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Apparel Retail

Posted by capital on April 13, 2018
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Retailers are in business to make money and there is no greater indicator of financial success then profit margin. The most profitable apparel retailers such as Lululemon and Kate Spade generate net profit margins between 12 and 14% by managing inventory to the constant changes in consumer tastes. The era when it was acceptable to manage a twelve to eighteen month product lifecycle is over. A faster supply chain from product ideation through delivery is important and has helped fashion retailers such as H&M become immensely successful. It’s also critical to have a good demand forecast engine to help decide how much of a particular item to make for shoppers. The apparel industry outsources most manufacturing to overseas countries due to cost advantages. Sellers tend to preempt the needs of consumers with spring and summer clothes typically going on sale in February and winter clothes in July. Some brands pay for premium locations for their goods, such as store windows or web site home pages. Fast selling clothes will likely hit their first markdown of about 25% off approximately sixty days after first going on sale. Poor performing clothes will go on sale even sooner. Then after a few more weeks the second markdown of approximately 35 to 50% begins. After that, the stores may send the items to factory outlet or other discount sites and stores.