January 3, 2005, 12:00 AM

Is time running out for store mannequins?

Apparel is becoming one of the fastest growing categories on the web, thanks to improved technology and shoppers’ positive experiences.

A recent report by consultants Retail Forward Inc. identifies 18- to 24-year-olds as the most web-savvy online shopping audience. So with a target audience of 15- to 25-year-olds, it’s no surprise that multi-channel apparel retailer American Eagle Outfitters views the web as its primary marketing vehicle.

Whether it’s research for school, shopping, instant messaging, e-mail or blogs, “It’s where our customer is,” says Stacey McCormick, director of marketing and merchandising for AE Direct. “Our peak hours are at night because when they get home, they’re on the computer.”

But it isn’t just the marketers of the hippest or most youth-oriented duds that are following their customers online. Apparel retailers such as Lands’ End and Eddie Bauer have successfully sold on the web for years. Old-line clothier Brooks Brothers recently beefed up its online presence, while Burberry, the British maker of classic trench coats and other gear, has launched its first-ever web store in the U.S. And if any doubt still lingers as to whether consumers will really embrace the channel for buying clothes, mainstream retailers Walmart.com’s and Sears.com’s moves last year to launch apparel effectively serves notice: apparel’s here to stay online.

Fastest growing category

Forrester Research predicts that with $13.8 billion in sales this year, the fast-growing apparel category, including general apparel, accessories and footwear, will rack up more online sales this year than any other merchandise category, overtaking online sales of computer hardware and software for the first time. By 2010, predicts the research firm, 12% of all apparel sales will be online, up from 7% today.

Forrester puts that gain down in part to factors including increasing online access among shoppers, better multi-channel integration, more broadly distributed online campaigns that actively reach out to more consumers, and a better, easier online shopping experience.

Those improvements are boosting online sales across categories, but two other elements-visualization technology and custom fitting-are having a particular impact on the growth in the apparel category online. New imaging technologies are helping to break the “touch and feel” barrier. Online visualization tools that give consumers increasingly detailed and representational visual information about fit, fabric, sizing and multi-angle product views are going a long way toward compensating for the inability to actually try on clothing online, which remains the category’s key challenge on the web. The ability to specify customized clothing online, a spin that uses some of the same visualization tools helping to drive standardized clothing sales, is also helping to expand apparel sales on the web.

As the apparel category grows online, so do some attached headaches. Take returns rates. As more clothing sales move online, the volume of merchandise that’s returned is magnified, even with better visual information available to web shoppers before they place an order. “Most of our clients are seeing about a 20% average return rate on general apparel and about 25% to 30% on footwear,” says Jonathan Dampier, vice president of marketing for retail returns services provider Newgistics Inc. “Retailers already know apparel sales are shifting online, because they see bellwether retailers like Wal-Mart and Sears going there. What they may not know is the impact of returns.”

Dampier’s point is that with a short and seasonal lifecycle, apparel loses value if it’s not returned to the sales stream quickly. Or put another way: what Minnesota consumer, for example, is going to be interested in paying full price for a swimsuit that doesn’t make it back onto the sales floor until August?

Unique efficiencies

But the web’s at work to address such back-end problems too, with unique efficiencies to shorten the return cycle and even shorten the path from apparel supplier to retailer. By athletic shoe maker Nike’s own calculation, for example, if it made only the samples its b2b sales force needs to show the product to retailer customers and no other shoes for actual sale to consumers, it would still be the fifth largest shoemaker in the world. But that could be about to change. Nike is implementing new imaging technology from Scene7 Inc. that will cut the time and cost of producing that many samples by allowing Nike reps to show retailer customers online immediately how a new or redesigned shoe will look.

“We needed a tangible piece to sell, so historically, we would mock up each color of shoe,” says Mark Capalbo, executive producer at Nike.com. “This way we are going to be able to limit the number of samples we make. And if you can reduce that number, you’ve obviously got a cost benefit.”

The web has also helped put boot and apparel maker The Timberland Co. into the custom business on its direct-to-consumer side. In August, Timberland.com, which senior director and general manager Troy Brown calls the brand’s largest and fastest-growing specialty store, launched its Boot Studio.

It’s an offering that lets customers order its iconic yellow waterproof boot in pink, blue and other colors, adding the details of their choice on features such as the sole, hardware, stitching and more. Shoppers can design and order the boot based on actual materials samples available in Timberland specialty stores, or they can order from home or from new web-enabled kiosks in Timberland stores using an online configurator.

Brown won’t disclose custom boot sales from the Boot Studio, but says they’ve already exceeded expectations and were building rapidly into the holiday season. In fact, Timberland already is looking at using its web site to extend customization to other boot lines, apparel and accessories. “The challenge is finding a balance between having a custom product line developed for the consumer, a price point at which they’ll accept and buy it and enough volume for it to make sense. We’ll be picking product categories that will have enough volume to justify the investment,” Brown says.

Smaller catalogs

From front end to back end, the Internet is changing how the apparel industry sells, markets and even manufactures. The key difference between now and the efforts of only a few years ago is that mainstream retailers are today using the web more deliberately, as a strategic complement to other channels, rather than viewing it as competition.

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