Presented by Ilse Metchek, President of the California Fashion Association.

1. UNDERSTANDING THE U.S. MARKET
Presentation to Peruvian Exporters
June 12, 2012
Presented by Ilse Metchek, President

2. Outline
• U.S. Retail Marketing Channels
• Distribution & Shopping Patterns
• Requirements for Successful Brand Entry
• Peru’s Global Competitiveness
• Going Forward
• Los Angeles: Where Trends Happen

3. U.S. Retail Distribution
& Shopping Patterns

4. U.S. DISTRIBUTION METHODS
FOR APPAREL
Department Stores – inventory includes ‘hard Macy’s JCPenney, Sears
goods’, i.e., furniture, cookware, etc…………………
Specialty Chains – just apparel and accessories Saks, Nordstroms, Neimans,
Barneys
Mass Merchants……………………………………… Walmart, Target
Discount Chains...…………………………………… T.J. Maxx, Ross, SteinMart,
Catalogs – Direct Mail….……………………………. J. Crew, Boston Proper
Independent Specialty Stores ….………………….. Fred Segal, Ron Herman,
Kitson, Bergdorfs
Design-to-Consumer ………………………………… Gap, Forever 21
Online – Internet ……………………………………… Gilt Groupe, Bluefly, Amazon
Home Shopping Networks…………..……………… QVC, HSN
Distributors / Jobbers……………..………………… Independent Outlets &
Distribution Companies

5. SPECIALTY WEB VERTICAL
STORES STORE
CATALOG
Mastering the TV
Multi-Channel
World
KIOSK DEPARTMENT
STORE
POP-UP
STORE MOBILE

6. Total Apparel Sales by Retail Channel
Market Share of Total Channels
May 2010 – April 2011
8.5%
1.0%
12.4%
Source: The NPD Group, Inc. based on projections from consumer panelist data
via Women’s Wear Daily, July 2011

7. Total Apparel Sales
$32.3 billion
$107.61 billion Women
$52.82 billion
Men
Children
Total Sales: $192.73 billion
Source: The NPD Group, April 2011

8. US: Retailers’ May 2009
Sales
Same-Store
Retailer
Sales (+/-)%
(+/-)%
Macy’s -9.4% -9.1%
Nordstrom -8.8% -13.1%
Kohl’s 4.1% -0.4%
Saks -25.9% -26.6%
Limited Brands -6.4% -7.0%
Source: RetailSails, June 2009

9. US: Retailers’ May 2010
Sales
Same-Store
Retailer
Sales (+/-)%
(+/-)%
Macy’s 2.6% 1.4%
Nordstrom 7.8% 3.7%
Kohl’s 6.6% 3.5%
Saks 6.9% 5.8%
Limited Brands 6.2% 5.0%
Source: RetailSails, June 2010

10. US: Retailers’ May 2011
Sales
Same-Store
Retailer
Sales (+/-)%
(+/-)%
Macy’s 8.50% 7.40%
Nordstrom 12.90% 7.40%
Kohl’s 2.50% 0.80%
Saks 17.30% 20.20%
Limited Brands 6.00% 9.00%
Source: RetailSails, June 2011

11. US: Retailers’ May 2012
Sales Same-Store Sales
Retailer
(+/-)% (+/-)%
Macy’s 4.0% 4.2%
Nordstrom 9.3% 5.3%
Kohl’s -2.6% -4.2%
Saks 3.7% 4.0%
Limited Brands -6.3% 6.0%
Source: RetailSails, June 2012

12. E-Commerce Share of Specialty Apparel Sales
20%
18.1%
16.4%
10.1%
Source: NPD January 2012

13. Required for Successful Brand Entry

14. Brand Entry Review
To develop ‘brands’ for entry into the U.S. market, an
international fashion producer should:
• Establish a U.S. corporation.
• Quote prices as ‘landed, duty-paid in U.S.’
• Customer Service office in the U.S.

15. U.S. RETAIL CHANNELS
To Get the Product to the Consumer...
• Limited Marketing Channel (Branded & Private Label)
Manufacturer ____ to Retailer ____ to Consumer
• Extended Marketing Channel
Manufacturer ____ to Wholesaler ____ to Retailer ____ to Consumer
• Direct Marketing Channel (Vertical Retailing)
Manufacturer ____ to ____ Consumer

16. Fashion Marketing Options For
BRAND IDENTITY
• National ad campaign to establish an image.
• Regional sales campaign with in-store
promotions.
• Product Placement – ‘celebrity’ sightings are
the key for some trend setting categories -
requiring appropriate ‘public relations’
specialists.
• SOCIAL MEDIA !!!!

