Intimate Affair: Intimate Apparel Council Hosts Retail Expert Marshal Cohen

3 Nov

The Intimate Apparel Council (a division of the American Apparel and Footwear Association) presented “New Retail Rules” with speaker Marshal Cohen, chief industry analyst of the NPD Group, on Monday, October 31, 2011 at New York City’s private Union League Club.  Marshal was invited to speak to members of the Intimate Apparel Council regarding issues directly affecting our industry as well as nationwide retail trends, the economy, and other factors influencing “Consumerology” (the science of the consumer).  Marshal’s Intimate Insights proved to be extremely useful in helping the intimate apparel professionals in attendance to better understand the mindset of today’s consumer, the significance of brand power, and the importance of innovation.

Marshal Cohen

Marshal Cohen is an economist, but he thinks of himself as a retailer first and foremost.  He is a nationally-known expert on consumer behavior and the retail industry.  Marshal has followed retail trends for more than 30 years, at NPD, as the head of leading fashion and apparel companies, as well as at major retailers.  As part of his work at NPD, Marshal leads many top firms in long-range and strategic planning sessions.  Marshal recently published his second book, Buy Me! How to Get Customers to Choose Your Products and Ignore the Rest.  I am pleased to share his expertise with you as it is invaluable to professionals working in either retail or wholesale environments.

Marshal confirmed that there are indeed challenges in our industry, but the key for us is to think of these challenges as opportunities.  But how can we do that?  First, we need to identify the mindset of the consumer and to look at their buying habits.  Marshal says that today, everything starts with the consumer.  They are the epicenter.  In essence, they drive retail.  They dictate what we create and how we market it.  If we want to be successful in selling our product or services, “we need to adapt to the consumer rather than demand that they adapt to us,” Marshal said.

We have entered a new “era of consumption.”  Before the recession, we were in an era of “conspicuous consumption.”  There were no limits to the amount of money being spent.  If a consumer wanted it, he bought it!  The mindset of the consumer was different than it is now.  Now, the mindset is “calculated consumption.”  Today, the consumer asks himself, “Do I need it?  Do I want it?  Can I buy it elsewhere for less?”  At the beginning of the recession, the consumer was in a state of “frugal pride” (he simply stopped spending.)  Now, he’s in a place of “frugal fatigue” (he’s tired of living on such a tight budget… he’s loosening his belt a bit….).  So he’s back to spending money, but he is operating from the mindset of “calculated consumption.”  As a manufacturer or supplier of goods and/or services, we need to ask ourselves- does my product match up with this mindset?  Does my product or service deliver on its promise?  We now need to justify our product… We can’t just hang it on a rack and trust that it will sell. 

How do consumers describe “value” today?  Two years ago, the answer would have been “lowest price.”  Today, it is “Brand Names for Less,” and secondly, “More Product for Less”.  Branding is important.  Specialty retail is growing.  And, the number one growth area is in factory outlets!  This is where the consumer can still purchase the brand names he wants, but at a lower retail price.  To the consumer, this translates into perceived value.  What does this mean for us?  As a manufacturer, we need to help the consumer to understand why our product is worth their money.  We need to earn their purchase today.  This requires more work on our part.  And we need to look at how this fits into our business model.

There are numerous factors that influence buying habits.  Believe it or not, the weather can play a role in spending.  This past year is what meteorologists refer to as a “dramatic weather period.”  These periods historically happen every 8-10 years and they last for 9-14 months.  We are in the eighth month of the current dramatic weather period.  Just this past weekend, we saw snow before Halloween in parts of the country; other areas suffered record rains this year while others suffered from drought and record high heat, etc.  How does this affect the way we spend?  Marshal provided a concrete example which made a lot of sense.  Typically in mid August, consumers are budgeting for Back to School purchases.  But this year, the consumer’s buying habits were influenced by the fear of Hurricane Irene.  Right in the middle of the prime Back to School buying season, money was spent on bottled water, flashlights, light bulbs, sandbags, generators, etc.  And many consumers were forced to shell out money to repair their homes after the hurricane (flood damage, etc.)  Thus, there was less money to spend on typical Back to School items like apparel and accessories, consumer goods, etc.  The government can also impact spending.  As the U.S. government was debating whether to raise the debt ceiling, consumers simply stopped shopping.  Once an agreement was reached, the consumer reverted back to buying.  Also, we’re coming into a major election year.  Historically, whenever we are in a major election year, the consumer takes a step back.  And without a solid jobs program, we will likely not see economic recovery any time soon.  What happened to jobs?  Many have been outsourced overseas and many jobs have been replaced by technology (instead of bank tellers, we use ATM’s or bank online.)  We are in the deepest and potentially longest recession since World War II. 

