The Flanarant: Grown-ups a prime market for garment firms
Over-50s shoppers are the only retail customer base that's increasing in numbers
Instead of trying to build their businesses by seeking cheaper production and new locations for their stores, retailers would be better off focusing on grown-up customers. Turn your priorities upside down, advises Mike Flanagan, and sell clothes Paul McCartney or Queen Elizabeth would buy. Because they represent the single most important statistic garment businesses need to understand in planning for their survival.
A few months ago, I promised you the 'Flannertake' on how, apart from looking for new sources, retailers and brands should react to the growing price of imported clothing. Since then, I've been expanding our basic view on why garment sourcing has probably changed forever.
In a nutshell, the great economic problems in Europe or the US aren't slowing demand in the global garment industry right now. Demand merely looks slow because Asian producers have spent the past 15 years in a never-to-be-repeated Golden Era where:
- Most of their apparel sales went to the EU, US, Japan and a handful of other rich countries;
- Those sales grew as production moved to Asia from elsewhere;
- The number of clothes they sold was also stimulated by a collapse in their prices caused by moving production to Asia.
That Golden Era is over, even if inflation in imported apparel is now slowing. Garment makers need to organise themselves around the fact that growth in their core Western markets is permanently limited.
And Western garment retailers and brands need to plan for a world where volume and profits won't be stimulated by clothes becoming a lot cheaper than other things customers could be spending their money on.
No more production will move to Asia, because it's all moved. Indeed, some of it is likely to move a bit closer to home: probably not to the US or Western Europe, but very likely to Central America, Eastern Europe or the Mediterranean.
For the past couple of years, Western inflation in clothing has grown, compared to inflation in other products people buy - so customers have switched their spending to other things. Over the long term, Western apparel retail sales, in real terms, will grow at a couple of percent a year - a bit more in good years, a bit less in bad ones.
And if Asian producers are unhappy seeing flat apparel sales to Europe or North America, whining about European economic problems, or deluding themselves there's a huge potential market somewhere else, is missing the point. They need to understand their clients better, and improve the service and value they're offering. Because if they don't, someone else will.
For most Asian producers, there's simply no alternative to Europe and North America for volume sales.
For Western brands and retailers, of course, there's an important corollary to this: there's no significant alternative to Asia as a source of most of their good value clothing - though sourcing closer to home, by speeding up response times, will sometimes work out more profitable than sourcing from Asia.
But if there's no prospect of finding significantly cheaper places to source their clothes, what should a Western brand or retailer do to improve profitability?
Well, I've got a revolutionary suggestion.
Turn your priorities upside down. Finding better customers will make you a lot better off than hunting down cheaper factories.
Because in the 20 years Western brands and retailers have been preoccupied in finding far-off factories and even more remote locations for their shops, something extraordinary has been happening to the people who used to buy clothes from them.
Their customers have grown up - but the mindsets of people designing clothes for them haven't.
I wrote the first draft of this article just before Christmas 2011, right after watching Paul McCartney's last concert in his current tour in Liverpool - a few hundred yards from the site of the Cavern Club where the teenage McCartney first performed and the teenage Mike Flanagan first watched the groups of the Merseybeat era.
Fifty years on from the days of our youth, Macca stood up on stage at 8.15 pm, got 12,000 of us to our feet to join in with him - and none of us sat down, or stopped singing, till close on midnight. He didn't once break sweat. McCartney is 70 in June this year - and his audience was pretty much the same age.
I'm polishing this article off right after watching Britain's 86-year old Queen Elizabeth spend a four-day weekend celebrating 60 years on the throne. Among other things, it involved standing for hours in a barge in the pouring rain to acknowledge the thousand of participants in a river pageant. She's showing no evidence of wanting to hang up her imperial crown; and McCartney's not taking his formidable collection of guitars to the pawn shop any time soon either.
Queen Elizabeth and McCartney represent the single most important statistic garment businesses need to understand in planning for their companies' survival.
In 2000, over-65s accounted for just 6.9% of the world's population, according to the United Nations. This year, they account for 7.9%; in 2030 they'll account for 12% and by the end of this century the UN estimates they'll account for 24%.
That sounds like a pretty slow change over the next few years - but let's look at numbers more important to the garment industry.
In developed countries, where most garments are sold, there were 56 15-30 year olds for every 100 over 50s in 2010. Businesses justify targeting the relatively few youngsters because they currently spend more per head on clothes.
