Jul 24, 2009

Retailers Highlight Accessories; With New Wardrobes a Tough Sell, Chains Try Belts, Bangles and BagsBy Elizabeth HolmesOnline.WSJ.com

Clothing retailers are expanding their collections of belts, bangles and bags in hopes these high-margin accessories will boost slumping sales.

Casual wear retailer J.Crew Group Inc. opened its first accessories boutique last month in New York and soon will release its third accessories catalog. Accessories accounted for about $165 million, or 12% of its sales last year, almost double the amount in 2004.

Gap Inc. launched the first accessories-only branch of Banana Republic, called Edition, in May. And Henri Bendel, part of the Limited Brands Inc. portfolio, is expanding its offerings this summer with six more stand-alone accessories stores.

Retailers said jewelry, belts and scarves remain impulse-purchases that don’t require a lot of budgeting, unlike a new wardrobe. “It’s a little bit of a candy moment,” says Jenna Lyons, J.Crew’s creative director. “You don’t have to try it on. You can just take it to the cash register.”

Jewelry and bags can yield as much as double the 40% profit margins of apparel, though both vary greatly. The goods take up less space and have more of a timeless appeal, which helps retailers avoid the types of costly markdowns that have hurt results this year. Ed Bucciarelli, chief executive of Limited’s Henri Bendel unit, describes the category as “season-less…which obviously speaks to the profit.”

And sales are still growing. Women’s accessory sales by units for the three months ended April 30 were up 2% from a year earlier, according to market-research firm NPD Group. Women’s jewelry-item sales were up 5%, and men’s and women’s watches and sunglasses were up 11% and 5%, respectively. By contrast, women’s apparel sales in units were down about 5.6%.

There are signs shoppers are willing to spend. More than a third of respondents in a Shopping Habits Survey conducted by Shop It To Me, an online personal shopping service, said they were “still splurging” on shoes, and nearly a quarter said the same of handbags. Just 15% of the 940 respondents said they were still splurging on work clothing.

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