As chief executive officer of Sara Lee Branded Apparel, Lee Chaden oversees a $6.45 billion business with 55,000 employees, marketing some of the world’s best-known apparel brands including Hanes, Champion, L’eggs, Playtex, Bali and Wonderbra. In fact, apparel — not cheesecake — is the biggest line of business at the $19.6 billion Sara Lee Corp., the parent company where Chaden also serves as executive vice president.
“We think of ourselves as a branded consumer product company, and that thinking certainly applies to our apparel business,” said Chaden, who in his presentation focused on innovative strategies vendors and stores can pursue to exploit robust brands in today’s evolving retail environment. At Sara Lee, for example, that’s meant working with a powerful mass retailer such as Target to create a new brand called C9 by Champion, an exclusive label for that retailer that leverages the Champion name.
“Not long ago, a good manufacturer’s brand could not get enough business out of one account to justify exclusivity to one retailer,” said Chaden. “This is where the scale of today’s retailers is changing the game.”
Through the continued consolidation of traditional retailers, there are now a handful of companies vying for dominance in the retail marketplace and, as Chaden pointed out, these titans are constantly looking for new ways to build customer loyalty and reduce reliance on price promotions through differentiated product and brand offerings. “It was Target’s scale that made this program economically viable for us to pursue,” noted Chaden. “And we believe that you’ll see more manufacturers’ brand offerings tailored for particular retailers.”
These partnerships are especially attractive to vendors, given the efforts by large retailers to circumvent national brands by developing brands of their own, either via private label programs or through exclusive licensing deals for names such as Cherokee and Mossimo at Target, Martha Stewart at Kmart or White Stag at Wal-Mart. “I would say that we are very selective in terms of our decisions to venture forward in this area, but we are also very realistic that this is a way to take retailers’ scale — which a lot of people on our side of the table are saying is a threat — and turn it into an opportunity,” observed Chaden.
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Of course, maintaining the integrity of the core brand is central to any brand extension, cautioned Chaden. That concern was an important issue in transforming Hanes — “America’s brand,” in Chaden’s words — into a tiered label with distribution in the mass, midtier and department store channels. So, while Wal-Mart carries the core Hanes product, Kohl’s and Sears offer Hanes Classic, and May Department Stores stocks Hanes Ultimate, shoppers in all three channels can recognize the Hanes DNA in the various products.
“Notwithstanding the unique packaging and somewhat differentiated product offering, it all has the look and feel of the iconic Hanes brand and delivers on the basic Hanes promise of comfort, authenticity and value,” said Chaden, adding that the brand was undergoing a major relaunch this spring, with cleaner packaging and new celebrity-driven advertising. (He wouldn’t reveal any names.)
Tiered brand strategies, such as the one used by Hanes, are increasingly popular because they allow different kinds of retailers to benefit from a single powerful brand name. “From a retailer’s point of view, Hanes has helped drive sales and traffic by bringing product innovation to categories that were previously considered relatively mature,” said Chaden.
Case in point? Hanes’ tagless T-shirts increased the company’s T-shirt business by double-digit percentages in the 12 months following their launch and improved the overall category by 8 percent in the same period. “This was something that was very good for us, but also very good for our retail partners,” said Chaden. “The bottom line is, we are giving our traditional retail partners an important vehicle to compete directly with specialty stores that obviously don’t carry the Hanes brand.”
Specialty stores such as Gap and Victoria’s Secret have become dynamic brands in themselves — and powerful competitors for traditional retailers and manufacturers’ national brands. “There’s no question that the store as brand is here to stay. It’s likely to grow, and it represents an ongoing challenge for department stores, midtier chains and mass retailers,” noted Chaden.
Still, Chaden is confident that tried-and-true vendor brands will continue to thrive in the new retail landscape — particularly because of the difficulty in building competing brands from scratch. “To quote the President — it’s hard,” said Chaden dryly of competitors’ efforts to create powerful, enduring new brands. “Secondly, brand-building is expensive and getting more so. Media are highly fragmented and reaching consumers with your message is harder than ever. So brands that have been around for a long time, that have strong equity and have kept that equity relevant, are more valuable than ever.”