Fashion Week: Cutting Corners
by Catherine Curan
In the middle of an economic slump, slow retail sales, and a weak dollar, some fashion designers are changing their strategies.
With scissors, an overstuffed pin cushion, and a tape measure laid out before her, Yeohlee Teng sizes up the model parading around her showroom in New York’s garment district. Teng, whose minimalist, architectural styles have made her a darling of museum curators and high-minded fashionistas, has only a few days before her Fashion Week runway show. She worked all weekend styling potential runway looks, and the pressure is mounting. After a few seconds, she orders the young woman to display herself from a different angle.
“People look at you mostly sideways,” she informs the model, a lanky brunette who quickly shifts on her trendy black ankle boots to offer Teng a side view, akin to how fashion editors will see her strut on Monday afternoon.
Teng, a nearly 20-year veteran of the fashion industry, is highly attuned to the various angles fashion designers must try to hit with their work—they need ideas that move the fashion needle as well as items that consumers will buy. But economic challenges are looming as large—if not larger—than creative ones as the fashion industry gears up for the Spring 2009 shows, which begin in Bryant Park today. Falling retail sales, a weak dollar, rising costs for overseas labor, jittery consumers, and a global economic slump provide a grim real-world backdrop to the runway glitz and party circuit.
In fact, thanks to the customary first Thursday of the month release date for sales results from the previous month, a big shovelful of bad news came just in time for Fashion Week. Same-store sales, a key barometer of retail health, declined for most stores other than Wal-Mart as cash-strapped consumers pulled back on shopping. Worse, the upscale chains selling the designers who show during Fashion Week—and who are heading into town or gearing up to place orders—turned in particularly poor results. Saks posted a 5.9 percent same-store sales drop, while Nordstrom’s same-store sales slid 7.9 percent. Consumer researchers don’t expect shoppers, even at the high end, to open their wallets wide again soon.
“We’re seeing continued spending deferrals, especially on apparel,” says Phil Rist, executive vice president of strategy at Worthington, Ohio-based BIGresearch, which surveys more than 8,000 consumers every month about the economy and shopping. “There’s a lot of anxiety about the future.”
Fashion industry executives often profess “cautious optimism” in the face of gloomy business conditions, and Teng is no exception. “I really feel in good times and in bad times there are people who make money and are successful,” she says.
But this season she and others are adjusting to the deteriorating economic picture. Some shifts, like negotiations on the price of imported fabric, are never seen by the fashion front row, while others, such as a runway show’s venue—big Tent or smaller Salon at Bryant Park, or off-site—send a very public message. Teng, whose philosophy centers on using every inch of a given bolt of cloth, has changed her already careful fabric-buying to save money. Nicole Miller, meanwhile, has concentrated this year on smaller shows that still pack a marketing wallop.
“We’ve cut from 750 seats and a big, crazy scene, air-kissing that got in the way of the editors,” says Bud Konheim, C.E.O. of Nicole Miller, which is spending $500,000 on its show tonight at 6 p.m. in the Salon in Bryant Park. “Now we have 350 people at the show and it’s very controlled and they get a good look at Nicole’s clothes.”
The company is not actually saving money overall, he says. The smaller venue is less expensive, but production costs—hiring models, producing samples—keep rising. But Konheim believes the expense is worthwhile, part of a big advertising and market push to keep the brand on consumer’s minds during a slow economy.
“There is more competition right now and because of the [weak] economy we are all fighting for the same buyers and attention,” echoes Yildiz Blackstone, president of celebrity favorite Luca Luca. The company showed in Bryant Park for 20 consecutive seasons, but bowed out last season while searching for a buyer. Now that it’s got one, Miami-based Equitium Group, Blackstone must prove that Luca Luca was a good investment by attracting retail buyers and press attention, especially from growth markets such as Russia. Blackstone is betting a show on Monday in Bryant Park will help reestablish the Luca Luca brand.
Most fashion shows only last about 15 minutes, but the planning begins six months in advance. Given that lead time, Teng has been able to adapt her financial planning to the economic woes while studying the bold red follies in Paris’ futuristic Parc de la Villette, her source of inspiration for Spring 2009.
In the past, she has relied mainly on sumptuous European fabrics for her designs. This season, with the dollar at historic lows against the euro, Teng scanned the globe for more cost-effective sources. As labor costs rise overseas and the dollar remains depressed against other currencies, she is also increasingly eager to preserve the remants of manufacturing in New York, where she finds matte jersey and fabric-dying services. A board member of the Council of Fashion Designers of America, Teng is working to develop strategies to aid the remaining garment businesses.
She also took time out from designing to hedge against further weakening of the dollar. Rather than waiting until fabric or goods valued in euros arrived here and then translating the prices into dollars—and potentially getting stung by continuing declines in the currency’s value—Teng negotiated with her suppliers to clinch a price in dollars in advance. That allows her to plan her costs, but could prove a bad bet for Teng if the dollar rebounded strongly.
“It’s a risk on both sides, but I do have people I’ve worked with a long time who recognize business is a two-way street,” she says.