Spring Cleanup
With retailers still suffering from excessive inventories, the spring cleaning has begun.
Coming off the nightmare of fall's early and aggressive markdowns, the first spring price cuts are already budding, particularly in the luxury tier and women's categories where the cadence of deliveries is quicker than menswear. Last week alone, Bergdorf Goodman advertised up to 40 percent off on its contemporary floor, and Yves Saint Laurent sent an email invitation to customers to receive an "exclusive one-time discount" at any boutique in the U.S. and 50 percent off ready-to-wear and 30 percent off accessories Wednesday.
Sample sales are on the rise, too, with stores pushing back goods to vendors. And some retailers are utilizing sales tactics usually reserved for holidays and pre-Christmas. Last week, for example, J.C. Penney Co. Inc. ran two days of doorbusters including dresses, Arizona, and other private-label products, and a buy-one-get-one-for-88 cents deal on a host of items. Neiman Marcus Inc. has offered various incentives this season to members of its InCircle reward program, such as free lunch at restaurants in the store and $50 gift cards. The website has also been promoting free shipping through today. Macy's Inc. ran a three-day fine jewelry sale with 30 to 50 percent off much of the assortment.
So-called "private" friends and family sales have taken a high profile. Saks Fifth Avenue staged one last week, and promoted it on the homepage of its website.
Nordstrom followed with a friends and family sale of its own, and this week, it's Bloomingdales' turn, offering 20 percent off almost all regular- and sale-priced purchases in apparel and home.
"People are going deeper, earlier," said Brendan Hoffman, president and chief executive officer of Lord & Taylor, characterizing the state of markdowns this season so far.
The situation has fueled speculation over when the major spring clearances will break and who will be the first out of the gate. Typically, department stores roll out spring clearances around Memorial Day, while higher-priced specialty chains pull the trigger around mid-May to make space for June's pre-fall deliveries.
At Nordstrom, which clears a lot of merchandise through its extensive network of Rack outlets, a spokeswoman suggested the inventory situation was under control. "We continue to feel that we are appropriately managing our inventory and are getting ready for the women's half-yearly sale, which is in May," she said.
Analysts and retailers expect clearances to surface before Mother's Day, with stores currently grappling with spring orders written last year—before consumers really clamped down on spending—and trying to whittle inventories down in line with demand. "Historically, I would not have considered markdowns before the beginning of June," said Diane Levbarg, executive vice president of Missoni. "However, this year, while it's still too early, I may reevaluate my strategy based on market conditions."
Aside from the rising unemployment rate and uncertainties about the economy, the late Easter and the late arrival of springlike temperatures to most of the country have contributed to disappointing apparel sales this season. In addition, push backs to vendors have sparked many more sample sales.
However, retailers and analysts contacted Monday emphasized that discounting hasn't reached clearance proportions yet, and that when the clearances do break, they shouldn't be anywhere as epic as the fall's avalanche of price cuts.
"I don't think that it's anywhere close to the degree and depth of what was experienced in the fall," observed Arnold Aronson, marketing director of retail strategies for Kurt Salmon Associates. "There's more of a gradual realignment of inventories to sales levels."
Spring markdowns and clearance tactics will include more retailer-vendor discussions than in the past, Aronson suggested. "There won't be huge surprises, or unilateral kinds of decisions," he said. "At this point, it's primarily first markdowns happening earlier than normal. Stores are not into clearance mode yet."
Jeffrey Kalinsky, founder of Jeffrey designer stores in New York and Atlanta, said he hasn't taken "a single markdown" or run any promotions. Competitors have been taking markdowns since January, he said, adding, "A lot of people do promotions under the guise of 'friends and family.' No one has broken sale yet, to my knowledge."
"Normally, in a good year, you wouldn't even be having this conversation" about markdowns, said one specialty store retailer. "It's too early. It's much, much, much too early. Nobody wants to be the first [to break price] because they're terrified of what happened with Saks [last holiday]. There's such a backlash because of markdowns taken last November that people don't want to go on sale. Business is challenging and I'm waiting to see if it gets more challenging.
"Would I love to go on sale now?" asked the retailer. "Yes. Everybody has too much inventory. Nothing's selling right now."




