This category includes establishments primarily engaged in the retail sale of women's clothing accessories and specialties, such as millinery, blouses, foundation garments, lingerie, hosiery, costume jewelry, gloves, handbags, and furs (including custom made furs).
448190 (Other Clothing Stores)
448150 (Clothing Accessories Stores)
Due to the recessive economy of the early 2000s, made worse by the uncertainty of the wartime climate of 2003, U.S. sales of women's accessories and specialty items have, at best, remained steady and, in many cases, declined. When consumer confidence is low, discretionary spending becomes limited because shoppers stick to the basics and the essentials. Two exceptions in the stagnant industry are plus-sized items and costume jewelry, which both saw growth in 2002. Furs, which were socially taboo during the 1980s and 1990s, are also making a comeback with designers, who are finding renewed success at high-end specialty shops.
Stores in this industry offered a vast selection within limited product lines and therefore were considered specialty retailers. Traditionally, these businesses were small, independently owned shops that provided distinctive merchandise and superior customer service, often at premium prices. During the 1990s, however, the women's accessory and specialty store industry experienced structural changes that paralleled changes in the retailing industry as a whole—the small, traditional retailer was being replaced by larger chains that emphasized value and convenience.
Store size was a contributing factor to a retailer's overall profitability. The size of women's accessory and specialty stores tended to be smaller than many other retail outlets. Although the size of larger chain stores in the industry averaged approximately 3,000 square feet, most accessory stores had less than 1,000 square feet of selling space. Accessory stores enjoyed relatively low overhead costs due to small store size and the low cost of goods. In fact, Claire's Stores, Inc., one of the larger retail chains, reported that new stores required an initial investment of only $85,000 for leasehold improvements and fixtures and $20,000 for inventory.
Store location often determined store size. Women's specialty and accessory stores, especially fur stores, were deliberately positioned in classy, urban retail centers such as Fifth Avenue in New York. The location of these boutiques in high-rent urban areas often encouraged the small store format. In contrast, chain stores were frequently situated in suburban shopping malls, where larger store size was financially feasible. Store size increased in the 1990s as businesses in this industry followed consumers out of the cities into suburban malls and shopping centers.
Although women's accessory and specialty stores were moving out of trendy, expensive areas, stores were designed to accommodate the fashion and status-conscious shopper. Consumers shopping at these specialty stores were interested in unique versions of basic products. With the exception of furs, the products offered by accessory stores, such as lingerie, hosiery, and handbags, were not particularly expensive and were readily available at department and variety stores. A specialty accessory store, however, offered the consumer distinctive merchandise in a stylish shopping atmosphere.
Competition. Until the mid-1980s, department stores were the main competitors of women's accessory and specialty retailers. Department stores often leased space to prominent accessory manufacturers such as Crystal Brands, the Monet jewelry manufacturer, and Coach Leather goods. Like the small, independently owned accessory shops, these leased departments are staffed with knowledgeable salespeople and provide strong customer service in a pleasant shopping atmosphere. Competition in this industry shifted, however, from department stores to off-price merchandisers and discount retail stores that carried a variety of accessories and specialty items at prices well below those offered by department stores and specialty shops.
Although competition from discount stores increased in the early 1990s, the industry remained fragmented. Due to the variety of merchandise included in this category, no one company dominated the industry. Nevertheless, in the mid-1990s, the popularity of the "category killer" retail format posed a threat to the women's specialty and accessory business. The lack of market leaders coupled with the small boutique-style store format made the industry vulnerable to attack from large retailers anxious to capitalize on the fragmented industry structure.
Traditionally, the women's specialty and accessory store industry has been dominated by fur retailers. Fur coats and accessories were widely coveted luxury items and status symbols in the United States; fur retailers were tremendously successful throughout much of the twentieth century. It appeared that the fur business peaked in 1987 when sales reached $1.8 billion. In the late 1980s and early 1990s, however, cultural and economic forces caused fur sales to plummet, and many fur retailers faced bankruptcy. Some large department stores such as Nordstrom's and Lord and Taylor dropped their fur departments. The industry was also adversely affected by a luxury tax imposed on furs, jewelry, and other costly nonessentials. In early 1992, a group of Senate democrats argued that fur merchants could not withstand the combined effects of recession and additional taxation, and they sought a repeal of certain sections of the luxury tax legislation. The luxury tax on furs valued at more than $10,000 was repealed the following year.
