experts say consumers will shop with caution and wait until the last minute to shop for the best deals.  They advise retailers to offer promotions, rewards and coupons to draw in consumers. Why? Consumers are expected to do even more comparison shopping and purchasing online than last year. Although the high unemployment rate (holding at 9.6%) continues to put a damper on retail sales, positive September sales for department stores and teen retailers (discount retailers struggled!) might give a glimmer of hope for the holiday retail season.

September sales soar...for some
September sales for many retailers show a light at the end of the recession tunnel, especially departments stores and teen retailers. Surprisingly, discount retailers did not fare as well.

Here are some highlights:
Teen retailers

• Abercrombie and Fitch posted an increase total comp store sales of 13% vs. an 18% decrease from last year
• American Eagle Outfitters, Inc. posted an increase in comp store sales of 4% compared to flat from the year before

Department stores

• Macy's same store sales increased 4.8% vs. a 2.3% drop from last year
• JC Penney Company, Inc. reported a 5.1% increase in comp store sales vs. a 1.4% decrease from last year
• Limited Brands comp store sales rose a whopping 12% vs. a 1.7% decrease from last year

Discount stores

• TJX Companies posted a 1% increase in consolidated comp store sales vs. a 7% increase from last year
• Kohl's reported only a 3% increase vs. a 5.5% increase for the same period last year
• Ross Stores, Inc. posted same store sales of 2% vs. an 8% increase from last year
• Although Walmart doesn't report monthly sales any more, they have posted five consecutive quarters of negative same store sales.

What does this shift foretell? Perhaps just having low prices isn't enough - retailers may need to show they have the right merchandise to bring consumers into their store.

Overall Holiday Sales Predictions from the Experts
Deloitte predicts that retailers can expect about a 2% rise in sales, beating last year's 1% increase, and most of the boost will come from non-store sales such as catalog, interactive television and online. In fact, Deloitte expects a 15% jump in non-store sales, nearly two-thirds of which will be online and the rest of which will come through catalogs and television.

"Online activity may also influence in-store shopping this holiday season, as social networks and mobile applications are playing a more prominent role in the shopping process."  

-Alison Paul, Deloitte Retails Sector Vice Chairman

Kantar Retail calls for fourth quarter retail sales to rise 2.5% better than the 0.5% gain from the same period a year ago. Although they predict the holidays will be a soft spot, Kantar says it's not an indication of a double-dip recession. The slow-rising economy, though, will keep consumers in a thrifty mode, which means consumers will be looking for discounts and deals, as well as shopping at dollar stores and small-format value retailers. Kantar found that one-third of consumers plan to comparison shop online before heading to the stores, and that one in every 20 customers will bypass stores completely.


National Retail Federation expects holiday sales to rise 2.3% over last year and that sales will reach $447.1 billion, the biggest increase in three years in part because of more aggressive pricing. This would be a vast improvement over lat year's 0.4% rise and the 3.9% holiday sales decline in 2008.

"Though the retail industry is on stronger footing than last year, companies are closely watching key economic indicators like employment and consumer confidence before getting too optimistic that the recession is behind them." -NRF President and CEO Matthew Shay

The International Council of Shopping Centers released its forecast Tuesday with the most optimistic predictions of an increase in holiday sales landing between 3% and 3.5%

What are consumers thinking?
Kantar Retail's September ShopperScape survey shows early spending plans by shoppers.

• 7% of shoppers are planning to spend more for the holidays vs. 9% from last year
• 19% of Gen Y shoppers plan to spend more - the strongest among all generations
• 38% of shoppers plan to spend less on holiday gifts vs. 40% from last year
• 42% of Baby Boomers plan to spend less - representing the greatest cutbacks between all generations
• 49% of shoppers plan to spend about the same compared with 46% from last year
• 55% of seniors are most likely to hold their holiday spending steady

Although the retail industry experienced a good back-to-school season and many stores saw positive September same store sales, with nearly 15 million people out of work, and until unemployment changes, retailers may not see a strong holiday season this year. Sales are certainly expected to be up, especially compared to the last two years, but the recession continues to have an effect on consumer spending. The holiday season shouldn't be completely dreary though, as long as retailers offer discounts and promotions, the consumers will shop.


