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NEW YORK — Underscoring the increasingly competitive atmosphere among Seventh Avenue’s major apparel forces, Liz Claiborne Inc. said late Tuesday that it had begun testing a new method of distributing collections to Federated Department Stores, one of its key retail customers.
The new system takes much of the logistical work out of the showroom buying process — working out ratios and quantities in advance over the Internet — with the ultimate aim of improving margins and full-price sales.
Dubbed LizPlanning, the program has been tested on Liz Claiborne branded spring merchandise with Federated, which jointly described the launch in a statement as “a new business model that could revolutionize the way manufacturers and department stores work together.” The system combines Claiborne’s proprietary “micro-merchandising” philosophy with a third-party vendor’s technology that enables the companies to communicate their merchandising plans for the season online several weeks in advance of a traditional market appointment.
In layman’s terms, LizPlanning is expected to enable Claiborne and Federated to get the numbers side of the business out of hand before buyers ever actually see a collection in person by exchanging their orders and proposals online. But there are other components to the process internally developed by Claiborne that eventually could tailor assortments by department store doors with a much greater understanding of local demographics and psychographics than ever before in the world of high-volume apparel, right down to the number of size 10 dresses that should be ordered for a Macy’s in New York City to a Lazarus store in a mall in Cincinnati. The ultimate goal is to sell more of those dresses at full price.
Seventh Avenue’s major players have been on a big technology kick in recent years, as the chief executive officers of Jones Apparel Group, VF Corp., Kellwood Co. and Claiborne have all repeatedly stressed the importance of their investments in technology and, given the current combative state of affairs for better and moderate floor space in a downtrodden market, it would be difficult not to read some crowing in Claiborne’s announcement of its achievement and the tie-in with big-fish Federated, which operates Macy’s, Bloomingdale’s, The Bon Marche, Burdines, Goldsmith’s, Lazarus and Rich’s-Macy’s.
Although the software involved, 7th Online’s Collaborate, is available to any company interested in buying it, Claiborne’s proprietary methods of micro-merchandising are not, and the company also has commenced plans to introduce LizPlanning at Saks Inc. and May Co. stores, and eventually for all of its brands, said John Sullivan, chief information officer and senior vice president of information systems and technology at Claiborne.
“What separates the landscape of winners and losers is the business practices that surround the softwear,” Sullivan said. “The success is not in the concept, but in the execution. Nobody can do this because there’s a couple of dynamics involved — the volume of data that you need to be able to digest and make meaning out of it, and to do that requires some substantial investments in technology. We’ve already cemented that and this is a wonderful place to find ourselves.”
Claiborne and Federated have worked for more than a year on developing the model, basically “getting under each other’s hoods,” Sullivan said, describing how Claiborne ceo Paul Charron and Federated ceo Terry Lundgren agreed to make a lot of internal business practices available to better understand the overall buying process so that it could be automated. This will leave both companies with more time to focus on future plans, rather than debating numbers when they meet in person.
“Under the current model, we would come into market and buyers and sellers would begin to exchange proposed units and financial plans, often for the first time,” Sullivan said. “Or at least they had not consistently agreed on what were their mutual goals. Consequently, the moments we spent together were all too operational and not strategic enough. In the new world, using wireless and handheld PCs, buyers will be moving from showroom booth to showroom booth as they are refining an order and stretching business opportunities.”
As for the additional components that relate to micro-merchandising, Claiborne’s own softwear uses the retailers’ point-of-sale information to examine consumer purchasing patterns and size preferences, then recommends size assortments that are aligned with each store’s specific needs by door and classification. Some companies have manually studied these numbers in the past, but the sheer volume of stores and units sold have made it difficult to analyze sales in less-than-general terms.
“This is much more reactive,” Sullivan said. “It is interpreting and reacting to trends in the market, and understanding the affinity between the design inspiration and the consumers that shop that store.”