Threats to the fur industry, however, were not only economic and legislative. Widespread negative perceptions of this business and changing cultural values also resulted in significant sales declines for fur retailers. In fact, the animal rights movement, once on the periphery of the mainstream American consciousness, saw sweeping acceptance by the mid-1980s. Heightened regard for animal rights and the growing perception that fur coats were symbols of greed and cruelty, drastically decreased demand for fur coats and accessories.
The setbacks suffered by the fur industry during the late 1980s caused changes in the mix of businesses in the women's specialty and accessory industry; however, they did not slow its development. While fur retailing suffered losses, other categories such as hats, scarves, and lingerie flourished. These categories gained popularity during the 1980s and fueled the growth of the industry in the early 1990s.
Despite a poor economic climate, the women's accessory and specialty store industry experienced solid growth in the early 1990s. While the women's clothing industry struggled to keep pace with inflation, the accessory and specialty store industry grew more than 8 percent annually during the early 1990s. The growth of specialty stores made this industry one of the few bright spots in the otherwise bleak retailing sector. Accessory retailers benefited from promotional campaigns launched by manufacturers and positive buying patterns. Some observers noted that the relative prosperity of the industry was a result of indulgence buying and pent-up demand. Additionally, national statistics revealed that specialty retail stores generally outperformed department stores during the early 1990s.
In the mid-1990s, businesses in this industry operated in a changing retail environment. The recession of the late 1980s and early 1990s caused a conservative shift in spending behavior, as consumers began to emphasize savings over consumption. Spending on intangible goods such as education and healthcare took precedence over purchases of tangibles such as new clothing. In this price-conscious atmosphere, retailers of non-essentials were challenged to offer products at prices that were consistent with consumer expectations of quality and value.
Fearing that demand would soften, sales and marketing strategies for accessories were re-evaluated in the early 1990s. In addition to improving merchandise presentation, some retailers implemented trend shop concepts, whereby merchandise was grouped into a single fashion trend and sold in one shop. At larger accessory and specialty stores, management used dedicated sales staffs to promote particular product lines. These retailer-based strategies were augmented by increased marketing efforts by manufacturers. Promotional resources, such as videos describing different ways to wear scarves, also supported salespeople's efforts. Often these sales and marketing strategies were similar to successful approaches used by cosmetics departments.
Consumer buying patterns provided another boost to accessory sales as the industry entered the mid-1990s. Some analysts observed that consumers, having endured the recession of the late 1980s and early 1990s and lacking encouraging news on the health of the economy, engaged in indulgence purchasing. Others noted that years of saving caused pent-up demand. Accessories were well suited for this purchasing mentality because they were relatively inexpensive. Industry analysts noted that the "special occasion" segment of the accessories business, with its glitzy holiday and party orientation, benefited most from this trend.
According to Manufacturing USA: Industry Analyses, Statistics, and Leading Companies, sales in the women's accessory and specialty store industry totaled more than $4.3 billion in 1996, up 16 percent from $3.6 billion in 1992. This fragmented retail segment was comprised of an estimated 9,500 small, independently owned businesses and some large chain stores. Due to the abundance of small, privately owned stores, financial data on the industry is difficult to compile. In 1995, however, the industry's top 10 companies generated more than $1.7 billion in sales, or about 40 percent of total industry revenues. These companies carried such product lines as furs, handbags, lingerie, costume jewelry, millinery, and hair accessories. The industry employs more than 50,000, most of whom are part-time sales people.
The women's accessory industry followed similar trends as the women's clothing industry, which in the late 1990s veered toward casual wear over business wear as women found that they could fulfill their professional attire needs with casual styles. However, segments of the accessory industry were adversely affected by the sluggish economy and a decline in consumer spending for discretionary goods. The overall women's clothing industry was down 6 percent in 2002 from 2001, but lingerie sales fell between 10 and 15 percent. Upscale intimate apparel was particularly hard hit, with slow sales of bras in the $150 price range and coordinating panties for $80 to $100. In the midrange of prices, such promotions as buy-one-get-two helped move merchandise but did little to improve the bottom line.
Total innerwear sales for 2002 totaled $12 billion. Full-figured intimates, which account for approximately one-third of lingerie sales, was the only innerwear category to see an increase in sales, with a growth of 4 percent over the previous year. Pantyhose sales fell more than 9 percent on the year. Costume jewelry, propelled by a new trend back to metals by setting turquoise and other natural stones in coppertone, goldtone, and silvertone, reported double digit growth during 2002.