But by 2030, there'll be just 41 15-30 year olds for every 100 over 50s; and by 2100, the UN estimates, there'll only be 39.
The trend is global, and not restricted to rich countries. In China, which most garment businesses tell us is their prime focus of future activity, there were 99 15-30s for every 100 over 50s in 2010, but there'll be just 44 in 2030.
Over 65s accounted for less than half of China's over 50s in 2010 - they'll account for over two-thirds by 2030. By 2030, China's 15-30 population will be a third smaller than in 2010; its over-65 population will grow 150% - and be bigger than the entire population of Japan.
By the end of this decade, there'll be more over-65s than 15-30 year olds throughout the developed world.
The traditional core target of most garment businesses is shrinking fast in developed countries and in China. The growth market consists of the people the stick-in-the-mud "fashion" industry overtly despises and publicly belittles: grown-ups, especially those over 65.
As I said, garment retailers claim their uncommercial obsession with the youth market makes sense because younger people spend more per head on clothes than their elders - though some of us suspect their buyers and designers are just happier selling clothes their chums like.
That used to be the view of many other once youth-obsessed industries - but most of the others have woken up to the revolutionary idea of designing products to sell to the expanding part of their market. Like:
- Recorded music. My first paid job was in the record store where Brian Epstein had discovered the Beatles a year or two earlier. In those days, 99% of our customers were under 25 - and most of the rest were buying Christmas presents for their teenage children. Now over-50s spend more on recorded music than the rest of the population. Because younger customers download their music for almost free? Partly, so that means the music industry has to make its money from:
- Live concerts. Which again, are no longer the privilege of the under 30s. Clothesource Towers in midsummer is surrounded by beautiful country parks running new style rock festivals - with activities, accommodation, catering and facilities geared largely to the over-50s. Attended in their thousands. And that's before we get onto the hundreds of opera festivals and private concerts we're forever getting invitations to pay huge sums of money for.
- Movies. When I was selling records, few people went to cinemas except as part of the courting ritual. But over the past few years, films like "The King's Speech" and "Salmon Fishing in the Yemen", aimed largely at older audiences, have been packing them in. Every single head in my local cinema for "Salmon Fishing" this week was grey.
- Adventure travel. The generation that discovered hitchhiking to India won't spend its holidays playing deck quoits on cruise liners - even when they're pushing 100. My email in-tray's stuffed with ads aimed at people my age for trekking holidays in the Hindu Kush or canoeing holidays up the Amazon. All justifying their colossal prices because of the fame of the guest lecturer, the unique sites they've negotiated access to, or the quality of the catering.
- Education. About a third of the over-65s in our Cotswold town are spending real cash studying for master's degrees or doctorates. Our local university - world renowned for antiquity, stuffiness and Latin Graces before dinner - has developed a range of courses tailored to the specific needs of older homeworkers, too busy doing consulting for Chinese factories or writing opinion columns to drive into lectures, but prepared to pay a premium for the convenience of combining study with a working life.
Now while I've been mulling over these near-endless lists of inducements to spend my earnings, Mrs Flanagan went looking for a new swimsuit. And found not a single one designed to help a woman of more-or-less my age feel comfortable exposing her body. So she's still going to have to go to our local pools or the gym in activity clothing that doesn't even try to make grown-up women feel relaxed.
Chasing a collapsing market
The garment industry's approach to the one part of their customer base that's increasing in numbers sounds worryingly like US carmakers in the 1970s. Refusing to make smaller, more fuel-efficient cars because they made more money from gas-guzzling clunkers, they watched their domestic sales collapse to better-made, more efficient, Japanese imports, and overseas sales disappear forever.
The parallel with the garment industry isn't 100% of course. The danger isn't mature American customers buying their clothes from Japan, but spending cash on travel, music, films or whatever instead of clothes, because clothes sellers are obsessed with chasing a collapsing market.
There are three fundamental rules that apply to the over-50s:
1. Like everyone, over-50s buy clothes for four different reasons:
- To look good
- For protection against the environment
- To safeguard what their culture regards as standards of modesty
- To be appropriately dressed for a specific occasion
2. But few of them often really need to buy new clothes. Their wardrobes are filled to bursting - so anyone trying to sell to them needs to have designed a garment that fills a real need. Easy enough to sell them thicker anoraks for a mountaineering holiday, or dresses that won't upset locals for a trip to a Muslim country. But selling them clothes they'll believe will enhance their looks requires real skill and dedication.
