Sizing Up the Active-Wear Market
1. What is your evaluation of the women’s apparel industry and Harrington’s position? How has the average price of women’s apparel changed? What is your evaluation of their financial performance?
The Women’s Apparel Industry
The U.S. women’s apparel industry market is mature, given that the average growth rate from 2005 to 2007 was 4.66%. Within the industry, there are 6 categories of clothing in which companies compete: haute couture, designer, bridge, better, moderate, and budget. Each category targets customers with different needs and different price ranges, with haute coutre and designer clothing ranging upwards from $10,000 and moderate to budget clothing below $50. In 2007, the primary channel by which retail sales occurred was specialty stores. At 58.6%, specialty stores dominated the other channels, with department stores having 19% of retail sales, discounters and mass merchandisers having 11.4% of sales, warehouse clubs/supercenters at 8.1%, and other channels at 2.9%. Ultimately, the total number of retail sales for 2007 was 133 billion, with the majority of units in women’s apparel being sold under the $100 price point, about 75%. Most sales were in specialty stores, and they ranged from budget to better. An economic downturn has influenced the clothing market since the early 2000s, which has led to a change in consumer buying habits. Because of the downturn, customers are very price sensitive and prefer less expensive apparel, as over half of the clothing sold in the apparel industry has been done so “on sale”. To cut their costs, many companies have begun to outsource. In 2005, imports accounted for 82% of all sales. The issue of cutting costs is important, because the clothing market is highly competitive. With low barriers of entry (and therefore low costs of entry), there are many brands competing for market share and self-space, like Jones Apparel Group and Liz Claiborne. Both of these companies captured significant market shares due to their diverse brand portfolios. A diverse portfolio of brands in different categories works because customers within the women’s apparel industry are highly fickle. Customers regularly change their tastes, and as a result styles change rapidly. Companies who are capable of keeping up with the trends across several markets are also the most successful. Because of a combination of economic decline and changing life styles, the current “trend” is active-wear. There is tremendous growth in the active-wear segment, which is considered as stylish, comfortable, and most importantly: cheap.
Evaluation of Harrington Collection’s Position
Harrington Collection is a large manufacturer and retailer of high-end women’s apparel. It differentiates its products through design, marketing, and outstanding service with other companies. Harrington Collection’s goal is to remain the apparel industry leader. Overall, Harrington Collection products held approximately 1.83 percent share of the total women’s apparel market in terms of dollars in 2007.
Harrington Collection's target costumers are women who are affluent, fashionable, and college-educated professionals from ages 25 to 60. In order to reach these customers, Harrington Collection has four brands that cater to different market segments and consumer needs: • Harrington Limited is a designer brand of clothing, with prices from $500-$1,000. It focuses mainly on high fashion styles for women. • Sopra is a “bridge” brand, and has prices from $400-$800. Sopra’s focus is on evening wear. • Christina Cole, the first of Harrington’s acquisitions in the 1980s, has an emphasis on professional wear. Christina Cole is also considered part of the “bridge” division. The average prices for Christina Cole suits and dresses are $300-$700. • Vigor is the cheapest of all Harrington Collection’s brands. In...