Industry dealmaker and chairman of Financo Inc. Gilbert Harrison, along with company president Bill Susman, met with journalists on Wednesday to sound off on trends in the fashion business. Though billed as a “state of luxury” conference, the executives addressed a range of topics, from department store survival to mergers and acquisitions. Here is a roundup of the highlights.
On economic recovery:
“An economic revival depends on a rebalance of consumer income, debt and savings. We shouldn’t expect a recovery until 2011 or 2012.” —G.H.
“Until unemployment goes down, the psychological effect will impact consumer behavior even for those who are still employed.” —B.S.
On luxury department stores:
“Saks Fifth Avenue and Neiman Marcus have been the worst retail performers recently. … [Saks CEO] Steve Sadove has been doing the best he can in a tough situation. … High-end stores are buying 30 percent [fewer] goods to try to make consumers purchase immediately at full price, but I’m not sure that’s going to work.” — G.H.
On Scoop and Intermix:
“The original concept behind those stores was having new and unique items. I’m not sure if they are struggling because there is less newness in the marketplace or less demand for those price points.” — B.S.
On fast-fashion retailers:
“Customers’ need for relative value will force them to think about mixing high and low brands, which drives them to places like fast-fashion retailers. … Forever 21 will take on at least 2 million square feet of retail with the Mervyn’s and Gottschalks acquisitions.” — B.S.
“This retailer caused a sensation in the marketplace. It’s about newness and design. It works in New York and might work in a few other U.S. cities, but I’m not sure the U.S. is ready for a 500-store rollout.” — G.H.
On Manhattan’s first JCPenney store:
“The market is always competitive. I would say that a Target, which is able to attract certain design talent, would be more threatening. Macy’s margins are already tight, but it helps that they own most of their real estate. If they were paying rent, their margins would be razor thin.” — G.H.
On designer diffusion lines:
“[While many designers are experimenting with diffusion lines], Stuart Weitzman says he will never do a mass-market line because he thinks it will take away from the value of his brand.” — G.H.
On mergers and acquisitions:
“Many smaller independent luxury companies will be bought up or will disappear in this economy. Public companies that firmed up their balance sheets in early ’09 and are now cash flush may want to use this time to make deal. There will be some acquisition activity.” — G.H.