Are Upgraded Mannequins Really the Answer?

In the 1987 film, Mannequin, Andrew McCarthy's character uses a mannequin, played by a young Kim Cattrall, to attract large audiences of shoppers for a struggling department store. After great success, Andrew McCarthy's character moves up the business ladder after his department store rakes in huge profits.

Target (NYSE: TGT  ) and Ralph Lauren (NYSE: RL  ) are among several companies that are hoping for the same as they are bringing back improved mannequins to their shopping floors. Although Gap (NYSE: GPS  ) hasn't said if they are joining in on the mannequin makeovers directly, they do own fashion retailer Intermix, which they acquired in 2012, which has also modernized their mannequins.

However, are upgraded mannequins really a solution for these and several other retailers long term?

Modern mannequins doing more than just standing around. By Chris Waits, via Wikimedia Commons

Mannequins are making a comeback
Whether it's big-box stores like Target, nationwide department stores, or clothing retailers like Ralph Lauren or Gap, more and more companies are finding value in bringing mannequins back. The new mannequins are being designed to be more glamorous and, more importantly, a lot more real. They are athletic, flexible, and have physical features like tattoos, facial hair, and even wrinkles.

Target doesn't have mannequins in most of its larger big-box U.S. locations, but has plans to test the upgraded mannequins at 50 stores this summer.

However, the company is still facing ongoing problems in Canada, and the fallout from the infamous data breach it suffered late last year. Target's fourth-quarter net income fell 46%, while the data breach cost the company $61 million so far with dozens of potential lawsuits on the horizon. Issues in Canada cost Target $941 million in 2013.

Ralph Lauren was actually profitable last quarter, with both revenue and net income up more than 9%. Yet, the company has also stated it is bringing back makeup and wigs to make its mannequins more realistic after taking the headless route for years.

Source: Colin Rose, via Wikimedia Commons. Older versions of mannequins without facial features or even faces. 

Modern mannequins still don't connect with reality
Since 2005, the average dress size in America has grown from 12 to 14. However, shoppers wouldn't know that considering that most mannequins are still a size 4. The average size for not just women, but men, has continued to grow for years. Therefore, if mannequins are trying to be more real to advertise how apparel might look on customers, they are still coming up short in this area.

Promotional retail-environment trends among clothing retailers has created a cycle of shopping where customers wait for items to go on sale or clearance before purchase. The addition of the Internet has created a "super shopper," where very few items are paid for at full retail price anymore. It is unclear how mannequins will address this growing problem.

Additionally, online and mobile ordering trends don't support the need for mannequins or other similar improvements in the physical stores themselves. For example, last year, Gap's online sales rose to $2.26 billion, or 14% of the $16.2 billion in sales for the year. The previous year, Gap's online sales made up just 11.9% of total sales.

Furthermore, for the first time in a recent survey's history, teens are spending as much on food as they are on clothing. Brands that were popular just a few years ago are losing interest among teen shoppers, while activewear now comprises 28% of teens' apparel purchases, up from just 6% in 2008. This is due to more casual athletic clothing being worn more often outside of gyms.

Showrooming has even affected luxury fashion stores, as well, while some nationwide department stores are now recognizing the digital age where younger customers have no concept of life before the Internet.

Lastly, even though March retail sales showed clothing stores' sales increased a seasonally adjusted1%, clothing sales are still down 2.3% unadjusted year over year.

Source: Ralph Lauren. Online sales grew 25% compounded annually during the last decade for Ralph Lauren. 

Bottom line
Mannequin came out nearly three decades ago and, while it is just a movie, it does highlight the biggest difference between then and now -- the Internet.

A recent study by the National Retail Federation projected that the retail industry would see sales climb 4.1% in 2014. However, it also anticipates retail sales online will be in the 9%-12% range.

In the end, upgraded mannequins may prove to be another expense that outweighs the benefits for clothing retailers. They might result in customers giving the mannequins a second look, but may do little for overall sales.

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Michael Carter

I graduated with honors with a B.S. in Mechanical Engineering from Virginia Tech and later got my MBA from the University of Pittsburgh. I'm a Licensed Professional Engineer (P.E.) for the state of Pennsylvania. As an experienced equities investor and Motley Fool member since 2006, I try to show that investing is not only for the pros.

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