Catalogers Learn Ways to Overcome Returns Costs
Attendees learned that the apparel business in the United States accounts for more than $150 billion annually with a yearly growth rate in recent years of 4 percent. Strait said that the segment represented the largest direct business, accounting for $3.7 billion in the last holiday season.
But also mentioned was that more than 60 percent of consumers are unhappy with the fit of the clothes they buy, with return rates ranging from 6 percent to 40 percent depending on the category and item.
"Dresses get very high return rates," said Strait, CEO of merchandising and sourcing consultancy Strait Profit Solutions Inc., Scarborough, ME. "You have to make 70 percent markup or the numbers just don't work."
Another trend was discussed at the "Keeping Your Catalog Current With Merchandise Trends" session: The cost of comparable garments during the past 24 years has fallen, placing increasing pressure on average order values.
"Catalogers almost have to be a higher quality than that whole bottom segment of the retail [sector]," he said. "You're dealing with returns that cost you money. They don't cost the retailers as much money."
Along with necessary markups, Strait also discussed going direct to the factory to save 40 percent to 50 percent on cost. But that option is available only for those dealing in large volumes.
"You have to have a method to get your minimums on whatever item up to whatever you can negotiate out of the factory," he said. "Usually factories want couple-thousand unit minimums of a style, and you also have to hit the fabric minimums with the mill."
The old "everything is negotiable" rule applies.
"If you sit down with them and they believe in your concept and think you're going to grow to be a big business, they'll play ball, or if you have the power of other people [such as] a great agent," he said.
Attendees also were advised to get a good designer, because "slightly off doesn't cut it." And they were told to "send swatches" as part of ensuring catalog color reproduction is accurate.
"Make sure that your product is shown well, that they're matching the color at the place they print because if they aren't ... even if you sell it to somebody, it comes right back," he said. "They're not playing around with color. They don't want a different color than what they ordered."