According to the Fur Information Council of America, an industry trade organization, U.S. fur retail sales jumped in the late 1990s and hit a decade-long high of $1.69 billion in 2000 before falling to $1.53 billion in 2001. The renewed interest in furs pushed designers to incorporate fur into new lines that featured contemporary styling, as well as making use of new treatment and shearing techniques that allow the fur to be used unlined. In 2000, the average age of the fur customer was 48; just two years later, in 2002, that figure had dropped to 35. Despite the industry's seemingly successful attempts to ignore the anti-fur movement, some shops also carried synthetic versions of items for customers who might be turned off by natural furs.
If furs are making a comeback with younger shoppers, the pantyhose sector is attempting the same. As fashion begins to return to the workplace, retailers are hoping the new trend toward dressy rather than casual business attire will fuel the return of hosiery. In 2002, only 25 percent of women under 25 years old wore sheer hosiery. To attract the younger customer base to hosiery, a category that produces $6 billion in annual sales, manufactures were accentuating the bare, natural look and repackaging products to add new appeal to shoppers.
Although the women's accessory and specialty store market was quite fragmented, a few larger companies were gaining market share in the mid-1990s. While the small, boutique-style stores competed on their superior customer service and unique product offerings, the larger companies focused on rapid expansion of their chains, enhanced store design, and national advertising.
Victoria's Secret Stores, a subsidiary of Intimate Brands, Inc., which in turn is owned by Limited Brands, Inc., discovered success in the 1980s by introducing a new approach to lingerie sales. The Victoria's Secret concept was originated by Roy Raymond in San Francisco. After studying the lingerie market, Raymond saw an opportunity to target men who liked to buy lingerie for their wives or girlfriends, yet were embarrassed to venture into the intimate apparel section of a department store. Victoria's Secret stores were designed to provide a comfortable and provocative environment in which men could shop.
The business was started in 1977 with $40,000 and grew quickly. By 1982, Raymond operated five stores and generated $6 million in sales. In addition to the Victoria's Secret Stores, Raymond developed a successful lingerie catalogue service. The concept saw tremendous success and rapid growth. In 1982, The Limited, Inc. offered Raymond the backing to expand the company to more than 700 stores. Raymond, however, did not want to be involved in such a large operation and ultimately sold his business for $1 million in The Limited, Inc. stock and other undisclosed benefits.
Dubbed "The Intimate Category Killer" by Women's Wear Daily in 1995, Victoria's Secret Stores continued to grow. Although Raymond had sold expensive designer fashions, under The Limited, Victoria's Secret Stores offered a moderately priced product line of lesser quality. The change in merchandise did not inhibit Victoria's Secret's success; its sales doubled from $600 million in 1990 to $1.2 billion in 1994, when it was Intimate Brands' most profitable division. For the fiscal year ending January 2002 Victoria's Secret posted $2.4 billion in sales.
Victoria's Secret diversified its advertising strategy in 1998 from just window displays and catalog distribution to a full-on media assault with commercials that aired on national television 40 weeks a year. Victoria's Secret also hosted an Internet fashion show in January 1999 that proved so popular, attracting one billion viewers, that many who tried to access the event online got locked out.
As Victoria's Secret became more popular through the 1990s, the parent company Intimate Brands, Inc. pursued a more aggressive strategy to grow Victoria's from a mainstream retailer of moderately priced lingerie to a prestigious global brand with a diversified line, adding fragrances to their menu in the late 1990s. Victoria's Secret bras sold for $14.98 on average in 1995, whereas by 1999 they sold for $30 on average, increasing the company's profit margins. Same-store sales at Victoria's Secret stores increased 11 percent in November 1999, and Victoria's Secret Direct, which mailed out nearly 375 million catalogues each year, reported an 8 percent increase in sales For the fiscal year ending January 2002, Victoria's Secret Direct reported sales of $869 million.
Frederick's of Hollywood followed the same strategy as Victoria's Secret, though Frederick's tended to be bolder, appealing to women who were very confident of their sexuality and adventurous regarding their lingerie. The company operates around 170 stores, mostly mall based, as well as a catalogue division and Web site. Frederick's, which posted revenues of $140 million for the fiscal year ending July 2001, was unable to compete with Victoria's Secret and filed for bankruptcy in July 2000. The company's financial situation was also put under a heavy debt load associated with the switch from public to private ownership status in 1997. The company did not emerge from bankruptcy proceedings until the fall of 2002.
Claire's Stores, Inc., of Florida, a leading retailer of costume jewelry and fashion accessories typified the multi-product accessory store concept, with a price range of $2 to $20. This company operated boutiques, primarily located in malls in the United States, the Caribbean, Canada, Great Britain, and Japan under various names. The stores averaged 850 square feet of selling space. Although the company had relatively low overhead and a 15 percent operating margin, it endured a period of decline in 1991.