3. They're all different. A 55-year-old's tastes differ as much from her 90-year-old mother's as from her 20-year-old daughter's. Even Mc Cartney's generation of similarly resilient, similarly aged, UK-born global rock stars - Mick Jagger, Keith Richards, Elton John, Ringo Starr, Tom Jones and the others - cover a huge range of tastes, body shapes, sartorial styles and personal histories. But what they all share, apart from bodies showing fewer signs of ageing than people their age in earlier times, is an extraordinary range of interests. Buying clothes competes with everything from philanthropy to new underground swimming pools.
McCartney and most of those other British rock stars put on a monster concert as the culmination of Britain's Jubilee celebration weekend. It revealed an extraordinary paradox in apparel retailing.
In the audience, Kate, Duchess of Cambridge wore a dress bought from Whistles, a mainstream mid-price British chain. Her husband, Prince William, and his brother Harry also wore clothes indistinguishable from the audience's - quite possibly bought at any London branch of Gap or Marks & Spencer. Unsurprising since the real achievement of the great Western retailers like Donald Fisher and the Sieffs over the past century has been to make it possible for almost anyone to dress, eat or be entertained like royalty.
But not if they're getting on a bit. Just like the young royals, Queen Elizabeth and McCartney looked stylish and unostentatious: as far as it's possible to imagine from the demeaning, bigoted, clichés (like "dowdy", "frumpish" and "granny") the fashion industry descends to when describing customers old enough to have some discrimination.
But their clothes were so well and flatteringly designed for ageing bodies, so well tailored, and so stylish they couldn't possibly have been bought in any London high street or shopping mall. Once you're over 50, it seems, only royalty (or those like McCartney who're richer than royalty) can afford to dress like a queen.
Retailers have tried - and failed
Why are self styled "cutting-edge" clothing chains so much less astute at getting money out of the world's fastest-growing market than the 800-year old University of Oxford - a byword among many for ivory-tower, out of touch, academics?
It's not as if they haven't tried. Gap's Forth & Towne chain and M&S' Portfolio brand were both aimed at the older market, and both got nowhere. Both companies announced the demises in corporate-speak: Forth & Towne was closed, said Gap "to focus our efforts on stabilising the existing businesses". Portfolio went, said M&S, so that "We will deliver more clarity and remove duplication across the sub-brands."
Others were less charitable. Forth & Towne was really, said Slate, "too focused on reproducing youthful fashions with a more generous cut". Portfolio's designs were dismissed by one of my neighbours as "just the clothes we'd never be seen dead in". Judging by how many pages of those designs still live on, almost two years after Portfolio's death sentence was announced, savagely marked down on the M&S Outlet website but still unsellable, that neighbour is by no means unique.
As you get older, there's a great deal more to looking good than looking "cool", or wanting to look like a 1970s celebrity no-one with any real interests ever heard of anyway. Looking good after 50 requires clever tailoring, engineering and design to disguise half a century of self-indulgence and nature's tolls. More importantly, it needs real insight and flair to identify styles and colours that flatter older shapes and skin - and a real respect for the customer.
Understand that customer, design the right clothes, and retailers and brands can win back a generation they're losing to more commercially astute competitors in the music, film, travel and educational industries. Not to mention to home designers, garden centres, financial advisors, wine merchants and all the other industries getting fat on the people the clothes industry currently ignores - through having the humility to understand the people they're selling to.
Many "fashion" businesses suffer from a fundamental staffing problem. Every adult, whether 30 or 90, has been an adolescent and - believe it or not - retains some appreciation of what motivates those younger than him or her.
But no 30-year-old in history has ever been 70: and it's really hard work to design for people whose shoes you've never walked in. And harder work still for senior management - equally unfamiliar with being 70 - to motivate people to approach the job with real insight, sensitivity and flair.
Kate's Whistles dress was clearly designed by someone who saw her customer as a real person. Too many of the clothes at Portfolio and Forth & Towne looked as if they were designed just for a demographic - and one the designers had no intuition about.
Retailers and brands can duck the challenge, or claim because they've failed once there's no point trying again. But the older market's not going away. The youth market will go on getting ever smaller, everywhere, as long as any reputable forecaster will predict, which means for longer than most readers' working career.
If a store chain wants to run itself for buyers' gratification rather than shareholders' dividends, it might as well sell its shops to gyms, comfortable wine bars and other businesses that understand selling to growing markets right now.
Because if they keep concentrating on a market that's disappearing, those shops will be unsellable in a few years' time.
An interactive databank with intelligence on the major apparel sourcing countries
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