Why Millennials and Mid-Market Firms Are a Fashion Match
By Jack Hendler
Geography has always mattered when it comes to economic performance. When South Carolina manufacturers are struggling, producers in the South Bronx may be having a banner year. And vice versa. But regardless of location, the common denominator of today’s economy is the very unique, yet developing, consumer known as the Millennial.
For those paying close attention, the Millennial demographic creates a significant opportunity for smaller, mid-market producers of product and the retailers that sell those goods. Why? Because these purveyors have the size and infrastructure that permit the flexibility and creativity to offer Millennial customers a presentation of uniqueness, whether these customer are male or female — and certainly for their children.
Millennials have demonstrated a pattern of not wanting the garment they see hanging on the four-way or waterfall at Macycs or Kohl’s because they know that dozens of other garments just like that one will find their way into the closets of thousands of other people. And they don’t want that. They don’t want to see the same product “coming and going.” They want “unique.”
For Millennials, having their children show up at the playground or preschool in the same outfit another kid is wearing would be a shameful outrage. The nanny would be beside herself, not knowing how to appropriately report back to the parent.
Less is more
In this, mid-market firms have an advantage. They have an ability to create “small-batch” product and put it into distribution channels that don’t require production minimums of 100+ dozen per style. They can produce items that give the appearance of “one-offs” by modifying trim, buttons and color variations on the same base or core garment, giving consumers the impression that what they are purchasing at their favorite boutique is not the same exact garment selling down the street or at Macy’s.
Online retailers in particular have discovered how best to represent uniqueness in their product offerings. They constantly rotate items as they introduce new product. This encourages their followings to visit their websites often to see what’s new and ultimately make additional purchases.
However, many have been unable to deliver profitability as they are still learning how to manage inventory.
Downturns breed new businesses
There is a theory that more new businesses launch during a recession than at any other time. The recent recession was just such an occasion, permitting the growth of smaller retailers offering “value,” not just a “sale” or “discount day.”
An example of this kind of value-marketing is HomeGoods, a new, mid-market chain that has blossomed, while sales for the home departments at Bloomingdale’s and Macy’s have declined. Companies like HomeGoods can thrive because they are more agile in analyzing the marketplace and then quickly are able to react in terms of unique product selection and value. Even its “mission statement” pushes forward the company’s “passion for unique and beautiful finds” by buyers who “travel the globe, searching for one-of-a-kind handcrafted merchandise … at significant savings” with “new shipments every week, so there’s always something new to discover.”
It’s not that HomeGoods’ products are different than other retailers, but while traditional retailers may use products specifically produced for them to create much larger profit margins, HomeGoods, and its parent company TJX use this same strategy to ensure a flow of the proper merchandise in the correct season.
This same inability to adapt to market changes quickly has turned many apparel industry giants and anchor retailers into dinosaurs. Mammoth anchor retailers, in particular, have reacted to changes in their markets by “closing ranks,” in that they take few risks and try to appeal to the most conservative consumer possible. The Millennial is not interested. Online retailers, or e-tailers, are taking up the slack. And brick-and-mortar stores such as Men’s Wearhouse, which owns the Joseph Abboud brand, are among these.
While other brick-and-mortar retailers are closing stores, Men’s Wearhouse saw an opportunity to thrive by using the well-known, mid-market label as a line extension to create a new destination for men’s suits and sportswear customers — online. This permitted Men’s Wearhouse to avoid confusing its existing customer or dilute the upscale “Abboud” brand name (by cramming Joseph Abboud product into its stores), and to target a different customer seeking a different buying experience on the web.
Men’s Wearhouse’s Joseph Abboud-branded product targets Millennials and traditionalists who shop online and want a personalized product. The Joseph Abboud site offers custom choices in style and fabrics and permits the shopper to mix and match for an individualized style. The suits are made in the United States (a beneficial marketing strategy) and delivered in three weeks. Price points are similar to the branded suits already available through conventional brick-and-mortar retailers but offer custom touches and custom fit.
In pursuing this strategy, Men’s Wearhouse understood the challenge of selling a Joseph Abboud label into major retail outlets and side-stepped the effort and slim margins (after markdowns) by pursuing the growing base of online consumers. In this manner, a mid-market retailer found a way to create growth by identifying a niche and need in the men’s suit market and filling it at the right price point. The end result is that Men’s Wearhouse, a conventional brick-and-mortar retailer, was able to market the Joseph Abboud line extension profitably.