American fashion department stores: personalized offer

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Confronted with recession, American department stores invent strategies to confront the crisis: Henri Bendel focuses on accessories and its own brand name while the giant, Macy’s, lowers prices and personalizes its offer.

Since the month of August, Henri Bendel, the famous store on fifth Avenue, removed the fashion-clothing department, if was an important change for the distinguished New York institution, founded in 1895, that was well known for its designer offer. However, the crisis hit and strategists at Limited Brands, Henri Bendel’s parent company, think that customers won’t be coming back to shop for designer dresses any time soon. Characters from the TV series. Gossip Girl and the movie, Confessions of a Shopaholic, will have to go somewhere else to find their clothes…

30 European jewellery brands

In the spring, the store announced that it wanted to focus on its leading categories, such as accessories and beauty. Although American market sales for accessories between $100/71€ and $200/142€ dropped 14% over a period of twelve months ending in May 2009, according to NPD, an American market study company, the category traditionally offers more comfortable margins than clothing. Bendel’s change in strategy is a stroket of luck for European accessory brands that are already well positioned in the store. 30 out of 150 jewellery brands come from Europe, Anton Heunis. Atelier Swarovski, Delphina Delettrez, Etro, Pellini, Philippe Audibert and Rodrigo Otazu are among them. Henri Bendel recently introduced the Italian bag brand. JT Italia. “We definitely like established brands but we are always looking for a new products”, explains Ed Bucciarelli, General Manager at Henri Bendel. Bendel’s buyer scouts for new brands at Premiere Classe, Tranoï in Paris, the White Show in Milan as well as at New York trade shows like Designers and Agents (D&A), Accessories Circuit and Coterie. Although most European brands are positioned in the high-end range (especially due to the euros-dollars exchange), it seems to be the end of the era of the incredibly expensive “it” bag. “People are most cautious (for spending). We are most careful. That does not mean that we carry new, less expensive brands. We look at the price range for designers with whom we already work and we tend more toward their basic range products” points out Ed Bucciarelli.

A brand with a billion dollar potential

Henri Bendel also intends to capitalize on its own brand; a brand that is positioned in the high-end range, however, with a very broad price range. “We are not afraid of displaying earnings that sell for $50/35€ next to a Henri Bendel bag with iconic brown and white stripes that sells for $2000, he says. Some examples from the collection are bracelets at $88/63€ or a tote bag at $295/211€. Sales for the Henri Bendel brand are increasing, states Ed Bucciarelli, who refuses to communicate the figures. He foresees an even sharper increase this year, in favor of opening new stores. Henri Bendel is going to open six new flagship stores before the end of the year. “Bendel is one of the most recognizable brands in the world,” states Leslie Wexner, General Manager for Limited Brands. She said that she only accepted brands that generated more than one billion dollars revenue in her wallet. Henri Bendel does not yet meet those requirements but “the brand has the potential” notes Ed Bucciarelli.

Weekly sales

Henri Bendel is not the only store that has to change in order to adapt to a drop in sales. In order to attract wary customers, Macy’s, with over 800 stores in the country, slashes its prices: during a recent visit to the flagship store on 34th Street, mid-range handbag brands like Fossil, Etienne Aigner or Guess were at rock-bottom prices. “We have sales like that every week”, said a sales clerck. Luxury brands are also lowering their prices. The “affordable luxury” American brand, Coach, whose stand is in a choice spot at the entrance to the store, has expanded its offer for bags at less than $300: they currently make up for 50% of the offer, compared to 30% last year.

A personalized offer

Hit with the full force of the crisis (the chain recorded a 9.5% drop in sales for the first trimester 2009 at $5.2b/3.7b€ after a 5.4% drop in sales for the fiscal year of 2008), the store is tightening the belt. In February, it announced that it was letting go 7000 employees. It also implemented a new strategy alled “My Macy’s” which “regionalized” merchandise suplly. With the new structure, it would not be ususual to find a certain handbag in the Salt Lake City Macy’s store but not in another store in 100km aways. Macy’s wants to recognize that taste varies from one region to another and that each store’s offer should be personalized in order to satisfy customers. “Macy’s has started the biggest change in decades”, started its President and General Manager, Terry Lundgren. Some detractors ironically compare the change to the local strategy that was in place before the Federated group swallowed up the chain of May’s stores, changing the name of Macy’s. No matter what, the initiative should allow mid-range niche brands to find their market. Doesn’t the Chinese ideogram for “crisis” also mean opportunity?

Publication: Sacastar.com: the french online bag store

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