Rising Retail Prices Drive Back-To-School Shoppers To Local Consignment Shops

By John Voket

Back to school shoppers frustrated by skyrocketing retail prices and searching for cool fashions their children and college age students will actually wear need look no further than a handful of local consignment shops.

At the malls and big box stores, retailers are trying everything they can think of to disguise the fact that back to school shoppers are going to pay more for clothes this fall, according to the latest reports by the Associated Press. Some are using less fabric and calling it the new look. Others are adding cheap stitching and trumpeting it as a redesign.

Retailers are raising prices on merchandise an average of ten percent across-the-board this fall in an effort to offset their rising costs for materials and labor.

But merchants are worried that cash-strapped customers who are weighed down by economic woes will balk at price hikes. So, retailers are trying to raise prices without tipping off unsuspecting customers.

“Let the consumer trickery begin,” said Brian Sozzi, Wall Street Strategies retail analyst

Retailers have long tried to mask price hikes — for instance, jacking them up more than needed so that they can offer a “sale” on the higher price. But the new strategies come as merchants’ production and labor costs are expected to rise ten percent to 20 percent in the second half of the year after having remained low during most of the past two decades.

Costs can quickly add up: Raw materials account for 25 percent to 50 percent of the cost of producing a garment, while labor ranges from 20 percent to 40 percent, analysts estimate. This is great news for several local consignment and recycled clothing boutiques in Newtown.

At the pink house on South Main Street known as Fashion Exchange, owner Janet Falkenthal has seen the value and quality of first-run retail merchandise drop as prices have shot up, up, and up.

Way Below Retail

After 27 years in the consignment business Ms Falkenthal has seen thousands of converts to recycled fashions, many who have come to her store as teens or young professionals who may still be coming back with children of their own in tow.

“Our clientele are all looking for upscale fashions at way below retail prices,” she said during a recent visit where more than a half-dozen visitors, including some mother-daughter teams, were poking through racks of pants, sweaters, shoes, and jewelry. “Typically, they can really stretch their dollars by getting half to 75 percent off what they might expect to pay for new retail.”

Ms Falkenthal said she has a variety of fashions appropriate for college age shoppers and local professionals. And her robust stock of footwear includes names like Prada, Gucci, and Ralph Lauren.

“These shoes are all barely worn or brand new and never worn,” she said.

Stores retailing new stock have already have passed along their rising costs to customers by raising prices on select items. The core Consumer Price Index, which includes spending on everything except food and energy, rose 0.2 percent in July, the Labor Department said in a report released August 18.

But now that production costs are going up even higher, merchants are increasing prices on a broader range of merchandise. Because of their concern that shoppers will retreat, though, retailers are treading the line between style, quality, and price.

Some merchants are making inexpensive tweaks — additional stitching, fake button holes, fancy tags — to justify price increases. Those embellishments can add pennies to $1 to the cost of a garment, but retailers can charge $10 more for them, said Marshal Cohen, chief industry analyst with market research firm The NPD Group.

After the price of the fabric for its girl’s corduroy pants almost doubled, catalog retailer Lands’ End, based in Dodgeville, Wis., raised the price of the pants by $7 to $34.50. The company, a unit of Sears Holdings Corp, also added buttons and stitching on the pockets to dress them up.

“Consumers are going to notice the price differences,” said Michele Casper, a Lands’ End spokeswoman.

Such-A-Deal

Diane Kozenieski, who recently opened Such-A-Deal on Mt Pleasant Road in Hawleyville, has so many popular youth fashions consigned at her shop that she has several racks each designated to popular brands like Hollister or Abercrombie & Fitch, one of the fashion makers taking away things but marketing it to customers as the latest trend.

Abercrombie & Fitch is advertising a “Redesigned 2012” jean collection in its stores and on its website, touting that the jeans are “softer, with the perfect amount of stretch.” They are also mostly priced between $78 and $88, about $10 more than last year, according to Jennifer Black, who heads up research firm Jennifer Black & Associates.

A quick scan of the racks of designer jeans at Such-A-Deal reveals some still new denims with an original price tag that were going for $59.99 marked down to just $20.

“As a single mom of a teen boy, I worked two jobs just to keep him dressed in name brand clothes that were high quality,” Ms Kozenieski said. Her shop carries a variety of fashions for teen girls and guys, as well as some sporting goods consignments, and she is on the cusp of opening a maternity room as well.

“I love the teens,” she said, “because once they see the brand names and the styles I carry they’re hooked.”

Ms Kozenieski said her teen and college age clients will sport the brand names everyone else is wearing, but they won’t show up with the same sweater or jacket several of their peers just snapped up off the rack at the local mall for three times the price.

Finds & Designs

Liz Cooper at Newtown’s Great Finds & Designs adjacent to Ricci’s Salon on South Main Street said she has seen a lot of teens and college students coming in to peruse and buy designer jeans, tops, sweaters, blazers, and casual wear.

Her store also offers housewares, framed pictures, and accessories that can dress up a dorm room or college apartment.

All three Newtown consigners also feature jewelry and a wide range of fashion accessories, which were attracting attention from shoppers, some commenting audibly about the low prices or comparable variety of offerings compared to regional department or mall outlets.

Bill Melnick, director of strategic planning at SAI Marketing, which studies consumer behavior at major consumer brands, said most shoppers may not notice retailers’ tactics to disguise prices. But he says shoppers won’t buy if they can’t afford it.

Associated Press content was used in this report.