NEW YORK — Equity analysts say there's room in the specialty retail market for American Eagle Outfitters Inc.'s new Martin + Osa concept, but to make it work, the retailer has to differentiate its product.
Since the retailer has not shared details such as product specs, fabrications or price points, analysts can't nail down what Martin + Osa will be competing against.
Although American Eagle declined to comment, analysts said potential rivals include newer retail concepts such as Rugby from Polo Ralph Lauren Corp., Forth & Towne from Gap Inc., Janeville from Gymboree Corp. and Ruehl from Abercrombie & Fitch Co. Other possible competitors are Banana Republic, J. Crew, Eddie Bauer and J. Jill, as well as Urban Outfitters' Free People brand and White House/Black Market, which is owned by Chico's FAS.
American Eagle has said, however, that the Martin + Osa brand will cater to active, adventurous women and men, aged 25 to 40, and focus on denim and sportswear. John Morris, an analyst at Harris Nesbitt, said there was definitely room in that demographic market. He also said it was likely that the brand would focus on different fabrications to set it apart.
"It's an underserved demographic in specialty apparel. Clearly, you've got a lot of competitors flooding this segment now. But they're all kind of in the start-up phase and they're all sort of jockeying for position," Morris said in an interview.
Thomas Filandro, an analyst at Susquehanna Financial Group, said in a recent research report that the brand would likely offer such "classic selections" as woven tops, oxfords, polos, jeans and T-shirts. He expects prices to be 50 to 100 percent higher than those of the American Eagle brand.
Martin Brill, president of Sweetwater Consulting in New Jersey, said American Eagle has found a void for Martin + Osa to fill, as Gap's new Forth & Towne concept is attempting to fill the void in the over-35 age group.
One reason retailers are trying new concepts now is to respond to the aging of their customers, said Brill. "That's been a problem for a lot of business, especially certain categories. How do you bring more of your merchandising acumen and knowledge of retailing — and what the customers are really looking for — and bring it to that customer who is now 10 to 15 years older? And, obviously, they are correct that this is an area that needs to be exploited."
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