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Women over 35 an untapped retail market
Thu Sep 29, 2005 12:44 PM ET
 

By Angela Moore

NEW YORK (Reuters) - From clothing to cosmetics, youth-obsessed retailers and manufacturers are paying attention to an ignored market with money to spend: women over 35.

"The 35-plus segment is extremely important," Sherif Mityas, managing partner at consulting firm AT Kearney said at the Reuters Consumer and Retail Summit. "Retailers discovered a few years ago that teens have a lot of money to spend."

"Now they're realizing that the over 35 market also has a lot of money, more sophisticated tastes, and they get better margins from them," he said.

Chico's FAS (CHS.N: Quote, Profile, Research) carved out its niche years ago, offering comfortable, yet fashionable, clothing to baby boomers. The company started in 1983 and stumbled upon its niche because the founder was looking for merchandise he thought his wife would like.

Chico's has its own sizing system, brings new merchandise into stores every week to lure shoppers, and has posted same store sales growth each month for the past year.

The company's sales hit a record high in August after Chico's posted unexpectedly strong sales, but tepid forecasts and strong gains in its stock price this year have put investors on guard. Year-to-date the shares are up about 48 percent, and the company's forward price-to-earnings ratio is 34, according to Reuters Estimates.

"This is an age group that has been ignored by most retailers, manufacturers and advertisers," said Candace Corlett, principal with retail consultants WSL Strategic Retail. "This group has taken their spending to the places that reach out the them: travel, restaurants, upscale supermarkets and casinos."

GAP INC. MAKES SOFT BET ON THE TREND

Gap Inc. (GPS.N: Quote, Profile, Research), known for its Old Navy, Banana Republic, and namesake Gap stores, is looking to beef up stagnant sales by adding a new chain, Forth & Towne, aimed at the 35-plus set. Merchandise is priced between the company's mid-level Gap stores and its more upscale Banana Republic chain.

In order to target female baby boomers, Forth & Towne will offer a more generous fit in its clothing by using size 10 as its benchmark, rather than the size 8 standard.

Chico's chief financial officer said the chain isn't concerned about Gap's entrance into its market.

"They're only opening five this year and five next year, so it's negligible," Charlie Kleman said at the summit, held at Reuters New York headquarters. "Long term, if Gap does it right, it's still a big market."

Cosmetics companies are also enhancing their products to include more anti-aging properties, and introducing new brands and spokesmodels to attract a more mature consumer.

"Catherine Zeta-Jones has really helped in modernizing and contemporizing the Elizabeth Arden brand and our core customer is that 35- to 55-year-old woman globally," Scott Beattie, chief executive of Elizabeth Arden Inc. (RDEN.O: Quote, Profile, Research), said at the summit.

"As more women reach that 35- to 45-year range, where they're changing their skincare regimes and the requirements of their products, (we try to) capture more and more of that group of consumers entering that age demographic."

(Additional reporting by Jessica Wohl and Emily Kaiser)

   

© Reuters 2005. All Rights Reserved.






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