Image: dream designs/freedigitalphotos.net


Sources:
September Retail Sales Lift Holiday Sales Expectations, 123jump.com, 10/9/10
Employment Situation Summary, bls.gov, 10/8/10
September Same-Store Sales Grow Slightly Slower, Kantar Retail Reports, retailforward.com, 10/7/10
September Retail Sales Rise; Holiday Looks Happy, multichannelmerchant.com, 10/7/10
Retailers' Holiday Hinges on Discounts, wsj.com, 10/6/10
Retailers Need 'Promo Mojo' to Survive Holiday 2010, cnbc.com, 9/30/10
Deloitte: Online will drive small uptick in holiday sales, bizreport.com, 9/26/10
Retailers Cautious As They Hire Holiday Temps, npr.org, 9/19/10
Analysis: As school starts, retail thoughts turn to holidays, reuters.com, 9/3/10

Back-to-School 2010 - A step in the right direction

Overall back-to-school sales for 2010 were up compared to sales from last year. Oppressive heat drove people inside to air conditioned stores that not only had severely  discounted merchandise (as much as 50%), but were discounting as early as July. In addition, some states had tax free shopping weeks. Although sales are up for back-to school this year, they are still below those of 2008. With consumer confidence up for now (barely), retailers hope the positive back-to-school sales will be a good sign for the holidays.   

A Few More Predictions

• 2010 Consumer Intentions and Actions Back to School survey found the average American family will spend $606.40 on clothes, shoes, supplies and electronics, compared to $548.72 last year, and close to the $594.24 in 2008.
• Total spending on school-aged children in grades K-12 is expected to reach $21.35 billion.
• Combined K-12 and college spending will reach $55.12 billion.

What Really Happened

Reuters tracks same-store sales for a group of 27 national retail chains, the following results are based on the information they gathered

• Retailers posted a 3.3% gain in same-store sales for August, ahead of the 2.5% rise that analysts projected
• This follows a 2.9% drop a year ago and a 2.7% rise in July
• Among the clear sales winners in August were clothing and stores catering to teen and young adult shoppers
• Electronics sales rose a modest 2.3% from the year before but were down 9.9% from two years ago
• 67% of the retailers that reported same-store sales beat expectations, with mass merchants and apparel retailers doing so by the widest margins
• The last week of August was particularly strong
• Spending on many non-essentials like fashions are still below 2008
• With high unemployment and weak consumer sentiment*, shoppers were still focused on low prices when choosing what to buy
• *An index of consumer confidence released the last week of August by the Conference Board, a private research group, rose just 2.5 points in August, to 53.5
• The International Council of Shopping Centers said forecast September sales would rise 3%

Clothing

• Limited Brands posted a 10% surge in sales last month, beating analysts' estimates for a 7.3% increase
• 40% discounts at Abercrombie & Fitch jumped 6% in the month, passing estimates for a gain of 5.7%
• Note: In August last year, when Abercrombie was holding on to its "no discounts" strategy, sales sank 29%
• Wet Seal reported a 1.1% sales gain vs. estimates for a 3.5% decline
• Macy's 4.3% gain in same-store sales was ahead of projections for a 4% rise
• Possible reasons: 1) Macy's shift to tailoring merchandise to local tastes and more centralized operations that allow quicker decisions. 2) A strong reception to merchandise such as the new Madonna-inspired Material Girl line
• Kohl's Corp. also had a solid showing, with a 4.5% increase in same-store sales, when 2.6% was projected
• TJX Companies posted a 2% increase in same-store sales, just missing the 2.4% expectation
• JC Penney Co. had 2.3% rise that beat analysts' expectations for a 1.6% gain
• American Eagle Outfitters Inc., reported a 1% comparable-store sales gain when analysts' projected a 1.1% rise
• Only Aeropostale Inc.'s same-store sales fell 1% for the month, compared with expectations for a 1.2% rise and a 9% gain a year ago

Discount Stores

• Overall, discounters saw a 4.3% increase, compared with expectations for a 3.1% gain

Walmart Stores Inc., among other retailers reported rising inventory levels as part of their quarterly earnings in August, a sign that they may be forced to mark down merchandise more than anticipated in order to clear stocks.

