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#Written by David Tam, 1996. #
#davidkftam@netscape.net Copyright 1999#
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David Tam
Wednesday, November 19, 1996.
Business Press Review
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Strauss, Marina. "High-end women's wear falls out of fashion".
The Globe and Mail. Thursday, November 14, 1996. B19.
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Upper scale fashion retailers are facing tough times as they try to cope
with changing market conditions. Ira Berg Ltd, a higher-end women's fashion
retailer, went into bankruptcy last month because of the changes it tried to
implement. Their failure leaves them owing creditors a total of $2.3-million.
The market for these retailers is shrinking. Consumer buying habits are
changing, and consumer loyalty is no longer present.
In the case of Ira Berg, its clientele were getting older, moving to
Florida, and no longer purchasing the same items they had use to. The company
decided to begin catering to the younger clientele. While doing so, however,
they unintentionally lost their older clientele because these clients were
neglected. Ira Berg Ltd began switching to trendy, expensive European label.
This alienated many of its long-time, older clients.
Creeds Ltd, another high-end fashion retailer, went bankrupt five years ago
following the same events as Ira Bergs. Both companies were taken over by the
sons of the owners and both began investing in trendier labels to attract
younger clients.
Holt Renfrew & Co Ltd, on the other hand, has been quite successful in this
market. They decided to broaden their customer base and by reaching out to the
"not-so-wealthy". They developed their own private line of fashion that was
comparable to expensive European wear at a lower cost. Profit margins also
grew because they began offering a wide variety of accessories. Their
marketing pitch was "quality at a reasonable price". Holt Renfrew has also
realized that their higher-class image can be problematic to some degree.
Barbara Atkin, fashion director at Holt said, "If you look pretentious, if
you're an overly well-maintained store ... that's frightening for people".
From our lectures, we have learned that it costs approximately six times
more to gain new clients than to keep existing ones. Ira Berg Ltd and Creeds
Ltd probably were not aware of this fact, or they cost to ignore it. They
under-estimated the value of customer loyalty. This may be part of the reason
why they went into bankruptcy. Another was a loss of focus, which was done
intentional, and was required in these cases. I believe they should have
implemented changes slower to retain focus on both markets. A lesson could be
learned from our past guest lecturer, Mr. Rego, who is also in the higher-end
fashion retail industry. His business never lost focus, even through the harsh
economic times, and he paid close attention to customer needs.
(
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