By  on July 8, 2005

NEW YORK — Saks Fifth Avenue is redirecting its private label strategy.

While eliminating its longstanding Real Clothes brand and closing its product development division, Saks said it will build up its offering of private label merchandise by working more with outside designers and brands and striving to obtain more exclusives bearing designer labels.

The shift will cut about 15 associates involved in product development, sourcing and design. The division will be shut by the end of September. Saks said substantial infrastructure and marketing expenses will be saved, and that its private branded business did not yield a sufficient return. The company declined to specify the volume or profits on the program.

Ronald Frasch, vice chairman and chief merchant of Saks Fifth Avenue Enterprises, said in a statement: "The discontinuation of our private label brand is consistent with our merchandising strategy, permitting us to focus our resources on unique, upscale merchandise from our most productive designers. In the future, our private label initiatives will be more aligned with this overall vision of the company and will be developed by our internal merchant team in conjunction with our existing trading partners."

Executives said the focus will be on higher-quality private label goods, particularly in categories such as leather goods, accessories, knits, outerwear and men's neckwear.

A year ago, Saks dropped 548, a contemporary collection created by an outside designer-consultant. "We decided about a year ago it didn't really fit in with what we were doing in contemporary," Frasch said in an interview. "We didn't feel we needed a collection approach to private label and contemporary. That program essentially converted to a commodity program, primarily focused on knitwear, like cashmere in the fall, and T-shirts and knits in the spring. We do it through partnered vendors," under the Saks Fifth Avenue label.

Real Clothes, housed in bridge, was originally more of a career collection that evolved into mostly casual and weekend clothes. "Within that we also did some commodity knitwear programs in a couple of ways, designed and developed in-house, or under the SFA label primarily sourced through domestic private label and branded vendors," Frasch explained. "It was a significant program, but it did not perform as well as we would have liked for sure."He characterized Saks' private label program as "a multitiered strategy," adding, "Principally, we will continue developing commodity programs in partnership with many of our existing suppliers," though additional suppliers are being utilized and sought, he noted, as the new strategy accelerates.

Saks is also shifting its men's wear program under the Saks Fifth Avenue label, which is commodity-driven, including woven shirts, cashmere, fine gauge knitwear, pants and ties. "All of those programs are now being developed in conjunction with primarily European branded suppliers," he said.

Saks has also been pushing for more exclusives under designer labels, particularly in ready-to-wear, accessories and shoes. Exclusives include rtw by designer Charles Nolan, and shoes from Via Spiga under the Spiga Italia label.

In September, Saks will launch its Wild About Cashmere promotion at all of its 57 stores. Frasch said Saks has developed more than 600 styles exclusive to the store, either working with designers, or designed internally.

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