Blog: Leonie BarrieBuoyant back-to-school spending

Leonie Barrie | 3 September 2012

Boosted by buoyant back-to-school spending, there was good news for US retailers in August after most managed to deliver strong sales gains during the month. With back-to school the largest selling period after the holidays, it is seen as a bellwether for demand for the rest of the year.

And it augurs well. In August, retailers exceeded expectations, with shoppers coming out to snap up deals and new fashions. A shift away from basics towards trends such as coloured denim helped offset headwinds including rising gas and food prices and high unemployment.

But for debt-laden retailer Bakers Footwear, last week brought news that the group is to shed more than 70 stores and up to one-third of its staff - including its COO, chief planning officer and chief merchandising officer - in an effort to turn around the ailing company. It will sell up to 52 stores to Aldo US and close 20-25 under-performing shops this autumn - and focus solely on its Bakers brand.

It was also a busy week for UK retailer Marks & Spencer. On the one hand it unveiled its second-largest UK store and eco-flagship, where it will roll out in-store wi-fi and equip some staff with iPads as part of efforts to boost sales and improve the customer experience. But on the other, it was faced with rumours of a possible private equity bid which, not surprisingly, got the industry talking.

Chinese textile and clothing manufacturers, meanwhile, are expecting to struggle for business for the remainder of 2012, with the worsening Eurozone crisis dampening demand in key export markets and competitiveness under pressure from the strengthening Chinese yuan and rising labour costs. Export figures, though, show the year so far has been relatively steady, with a fall of just 0.2% in the seven months to July.

But moves are underway to increase cotton quotas and sell cotton reserves to ease prices following complaints from Chinese fabric and clothing makers. And in a move that could have wider implications, the Australian government has given the go-ahead for the sale of the country's largest cotton producer to a consortium led by Chinese textile company Shandong Ruyi.

That said, the CEO of Hong Kong based Crystal Group, one of Asia's largest apparel manufacturers, has told just-style that the company's most profitable factories are all in China. In an exclusive interview, Andrew Lo also talks about supply chain consolidation, productivity, setting up offshore factories, and why big is better when it comes to building a competitive edge.


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