Chicago Dec 21 In retail, showrooming has not
hit shirts yet.
Showrooming, the retail term for shoppers who try a product,
then buy it cheaper on Amazon.com or other websites,
has driven retailers to the point of hiding barcodes, improving
their own websites and coming up with methods to get people to
complete their purchase in the store.
But brand-name clothing retailers have an advantage over
companies that sell items you can buy anywhere, like televisions
and home goods.
"Specialty apparel retailers are some of the least affected
by showrooming since the more exclusive the product is, the
harder it is to showroom," said Joel Bines, managing director of
the retail practice at advisory firm AlixPartners.
That, in turn, has helped retailers like Gap Inc and
Lululemon Athletica Inc find favor with investors.
A survey of 2,010 adults conducted by AlixPartners showed
consumers who shop for apparel were among the least likely (35
percent) to go to other websites after they liked an item at a
store, compared with 42 percent of electronics shoppers and 41
percent of those looking for accessories like watches and
"If you look at some of the most successful (clothes)
companies in the past few years, they are those that have that
moat around them," said hedge fund manager Shawn Kravetz, who
runs Esplanade Capital in Boston.
He cites yogawear maker Lululemon and Gap as good examples
of how it can help to have clothes that are not sold elsewhere.
If a shopper wants to buy a Banana Republic or Nordstrom
shirt from the latest season, they have to buy it either
from their stores or online shop.
Discount retailers like Zappos, Amazon and others stock
brand-name products, but the merchandise is often not from the
current season or limited in colors and sizes.
"I don't need to see if a television fits my body shape when
I buy a TV," said Joe Megibow, senior vice president of
omni-channel e-commerce at American Eagle Outfitters.
The teen clothes retailer has seen better sales than its peers
over the past year.
"I can get a sense of the TV and I'm good. Clothing is
different. Does it fit me, is it my style, do I like the quality
of the material and how it is put together. There's so much more
with apparel that matters," he said.
That is the part of the reason, analysts say, why
online-only clothing companies like Bonobos and Gap's Piperlime
have started opening brick-and-mortar stores or tied up with
retailers to sell their products in physical locations.
Choice and easy availability are the two most important
aspects of shopping, especially during a holiday season that has
lost steam after what looked like strong Thanksgiving sales.
Estelle Tran, an "impulsive" shopper in her twenties,
"If I want to buy books, tech items, DVDs, I would
definitely buy online. For clothes, I would rather (visit
stores) as it is also a fun experience to try on clothes," said
the Chicago-based finance auditor.
Tran said she would definitely check prices online if she
was spending more than $100.
Luxury and high-priced items can be more susceptible to
showrooming, because pricing is what drives the behavior, said
Marshal Cohen, chief economist at the consultancy NPD Group.
"With electronics and certain consumer goods it is very easy
to compare specific brands across multiple websites. But
(showrooming is) happening and it will be growing. If a
(clothes) retailer isn't taking it seriously, they are going to
fall behind," said Bolette Andersen, principal in KPMG's retail
ROOM TO GROW
Some investors are betting on apparel stocks because of
their relative insulation from the threat of showrooming.
While the S&P Apparel Index has returned a
sizzling 27.71 percent year to date, according to Reuters data,
far outperforming the S&P 500, which is up 14.80 percent,
more gains may be coming.
"We still think there's plenty of room to grow," said Brian
Peery, co-portfolio manager at Hennessy Funds. Its growth fund,
heavily weighted in apparel and consumer discretionary goods
shares, is up 30 percent over the year.
"As we look into the sector 12-18 months, we continue to buy
the discretionary area. Two of our heaviest investments would be
Foot Locker Inc and TJX Companies Inc," he said.
Discount chains like TJX and Ross Stores, which
sell branded clothes at low prices, have benefited from the
surge in bargain-seeking shoppers.
Even the stocks of retailers like Gap and American Eagle
that have staged or are staging turnarounds have gotten a good
boost over the year. Gap has soared 69 percent and American
Eagle is up 31 percent.
R. Shawn Neville, president of Avery Dennison retail
branding and information solutions, said another reason that
apparel and to a broader extent other consumer discretionary
stocks do well is because of their sustainability.
"In uncertain times, investors look towards market segments
that have strong underlying demand which are more stable, like
the apparel industry," Neville said.
Moreover, in times of economic uncertainty, shoppers can
still afford clothes and shoes, as opposed to a new car, home,
or expensive vacations, helping apparel stocks do well, he said.
"Though Amazon is clearly stealing some share in various
categories, clothes retailers, say Abercrombie & Fitch
isn't going anywhere. They're not being run out of the shopping
mall," said Esplanade's Kravetz.