By and  on March 15, 2010

Everybody wants a larger slice of the shrinking pie.

After more than a year of cost cuts and consumer retrenchment, apparel retailers and vendors are trying to put the Great Recession behind them — and market share gains have become the beacon they hope will lead them forward. From Saks Inc. and Neiman Marcus Inc. to Macy’s Inc., Wal-Mart Stores Inc. and Amazon.com, everyone wants more.

“Capturing market share is the name of the game for the foreseeable future, especially since there are not going to be many retail projects, shopping centers and the like, being built in the next few years,” said Terry Lundgren, chairman, president and chief executive officer of Macy’s.

Similarly, Saks’ chairman and ceo, Stephen I. Sadove, told Wall Street last month the company was “carefully moving from defense to offense,” comments echoed a week later by his rival Burt Tansky, president and ceo of Neiman’s.

Fashion brands and retailers are always jockeying for consumer dollars, but 9.7 percent unemployment, higher savings rates, a tenuous recovery and lower overall sales have only upped the stakes. Total apparel sales in the U.S. shrank 4.7 percent to $189 billion for the year ended Jan. 31, according to The NPD Group Inc.

“One man’s feast is another man’s famine,” said Marshal Cohen, NPD’s chief industry analyst.

Specialty stores, department stores and national chains all gave up market share last year, according to NPD. Gaining steam were the mass merchants, off-pricers and online retailers. Specialty stores still hold the top spot, with a 30.8 percent share of the apparel market. (For more specifics, see chart, opposite page.)

The pressure is on because there are only a few key paths to market share expansion for retailers. Craig Johnson, president of Customer Growth Partners, said retailers can:

• Make their current store bases more productive, i.e., improve comparable sales.

• Add stores at home or abroad, either under existing or new nameplates.

• Go online.

“You’ve got to use one or all of those levers to get organic top-line growth,” said Johnson, noting companies should be focusing again on the top line this year after multiple quarters of belt tightening.

“By cutting costs, you can have an OK season and you can even have an OK year, but if you’re not growing your top line, you’re certainly not growing your share,” he said. “What do you do for an encore?”

Stores at the lower end of the price spectrum already have pounced, blanketing the consumer with marketing that screams “Save Money.” Wal-Mart and Sam’s Club’s share of the total U.S. apparel market rose to 9.8 percent last year from 9.5 percent in 2008, according to Johnson’s calculations.

Still, the massive retailer is not happy.

“We’re disappointed with our apparel performance for the quarter and for the year, and a full review of our apparel merchandising strategy has been under way now for a few months,” said Eduardo Castro-Wright, vice chairman and head of Wal-Mart’s namesake U.S. unit, last month.

Off-pricer The TJX Cos. Inc. also has been taking a big chunk of apparel market share, with sales up 6.8 percent to $20.29 billion for the year ended Jan. 31.

While price has been a big part of Wal-Mart and TJX’s success, merchants relying more on cachet might find their brands don’t have as much pull with the new, stingier consumer.

“People are loyal to price. They’re loyal to a bargain. They’re loyal to a treasure hunt,” said Leon Nicholas, director of retail insights at MVI Retail Insights. “I don’t think they’re loyal to a particular retailer.”

But it isn’t only retailers seeking to grab more of the market. One vendor that hasn’t been shy about its aggressive tactics to build market share is Phillips-Van Heusen Corp.

“This type of environment is the best time to increase market share because your weaker competitors are under a lot of pressure,” said Emanuel Chirico, president and ceo of PVH. “They start cutting expenses, pulling back on marketing, cutting back on field support, and our competitive advantage goes up.”

PVH might also extend its reach through acquisition. The firm is said to be the lead contender to acquire Tommy Hilfiger Corp. from private equity firm Apax Partners for a price that would value Hilfiger at $3 billion to $4 billion.

PVH’s share of the department store dress shirt business grew to 45 percent last year from 35 percent in 2007, with similar gains in the neckwear category. PVH added new licensed brands to its portfolio, including Tommy Hilfiger, DKNY and Joseph Abboud, and has been able to usurp floor space from underperforming competitors, especially at Macy’s. In a process called “lane clearing,” PVH has paid markdown money to the department store to take underperforming non-PVH brands off the floor and replace them with PVH product.

“Taking somebody off the floor requires you to make an investment in both fixtures and markdown money,” said Chirico. “You have to liquidate those goods, and because of our financial strength, we can afford to do that. If we have a guarantee of improved market share, and improved space in a store, we’ll [provide] support financially to take that competitor off the floor.”

Macy’s has become a key battlefield for fashion’s biggest brands. The nation’s largest department store operator, in its own drive to grab share, has been tailoring assortments at stores with its much-ballyhooed My Macy’s localization program. That effort has forced vendors to be more responsive to the needs of local Macy’s stores, creating the need for more “on the ground” resources and expenditures.

“The net result is that it will likely be increasingly more difficult for smaller brands to thrive in Macy’s,” said Eric Beder, an analyst at Brean Murray Carret & Co., noting other retailers were also focusing their efforts on key resources.

Among the firms Beder believes will benefit as stores weed out weaker labels are True Religion Apparel Inc., The Warnaco Group Inc., Perry Ellis International Inc. and Maidenform Brands Inc.

Lundgren said My Macy’s has positioned the company to scoop up share this year and beyond, even though the retailer’s overall sales fell 5.6 percent to $23.49 billion last year.

“The opportunity is clearly in front of us,” Lundgren said. “Everything we’ve done with the My Macy’s organizational structure has been all about capturing market share for the local markets where we compete.”

Macy’s is also using its girth to sign exclusive deals with brands such as the forth-coming Material Girl junior line from Madonna.

But the list of Macy’s competitors for market share is long. Lundgren pointed to a range of rivals — from Neiman’s to Wal-Mart, specialty stores and Amazon.com. “You can’t just narrow your assortment to who’s next door to you or you will, in fact, lose market share,” he said.

Kohl’s Corp. is a key Macy’s competitor that’s grown market share in the down economy. The retailer has continued to expand its store base while consistently hammering home its message of low prices to cash-strapped consumers. The company’s sales grew 4.8 percent last year to $17.18 billion.

“What I think they have done a fantastic job of is not only being very sharp on their price point and improving their fashion quotient, but also doing an incredible job in terms of marketing everything,” said Deborah Weinswig, equity analyst at Citigroup Global Markets.

Kohl’s is gaining traction with an increasing number of marketing events, such as more Night Owl and Early Bird specials. “When the customer goes to shop Kohl’s, they’re going there with a purpose,” Weinswig said. “They’re not there to browse.”

Market share winners have come from across the price spectrum. One upscale brand that has grown share despite the economic storms is Coach, which grew its share of the women’s handbag and accessories market to 26 percent last year, up from 22 percent in 2007, according to the company’s own research.

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