By  on September 6, 2008

Janet Grove, vice chairman of Macy's Inc. and chairman of Macy's Merchandising Group, talks about the retailer's private and exclusive brands.

WWD: How much do you want to grow Macy’s private brand business?
Janet Grove: We’ve aggressively grown the private brand business over the last 10 to 15 years. The penetration has grown steadily as long as we can remember. It’s about 19 percent, and if you take out areas we aren’t in, like cosmetics, it’s a lot bigger—more like 25 percent. We’re comfortable with where we are, but we are always looking to grow.

WWD: What is the strategy behind a private label versus an exclusive?
J.G.: First, we call it private brands. Private labels and private brands are two different things, because a label is different from a brand. INC International Concepts is a brand. Charter Club is a brand. We look to understand where there is a void, then we work with designers and merchants to come up with a vision and product for a lifestyle that is not available in the market. On the other hand, exclusive usually has to do with already recognizable brands, like exclusive items from Coach or the whole Tommy Hilfiger [sportswear] line, which we have exclusively.

WWD: How do you develop a private brand?
J.G.: You know the marketplace, and in a particular category, you know what’s available and who your customer is. When you recognize you have an opportunity in a particular classification, there’s an opportunity to create the product yourself. We then have our merchants responsible for that particular zone of business looking for inspiration in New York, Los Angeles, Paris, London, and take that inspiration and knowledge of their customer to create product that’s different from what exists.

WWD: What is the DNA of a made-up label?
J.G.: Each of the brands we build becomes a unique brand. A label is something you just put a name on, but a brand is something where the customer understands the lifestyle and feels a relationship to the lifestyle, quality and vision. If you take INC, for instance, it has a whole bunch of characteristics for a particular lifestyle that are different from Charter Club. One is positioned for a more traditional customer, and one is for a more modern, fashion-oriented—what we would call neo-traditional—customer. You can describe DNA in a lot of ways. We try to build components of the brand in other categories of business and outfit that consumer from head to toe. For example, INC is a big sportswear apparel brand and we are introducing shoes this month.

WWD: How does it have to be unique from the other house brands, and how does it have to—if it does, indeed, have to—be consistent?
J.G.: It’s something you have to work hard on, be focused on and make a priority every day. We have different teams working on each brand. They may have the same senior manager, but there’s someone who is the champion of each individual brand, and they work very hard to keep the sensibility of the brand true to that customer. The Charter Club team is different from INC’s team and different from Alfani’s team. It’s important we keep them distinct, even though they are all sportswear. Then, we have to make the brands tie together through the different [categories], to maintain one vision of the brand from a global standpoint, yet still keep the right twist for women’s, men’s and home, so the customer can always be assured the price-value relationship and quality run through all the categories.

WWD: How do you come up with the names?
J.G.: That’s really the creative process. We have an incredible marketing group here in charge of packaging, labeling, advertising. Macy’s is unique in that it treats its brand as any marketer would treat its brands. We don’t look at them as private label. We have shops and marketing coordinators for our brands. Our private brands are basically in the same stable as the rest of our brands. We go through the process of coming up with the concept—thinking of names and filtering what’s the best. You build the name, and the name becomes important. Years ago, in the kids’ department, we had lots of different brands. We had these little bits of these megabrands we had throughout the store, and we felt that, from a shopping perspective, it was confusing, so we decided it was time to come up with a whole new process. We were happy with First Impressions, our infant business, but how do you take kids’ from the middle sizes all the way up to big girls’ and big boys’? We said we need a new name. We decided to take out some of our more well-known brands— Charter Club and Club Room, etcetera—and put in one big brand to create an easier and more fun shopping experience. We went through all kinds of market research and we came up with Green Dog. We came up with a whole visual package, including how to paint the walls. From that, we decided we needed a new brand, and in the last year we created Epic Threads for a little older kid right before they leave the children’s department.

WWD: Anything else?
J.G.: The thing I would want to stress is 20 percent of business is private brands and 80 percent is not, so our brands and partners are very important to us. They all work in harmony together: When things are right, all boats ride. What we are about is taking care of our customer and giving her all the right choices. For whatever customer group, if we can have the right brands and products in that zone, they will keep coming back to us.

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