17. Innovation & Good Design
Is Not Enough!
• Sizing - not standardized. Some retailers have clear
specifications.
• Labeling Requirements - Chemical testing is
required for all merchandise by some states.
• Shipping costs should be factored in the wholesale
selling price, not ‘FOB Callao’. (Don Nunnari)
• US Customs - Current requirements are being fully
enforced. (Tom Gould)
• Intellectual Property - Confirmation of valid
trademarks must be established. (Crystal Zarpas)

18. Financial Realities…
● ‘Style’, Marketing, and Delivery will
determine success. There is intense
global competition for decisions based on
price without profit!
● Be aware of regional preferences for
global brand development and marketing
strategies. One strategy does NOT fit all
markets.

19. Peru’s Entry into U.S. Market
&
Global Competitiveness

20. Peru’s Exports to the U.S.
Apparel & Textiles
YTD
Textiles 2012 2011 2010 2009
All US Ports 6,064,000 22,916,000 21,840,000 16,686,000
L.A. District Ports 103,000 500,900 892,600 806,700
Apparel
All US Ports 161,550,000 711,900,000 661,650,000 598,960,000
L.A. District Ports 12,640,000 37,193,000 44,154,000 52,656,000
Source: LAEDC 06/07/2012

21. U.S. Exports to Peru
Apparel &Textiles
YTD
Textiles 2012 2011 2010 2009
All Peru Ports 6,167,900 23,417,700 22,733,000 17,492,000
Apparel
All Peru Ports 174,199,800 749,095,000 705,808,000 651,616,000
Source: LAEDC 06/07/2012

22. Peru’s Global Competitiveness
“Peru continues to move upward in the ratings”
• Top Tier: “Business Sophistication”
o Economic stability – control of inflation
o Friendly environment for entrepreneurship
o Less time needed to begin a business
o Efficiency gains in labor and financial markets
• Bottom Tier: “Global Market Efficiency”
o Low level of innovation
o Insufficient transport infrastructure network
o Higher quality of educated employees required
o Costs of organized crime and violence to Business
Source: “Global Competitive Index” of 142 Countries

23. Going Forward...

24. Global Realities for Apparel
• U.S. Trends are crossing borders, creating
a ‘transnational’ media culture – due to
media and internet exposure.
• Hollywood ‘star power’ creates runway
fashion and consumer interest....not Paris!
• The “democracy of consumption” – one
does not have to be rich to be fashionable
anymore.

25. Retailing in 2013
• Clients (Retailers and Manufacturers) will
rely on technology and computers for
purchases, but still need personal
interaction and service!
• Brand Owners develop their own
‘specialty stores’ as a hedge against
larger retailers and the internet.

26. The Landscape for Major
U.S. Retailers in 2014
Present Future
Retailers design and source 30% 45%
for themselves
Low recognition brands 30% 15%
Major brand ‘giants’, ie: 40% 40%
Jockey, Ralph Lauren, etc.
Source: Weintraub Associates, Inc., August 2011

27. Los Angeles:
Where Trends Happen

28. Los Angeles is #1 or #2 in Major
‘Design-Based’ Industries (By Employment)
Apparel & Textiles 1) Los Angeles 2) New York
Architecture/Engineering 1) Los Angeles 2) New York
Food Manufacturing 1) Chicago 2) Los Angeles
Furniture 1) Los Angeles 2) New York
Health Services & Bio-med 1) New York 2) Los Angeles
Motion Picture/TV Production 1) Los Angeles 2) New York
Technology (including Aerospace) 1) San Jose 2) Los Angeles
Toys 1) Los Angeles 2) New York
Source: County Business Patterns - Los Angeles Economic Development Corp 2009

29. Southern California Apparel:
The Global Content Provider
The West Coast is much less conservative when viewing
‘new’ trends. There are no rules here….and no seasons.
Hollywood style dictates US street-scene fashion – not
European or New York runways.
The multi-ethnic mix creates a unique environment for
creative consumer product development.
Use of global sourcing, licensing, design services,
technology and strategic alliances contribute to L.A.’s
increased gross sales.

30. Fashion Industry Value to
the L.A. Region’s Economy
2010 1997
Apparel & Textile $40.3 billion $22.8 billion
Industry Sales/Value
of Shipments
Total # Employed 128,148 207,318
Apparel &
Textiles
Source: Calif. EDD: Bureau of Census, LAEDC October 2011

31. Democracy of Design
Elle Magazine - Brazil Marie Claire - US
Vogue - China

32. The California Fashion Association (CFA) is the
Business-to-business forum for California's
Apparel and Textile Industries.
Please visit our website:
www.CaliforniaFashionAssociation.org
Email: info@calfashion.org