Neiman-Marcus recently took all the merchandise it hadn't sold in more than a year, hung it on racks in a huge convention center in San Antonio and marked everything 70 to 90 percent off its original price. It was a virtual sellout.
Now Saks-Jandel is plotting a sellout. In late June or early July it hopes to sell more than $1 million in designer clothes at 60 to 80 percent below the usual price, and share the profits with a Washington-area charity, perhaps Wolf Trap Farm Park.
The fashion business is going through rough times these days. Many consumers are passing up merchandise they think is simply too expensive, especially in light of other strains on their budgets. Instead, they are scouting reduced prices at sales or discounters, or postponing purchases. In addition, retailers have been hurt by bad winter weather.
"We had more days that the store was closed in January than I can ever remember," says David Mullen, president of Woodward & Lothrop. "There were simply not enough people out there, and so we had higher-than-planned markdowns."
Woodward & Lothrop recently reported profits in the last quarter at 80 percent below what they were a year ago.
Woodies has bought far more conservatively for spring. "We are not going out on a limb," said Mullen. "We are trying to respond to the general economic conditions."
Garfinckel's has responded by curbing its number of summer employes and "watching to make sure all of the buyers' traveling is productive," says Hanne Merriman, president of Garfinckel's. The store, for example, has encouraged buyers to make one three-day trip to New York instead of two shorter ones. "This isn't the moment to cut back on buyers' ability to find things to stimulate business," she said.
Like most stores, Garfinckel's also has asked its suppliers to deliver fall merchandise to the store closer to the time it will be worn. "Most fall things are coming in 40 days later than last year. This will give us more time to sell summer clothing," says Merriman.
One store that makes a business of selling off clothes at the end of a season for other retailers has so much to sell, it is expanding its chain this year. Boston-based Filene's, whose bargain basement is a well-known treasure of merchandise with other stores' labels, will open three new stores on Long Island this summer.
Neiman-Marcus, which in the past has "dumped" merchandise at Filene's basement store, decided to sell those clothes itself in San Antonio, a city with no Neiman-Marcus store but plenty of Neiman-Marcus customers, who bought from its other stores or its catalogue. Last month, customers traveled from all over Texas for the sale in San Antonio. Executives from the Dallas store, dressed in jeans and western kerchiefs, assisted customers with clothes brought under one roof from the 16 Neiman-Marcus stores.
"The things hadn't sold at 50 percent off at our regular sales. We needed a fresh approach to stimulate sales and it really worked," said a Neiman-Marcus executive.
Larry Hill, general manager of Saks Fifth Avenue in Chevy Chase, says he isn't sure that such bargain selling is good for business. Such large, additional sales create "a big monster, a bad scenario," according to Hill. He says they risk repeating them every year to make the sales figures of the previous year. "A store tends to chase its tail when it creates a sale phenomenon," Hill concludes.
Ernest Marx, president of Saks-Jandel, disagrees. "With current interest rates so high it doesn't make sense for us to dribble out sales month by month," says Marx. "We want to clean house from all our boutiques and turn it into working cash to buy fresh merchandise." His boutiques include the fashions of such European designers as Yves Saint Laurent, Emanuel Ungaro and Valentino, who not only stipulate how much clothing must be bought each season but also restrict how unsold merchandise can be moved. Saks-Jandel has set up its own off-price shop, Status II, to sell these clothes at half the original retail. This year the accumulation from so many boutiques "after a January of bad weather and general gloom" has made the amount of merchandise more than Status II can handle, necessitating the big sale.
Marx teases about leaving town when it happens. "I don't want to be there," he says. "I don't like to see this kind of clothes go for 80 percent off."