• Walmart Stores Inc. has posted five straight quarters of declines in U.S. comparable-store sales
• Target Corp. reported a 1.8% gain in same-store sales for the month, falling just short of expectations for a 2% increase

Why?

• Pent up demand

• Mike Gatti from National Retail Federation says that "People may not have bought new shoes last year, so this year there's a bit more of a need."

• Coupons, sales, promotions

• More families this year say their school purchases were influenced by coupons, sales and/or promotions. 17% of families with children in grades K-12 say 100% of their purchases were influenced by bargains and coupons, up from 14.7% of families last year
• The level of back-to-school discounts, as much as 50% off, was the highest seen in a number of years
• Sales also came much earlier than usual as retailers were cutting prices in early July

• Weather

• Consumers sought shelter in the air conditioned stores
• August 2010 was the warmest since 1983 and second warmest in 50 years
• Off-price retailer TJX Companies Inc even said its sales were hurt slightly because it did not have enough summer clothes in stock

• Economics 

• Tax-free shopping weeks in several states, designed to boost school-related shopping in the month, likely boosted traffic and purchases in stores

Winners of TV

NRF's latest Back-to-School/College Consumer Intentions and Actions survey showed that...

• The top ten back-to-school commercials came from Walmart, Target, Staples, JC Penney, Kmart, Kohl's Old Navy, Office Depot, Office Max and Sears.
• 27% of families say the commercials from those retailers influenced them to shop at that particular store

Data from Ace Metrix revealed...

• A Kohl's ad promoting a "Vote for Your School" contest tie-in with Facebook is the early winner (614 out of 950)
• Target has been the most active back-to-school advertiser with 13 national breaking ads, they are also running the worst scoring ad, "The Roommate and her Gathering" (355) also featuring a Facebok tie-in
• Target had just one ad in the Top 10 retail back-to-school ads
• Walmart ran three back-to-school ads with one, "Last Night of Lightning Bugs" making the top ten, yet the overall number of ads was down from last year
• Interesting to note that both the highest scoring and the lowest scoring ad feature a tie-in with Facebook 

September Predictions

Although the monthly figures are on par with those posted in the beginning of the year, when people were starting to feel good about the economy, retailers will endure an uphill climb in September as they will be facing comparisons against positive same-store sales results for the first time in a year.

Image: Maggie Smith/Freedigitalphotos.net 

Sources:

Discounts, heat fuel August retail sales beat, reuters.com, 9/2/10

Limited Brands, Abercrombie report solid sales gains for August, dispatch.com, 9/2/10

Retailers Show Surprising Strength in August Sales, wsj.com, 9/2/10

Back to school sales get an A, cnn.com, 9/2/10

Retail Sales Prep: Back-to-School Edition, cnbc.com, 9/1/10

Back-to-School Shopping Bust Heralds Holiday Woes, wsj.com, 8/31/10

Who's Winning the Back-to-School Television Advertising Battle? Businesswire.com, 8/19/10

Average Family Has Completed More School Shopping Compared to Same Time Last Year, nrf.com, 8/19/10

Modest Rise in Back-To-School Spending, brandweek.com, 8/10/10

Back to School Sales Up As Parents Replenish Children's Needs, According to NRF, nrf.com, 7/15/10

This Week in Circular-ville: Back-to-School

The Back-to-School season is an important time of year for many retailers, and there continues to be a lot of buzz about BTS 2009 due to our country's economic situation. As the countdown to the first school bell begins, SBC Advertising's Consumer Lab takes a look at the circulars from this past Sunday. Here's who was promoting what in their weekly ads (as distributed in the Columbus Dispatch):

Grocery

Meijer

"We get high marks for low prices" tagline with a "Back to School 2009 Mom Approved" stamp. Featuring all licensed backpacks at 40% off.
Includes:

• All Falls Creek Kids' Shoes at 14.99
• 25% off all licensed Lunch Bags and Totes
• Buy $10 in any combination of Kellogg's, Keebler, Sunshine or Eggo Products and get $10 off instantly on any one backpack.