In response, Claire's Stores underwent a reorganization which included a company-wide refocus on its core business. All non-accessory businesses were sold, and stores were redesigned. The company also launched a national magazine advertising campaign targeting customers who were 13 to 40 years old. These changes rejuvenated the chain, which grew from about 1,000 stores in 1992, to nearly 1,500 by the end of 1995, and to 2,900 by the end of 2002. Claire's launched its European development that same year with the acquisition of 50 stores of the bankrupt British Bow Bangles chain. In the fiscal year ending January 2002, its net income totaled $77.8 million on sales of $1 billion.
Claire's entered the twenty-first century by recognizing key demographic patterns: teenage girls love to shop, but they do not tend to spend much cash on their mall trips. Claire's tapped this growing demographic market by launching in 1998 its "just nikki" catalog. Teens could peruse the catalog at home and then have a parent call in an order with a credit card. Orders averaged $70, compared to the $9 average sales at stores.
Off-price merchandisers also made strong gains in this segment. Leaders included One Price Clothing Stores, Inc., with $340.4 million in sales (fiscal year ending January 2002) and Deb Shops Inc., with revenues of $317.7 million (fiscal year ending January 2003). Other leading accessory-based companies were Ray Ban and Foster Grant, both sellers of fashionable sunglasses. Nine West, once known only for its shoes, made a hit in the accessories market, and Totes-Isotoner, maker of fashionable but durable umbrellas, gloves, and rainwear, continues as a mainstay in the accessories industry.
According to the U.S. Department of Labor, Bureau of Labor Statistics, women's accessory and specialty stores employed more than 55,000 people in 2001. The vast majority of these jobs, some 87 percent, were sales related, with a sales associate in a retail setting earning a mean annual salary of $16,870. Like much of the retail industry, accessory and specialty stores provide low-paying sales jobs, which are sometimes supplemented with a commission based on sales. There is heavy use of part-time employees. Managers and supervisors earned a mean annual salary of $27,530. Management occupations, which accounted for just over 2.5 percent of all jobs, reported a mean annual salary of $51,520.
Fears that the domestic market was becoming oversaturated encouraged some accessory and specialty retailers to look overseas to expand in the mid-1990s. According to an August 1996 article in Women's Wear Daily Japan and Canada were America's most fertile target markets. The magazine noted that "Japan was the fastest growing foreign market for accessories, importing $31.4 million worth of merchandise for the year, a 95.1 percent jump." By mid-decade, Claire's Stores had acquired or established locations in Japan, Canada, Puerto Rico, and Great Britain.
The advent of electronic commerce over the World Wide Web facilitated the growth of global targeting and sales, as consumers could order online from anywhere in the world. This medium particularly aided brands such as Victoria's Secret, which was trying to globalize its name simultaneous with the e-commerce explosion in the late 1990s.
Victoria's Secret went on-line December 4, 1998, and sales increased 100 percent monthly, with 40 percent new customers who had not bought the Victoria's Secret brand previously. Moreover, selling over the Internet upped the number of male customers to 30 percent from 10 percent for store and catalog sales. Apparently, the Internet fulfilled Raymond's original concept of appealing to men, offering more comfort than Victoria's Secret stores or its catalog.
This industry lagged behind many retailers in its use of technology. Although computerized inventory management became a major strategic priority in the early 1990s, the small accessory and specialty retailers did not embrace automation. The structure of the industry accounted for the resistance to using technology. Most of the small independent business owners considered the cost of automation to be prohibitive. Moreover, since inventory was not expensive and turned over quickly, the effect of poor inventory management was not as pronounced in this industry as it was in others. Accessory and specialty retailers, nevertheless, faced increasing pressure from manufacturers and vendors to adopt automated systems to ease administrative tasks. In the competitive 1990s, retailers were forced to adopt computerized cost-saving systems.
Cost-saving systems were not the only new technologies in this category, however. In the 1990s, retailers became increasingly dependent on video marketing and computerized self-help systems. One such technology was available in Japan in the early 1990s. Developed by Wacoal, a leading Japanese lingerie manufacturer, this software package helped a woman enhance her figure by identifying her correct size of lingerie. Customers stripped down to their underwear and then stood in front of a video camera that displayed their outline on a computer screen. The screen allowed the customer to compare her figure with what the store consultants considered ideal for her age. Next, the customer tried on lingerie designed to enhance her figure and then returned to the computer screen for a look at her improved outline. Japanese stores using the system reported a 10 percent increase in lingerie sales.
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