These are the harsh realities of our current condition.  So, what’s the answer?  Marshal says “Innovation!”  How do we create innovation?  First, we need to think about technology.  Electronics are seeing the highest level of growth.  The consumer is much more passionate about electronics than fashion because of its innovation.  We need to make sure our product or service is wanted and needed!  And, it needs to be practical for us to execute it from a costing standpoint.  We can all see how Apple revolutionized retail by implementing the principle of “create a want and a need.” 

Reebok's ZigTech

And just this past year, Reebok doubled their business by utilizing technology.  Their unique ZigTech sole created a want and a need.  They put innovation ahead of branding.  Marshal said, “A product becomes worthy of purchase because of what it does, not because of the brand.”  So, the challenge for us is to create innovative products!  Marshal says, “Basics maintain volume, innovation drives growth.”

We are in an era of “calculated consumption,” but are entering a “brand renaissance.”  The consumer is looking for brand equity with value.  Marshal referenced Target’s Missoni launch this past September.  It was a huge success from a retail standpoint.  It satisfied the consumer’s demand for a brand name at a great value.  It created the want and the need.  The consumer was willing to spend because of its perceived value as he is now operating from a place of “frugal fatigue.” 

In the intimate apparel world, bra and panties sales are generally flat to last year.  Why?   Because there was no innovation.  Marshal also talked about understanding the need cycle.  How often does a woman buy a new bra?  What about new underwear?  Shapewear sales were down -18% to last year.  This is likely a result of the need cycle.  To me, this means that I can increase the rate of the need cycle (and ultimately boost my sales) if I create an innovative product that gives my consumer that “want and need.”  And Marshal stated that we can build brand loyalty if we can better understand the need cycle.

Another important component in “Consumerology” is to understand the influence of technology.  How are we marketing to today’s consumer?  Today’s consumer is multi-tasking…  She is on her cell phone, while emailing, and surfing the internet, all while updating her Facebook status.  Cellphones and the iPad (and other tablets) make this possible.  And, social media is breaking all of the traditional rules of marketing and advertising.  How do we balance all of this?  We need to adapt to all forms of media.  I recently learned the new phrase SoLoMo: Social, Location, Mobile.  Personally, I don’t think we can underestimate the power of these methods of marketing.  I shared my Intimate Insights on The Lingerie Journal earlier this week regarding the importance of social media in the intimate apparel industry.  You can read the Article here.

Marshal concluded the session by talking about balance.  As a manufacturer or supplier of a product or service, we need to find a way to balance the risk versus the reward, selling direct to consumer versus wholesale, manufacturing brands versus private label product, and providing basic product versus developing innovative goods.  And based on the insight he provided, he encouraged us to take the leap.  This is the time to embrace change!

About The Intimate Apparel Council

The Intimate Apparel Council (IAC) is one of the most prestigious organizations in the industry and is comprised of leading designers, brands, retailers and suppliers of intimate apparel products. The mission of the IAC is to stimulate the growth of the intimate apparel business by creating a network and a forum to actively identify, address and act on matters of interest to the industry.  The IAC cooperates with consultants and others in gathering information of special concern to intimate apparel design houses and engages in public relations programs for the benefit of the consumer, the retailer and the manufacturer and design house.

The IAC is a division of The American Apparel & Footwear Association (AAFA).  AAFA is the national trade association representing apparel, footwear and other sewn products companies, and their suppliers which compete in the global market. AAFA’s mission is to promote and enhance its members’ competitiveness, productivity and profitability in the global market by minimizing regulatory, legal, commercial, political and trade restraints.

Resources:

Marshal Cohen & the NPD Group

www.npd.com/marshalcohen

Follow @MarshalCohen

The Intimate Apparel Council

www.IntimateApparelCouncil.org

The American Apparel & Footwear Association

www.ApparelandFootwear.org

Follow @ApparelFootwear

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