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Economic Headwinds, Oversupply Leave Retailers Cautious at Las Vegas Trade Shows

There’s an economic term out there to describe what is happening right now in the retail world. It is called the bullwhip effect.

That is when small fluctuations at the retail level cause larger fluctuations at the manufacturing one.

And women’s apparel and footwear vendors at the various trade shows at the Las Vegas Convention Center held Aug. 7 to 10 were feeling those fluctuations.

Manufacturers at Project, MAGIC and Las Vegas Apparel said they were seeing retailers who had ordered too much merchandise earlier when it was hard to get goods from overseas factories. Now they are drowning in T-shirts, dresses, shoes, blue jeans, tops and pants and other goods.

“A lot of our customers are just overstocked at this point,” said Elbert Cheng, chief executive officer of LAmade, a family-owned company in downtown Los Angeles that has its own factory with 50 workers. Most of what L.A. Made manufactures are soft knit tops and some pants, which it was showing at Project. “Now people are afraid to order too much.”

Cheng pointed out this was the same economic one-two punch happening to big-box and big-name retailers across the country that cater mostly to budget-conscious consumers. Now it is trickling down to specialty stores and small chains that are not in luxury categories.

Last quarter Walmart Inc.’s inventory shot up 32% over the previous year as customers spent more of their income on gas and food, both of which saw prices skyrocket by as much as 25% in the last year. Target Corp. had the same inventory problem. Both said in earnings reports that they will be discounting goods over the next few quarters to get rid of merchandise overflowing from their stockroom shelves.

Consequently, womenswear retailers wandering through the Las Vegas shows were buying fewer immediates while they concentrate on getting rid of merchandise. They were also waiting to buy closer to season to gauge consumer demand and trend directions.

“I feel like our business is kind of going downhill,” said Kara Willis, who works for L.A. contemporary brands Blue Blush and lalavon, which were showing at MAGIC. “I mean, we’ve been busy the past two days at the show, but things are just kind of slowing down a little. Buyers are a little afraid because they already have so much inventory.”

Denyse Shokett, the brand manager for the L.A. contemporary labels Matty M and Willow, also showing at MAGIC, said she picked up 15 new accounts, but she saw an air of caution in buying. “They are a little hesitant,” she said. “They are buying things they know they can sell in their store.”

Retailers, she said, are placing orders closer to season as they sit back and see what happens with the economy. “I think retailers will be buying spring items in February,” she observed.

The entrance to the MAGIC trade show
The entrance to the MAGIC trade show.
CREDIT: Courtesy

Another big shift is that retailers are stocking fewer items for the loungers who want to hang out in their home office in sweatshirts and joggers. That sounded fun at the beginning of the COVID-19 pandemic but is getting old.

“Yes, retailers are buying closer to season and cautiously, but they are also buying things that people don’t have in their closets,” said Steve Millman, chief brand manager for the contemporary L.A. label Bella Dahl, which has many styles incorporating soft fabrics for comfortable dressing. “They want things that are multipurpose that can take them from morning to evening.”

At LAmade, the sales representatives said they are offering soft dressing but also introducing more gauze, jacquards and structured looks. “People are ready to dress up again,” said Jacqueline Krafka, the company’s design director.

While most retailers were taking a conservative outlook on their open to buys, stores located in resort locations and travel destinations were on a shopping spree.

Timothy Law, who started the Knotty Living apparel and accessories shop eight years ago in St. Michaels, Maryland, was shopping at the relatively new Las Vegas Apparel show that was launched August 2021 at the Expo at World Market Center in downtown Las Vegas.

He and store manager Leah Bell were sifting through the clothing racks of Timing/Lumière, an L.A. label that specializes in high-quality knits and trendy affordable clothing.

The two were seeking luxury-looking products at a reasonable wholesale price. They were particularly intrigued with the brand’s trendy acrylic sweaters that had a cashmere look.

“Last year was a stupid crazy year,” Law said. “And this year, I was going to be happy if we broke even. But it is still good.”

His customer is an affluent individual who lives in nearby Washington, D.C., or New York. (St. Michaels is a picturesque seaside village where many people dock their 80-foot-long yachts or sailboats.)

The typical Knotty Living shopper is a mother between the ages of 40 and 60 whose family has been able to absorb the costs of inflation and is not constrained by a budget. “People are coming to our town for recreation, and they are coming to spend,” Bell said.

That kind of robust business was true for other retailers at the show. Sharon Mautz and her daughter, Kaitlyn Yoniski, have seen explosive growth for their store Vogue Society Boutique in Sarasota, Florida.

When COVID-19 hit, they closed their 1,200-square-foot store for one year and concentrated on online sales. But last November, they opened a 3,700-square-foot boutique where a Louis Vuitton store had been located at The Mall at University Town Center. “We’ve noticed a shift between online buying and coming into the store,” Yoniski said.

“Our customers are wanting to go out and dress up a bit, but still be casual and comfortable at the same time,” Mautz added, noting that dresses and blazers were doing well.

This story was reported by WWD and originally appeared on WWD.com. Read the full story on WWD.com.

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