Sep 19, 2008
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US retailers push one-stop shops as accessories boom

Sep 19, 2008

By Anne Pallivathuckal

BANGALORE, Sept 19 (Reuters) - Women need no longer walk out of apparel stores seeking accessories to complete their ensembles. One-stop shops selling everything from clothes to scarves and jewelry are not a fad, but are here to stay.

In a hard-hit U.S. retail landscape, the concept of one-stop shops, which offer a broader array of higher-margin accessories than typical apparel stores, are helping prop up sales at women's-apparel retailers like New York & Co Inc and Urban Outfitters Inc .

Apparel retailers have been branching out beyond their core merchandise over the past few years to stave off fierce competition and extend the appeal of their brands.

And women seem to love it as they are "being taken care of totally in that store," Britt Beemer, chairman of consumer-behavior tracking firm America's Research Group, said.

The strategy is paying off as cash-strapped consumers, pinched by a weakening economy, higher gas prices and a housing market slump, look to trendy accessories to revive their wardrobes in the absence of compelling apparel fashions.

Placing greater emphasis on accessories has multiple benefits for retailers: higher margins -- which can range from about 5 percent to 15 percent more than apparel -- increased units per transaction and customer loyalty.

The segment has been showing strong growth over the past five years, and has typically been much more recession-resistant than apparel, Mary Delk, director of retail practice at consulting firm Deloitte, said.

"I think customers often view them as a more affordable way to update their wardrobe," Delk said.

Companies, in turn, are reaping the benefits.

New York & Co, whose shares have soared more than 50 percent this year, and Urban Outfitters, whose stock has risen about 30 percent, have both beaten market estimates in the past several quarters.

Not to be left behind in ramping up accessory offerings, companies such as Bebe Stores Inc , Wet Seal Inc , Dress Barn Inc and Coldwater Creek Inc have also made deeper inroads into the category.

With traffic at mall apparel stores down between 14 percent and 18 percent this year, the whole retail base is trying to sell more to every customer, America's Research Group's Beemer said.

Retailers have been highlighting and improving the presentation of accessories throughout their stores, and adding them to outfits on display.

But analysts cautioned retailers need to tread carefully.

"You can't just throw it out there and think that it's going to work," analyst Elizabeth Pierce of Roth Capital Partners said.

The products have to make a connection with the retailer's brand and target customers. "If it's not merchandised correctly, you can overwhelm the consumer," Pierce said.

In spite of possible risks associated with accessories, sales are expected to continue to grow.

"(Retailers have) always offered these items but maybe when the economy was much better they could focus more on worrying about getting the apparel sales," analyst Mark Montagna of CL King & Associates said.

"Now that things are tight, everybody has to scrape and make sure they can squeeze every dollar out of every potential customer coming through the door."

(Editing by Pratish Narayanan)

((Reuters Messaging: [email protected]; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800)) Keywords: US ACCESSORIES/

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