Layout: Licensed backpacks, lunch bags and shoes in a school locker setting.

Drug Store

Walgreens

"Major in Savings" tagline. Featuring a .49 cent sale on school supplies. Also features .49 cent coupon's for Mars candy, and Big Roll Bathroom tissue. Also:

• Offering BOGO on bindgers, and Buy 1 Get on 50% on Mead Five Star notebooks.

Some grocery and cosmetic items also featured.
Layout: Traditional drug store look that is cluttered and unfocused.

Office Supply

OfficeMax

"Back to School for pennies." 20% off everything you can fit into a standard size brown grocery bag (printed ON the actual brown grocery bag).
Layout: Drawn schools supplies, and a back to school check off list.

Staples

"Staples = Savings. Huge Deals!" Features .25 cent black + white composition books, and $1 school supplies.
Also features

• Dell laptop for 499.98
• savings of 25 - 50% on all backpacks, and
• TI calculator for 89.99.

Staples is having a Teacher Appreciation Day '09 this Saturday, August 22 at 9am until noon.
Layout: Looks like layout is on a notepad. Design is cluttered and difficult to read.

Department Store

Sears.

"Life. Well spent." tagline and a "Get your jean on sale" promo featuring name brands like Levi's, BONGO, South Pole, and Canyon River Blues. Promoting layaway AND Christmas Club Card, where customer adds money and earns a 3% reward.
Layout: Young couple in an air guitar, and singer pose. Selena Gomez sweepstakes event is also promoted. Not as clutter as Kohl's ad.

Kohl's

"Back-to-school sale saving is in session." Features Avril Lavinge promoting the exclusive Abbey Dawn brand, including a new fragrance. Promotion is an extra 15, 20 or 30% off everything with Kohl's charge.
Layout: Avril Lavinge is on the cover, solo. Busy, rock-n-roll vibe.

JCPenney.

"Schooled in: Style. Smart looks for less." features young couple with Decree brand clothing. Promotion is Buy 1, get 1 for $1.00 Junior's Decree Tops and Bottoms. Also introducing Decree for guys with $14.99 tee or vest, and $24.99 straight-leg jean.
Layout: Young couple in simple, model-like pose. Cleanest ad of all the department stores. More singularly focused, too.

Craft

JoAnn

"Value is a bright idea." featuring back to dorm items such for storage and décor.

• Typical 40% coupon is available, plus a 609% off of custom framing.
• Additional decor items and dollar deals are featured as well.

Layout: Very feminine in bright pinks and orange, and feature a young woman organizing her space.

Discount

Wal-Mart

"Save money. Live better." No back-to-school specific headline on their circular. Features $348 Toshiba laptop and $1.50 school supplies.
Layout: very clean, and focused.

Target

"Expect more. Pay Less." Similar to Wal-Mart, no back-to-school specific headline is on their circular.
Features back-to-dorm items:

• $199 Magnavox 19" LCD HDTV
• $79 Haier 2.8 cu ft. stainless steel refrigerator
• $18 butterfly chair
• $3.50 bath towels
• $16 3-shelf bookcase
• $5 home pillow

Layout: Features a young woman in a contemporary setting interacting with many of the sale items.

Bottom line?

There's a lot of noise out there this time of year. It will be interesting to see who comes out on top. Our guess is that Wal-Mart's efforts (and extreme pricing) won't go unnoticed, while some of the department stores, like JCPenney may continue tostruggle to find their niche, despite their cleaned up brand image.