By  on April 12, 2010

TUCSON, Ariz. — Top industry executives at the 14th annual Global Retailing Conference said established brands need to blend their core values with cutting-edge creative and business strategies in order to grow and thrive.

Wesley R. Card, president and chief executive officer of the $3.3 billion Jones Apparel Group Inc. said the U.S. is entering an “era of consequences,” which he defined as a transition between the so-called new frugality of consumers and the return of materialism.

“We are somewhere in the middle…which means a change in buying criteria,” Card said here Friday at the closing of the two-day conference presented by the University of Arizona’s Terry J. Lundgren Center for Retailing.

Luxury is making a slow comeback, Card said, citing a “climate for growth….No growth is not an option. You grow or you die.”

Jones’ growth is pegged to several factors, including innovating and reinventing core brands, such as Jones New York and Nine West, and acquiring labels such as Rachel Roy and the Robert Rodriguez Collection, which have the potential to expand, Card said.

In particular, Card pointed to Jones’ L.E.I. denim label, which he said was stalled doing volume of $65 million before it was reinvigorated by an exclusive with Wal-Mart Stores Inc. and the hiring of Taylor Swift as a spokeswoman, which resulted in revenue of $250 million in the first season.

Referring to the company’s recession challenges, Card said, “Our sales were down considerably last year, but our core brands have stabilized.” In February, Jones said it narrowed its fourth-quarter losses and issued a bullish sales forecast for the year.

Jones acquired a 50 percent stake in Rachel Roy about two years ago. During a question-and-answer session with Terry J. Lundgren, chairman, president and ceo of Macy’s Inc., Roy spoke about the difficulties faced by a small design house and the benefits of innovation through partnership.

Before the deal with Jones, Roy said: “Every two weeks, I didn’t know how I was going to pay my employees. Certainly, I would not be in business without Jones.”

Roy, who has dressed First Lady Michelle Obama, Oprah Winfrey and Kate Hudson, among others, said the partnership with Jones led to her Rachel Rachel Roy contemporary line exclusive for Macy’s, which allowed her to keep her design aesthetic at a more accessible price point. And Lundgren said it is Macy’s most successful contemporary line.

The necessity for innovation, a theme of the conference, was also a focus of Wesley McDonald, executive vice president and chief financial officer of Kohl’s Corp.

“We’ve doubled our size in six years and gone from a Midwestern company to a national company,” he said. “Our geographic expansion was one of the driving forces for innovation in merchandise content,” which is a prerequisite “to keep your existing customers and attract new ones.”

Exclusive national brands such as Simply Vera by Vera Wang, Daisy Fuentes, LC Lauren Conrad and Dana Buchman now constitute about 16 percent of Kohl’s business “and we expect it to grow over time as customers become aware of the number of exclusive brands” being offered, he said.

“You have to be innovative because what people want is constantly changing,” McDonald said, adding that fresh approaches to business get a big boost “when you have the money to do so.”

Increased penetration from private and exclusive brands helped Kohl’s, which has 1,058 stores, and is represented in every state except Hawaii, boost its gross margins and post a 28.3 percent increase in profits during the fourth quarter.

“If you innovate and invest, your stock price will take care of itself,” McDonald said.

Tom Julian, president of the Tom Julian Group brand consultancy, said, “Heritage and history are two major trends. Brands can take advantage of this now if they have it.”

“The future belongs to visionaries,” he said. “New experiences like lifestyle centers are changing the consumer’s perception of shopping, which changes the game for retailers.”

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