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NEW YORK — The better sportswear category has become the newest cool hangout, attracting some of the most chic names in fashion to its broad confines.
Designers such as Calvin Klein, Marc Jacobs, Michael Kors, Oscar de la Renta, Nicole Miller and Ron Chereskin are looking to better sportswear as a way to build their brands and attract a wider audience in these cash-conscious — yet style-conscious — times.
Bud Konheim, president and chief executive officer of Nicole Miller, which will launch a better-priced sportswear line next spring, said, “That is what prestige has become. It’s not dressing the princess of Brunei, and [designers] who are respected are people who are able to capture a wide audience.”
New entrants staking claims in the better realm, though, are finding themselves in a shifting landscape. The Lauren by Ralph Lauren better label, which last year pulled in $548 million in sales for Jones Apparel Group and is at the center of a legal battle between the company and Polo Ralph Lauren Corp., has reverted back to Polo, as reported. The development left the valuable square footage previously earmarked for Lauren in department stores open for discussion.
While Lauren, to be produced by Polo, is moving quickly to keep its space without skipping a beat, the competition will include a new better-priced Jones New York Signature line. Calvin Klein, now owned by Philips-Van Heusen, is entering the better arena through a licensing deal with Kellwood Co., as reported, while Kors’ name has come up in reported talks for a similar project with Jones. De la Renta, meanwhile, is said to be negotiating with J.C. Penney Co. on a moderate-to-better sub-brand.
The sluggish economy is making the fight for better all the more fierce. The unemployment rate rose to 6.4 percent in June and the Federal Reserve Board’s Monetary Policy Report, submitted to Congress last week, began by describing the U.S. economy during the first half as “subpar.”
Against this backdrop, there’s a developing philosophy in the fashion world that those who stick to the notion that designers should only do designer-priced clothing might be left in the dust. Design has become democratic, observers said, and can be found from affordable venues like Target and QVC to the bastions of Bergdorf Goodman and Barneys New York.
“Why should fashion be barricaded by a price?” Jeffry Aronsson, chief executive officer of Marc Jacobs International, asked recently.
Aronsson was specifically discussing Jacobs’ move to a better-priced line, a third tier in his growing empire, but his remarks also signaled the breaking of barriers and a focus on the mainstream market from a range of designers and brands. Even Jacobs himself, whose designer collection retails in the thousands of dollars, discounted the idea that an affordable line would take away from his signature collection.
“I’m really into it and I don’t think it would negate anything,” Jacobs told WWD in a story in June. “What we’ve found was the customer who wears the designer line also wears the [secondary line] Marc by Marc and it kind of had an appeal on its own. So why would [this new line] be any different?”
Robert Duffy, president of Marc Jacobs, said last week he hopes to have a deal signed to license the better-priced line before August, with the collection ready for retail by the second-half of 2004. Industry sources have said two U.S. firm are in the lead for it: Jones Apparel Group and Kellwood Co. If that deal is struck, sources have estimated Marc Jacobs’ men’s and women’s apparel business could produce annual wholesale revenues of more than $200 million.
“We’re still negotiating with a couple different people and it’s progressing, but nothing is easy when you have a large corporation behind you,” Duffy said. “Everyone is into the idea, and Marc and I have wanted to do this for years. It’s just a matter of getting everyone on board with the partners and that’s what’s taking the longest. LVMH has never done something like this before as a luxury group, but Marc and I want to do more and we’re doing it.”
Duffy said he and Jacobs have been busy discussing the concepts and all the possibilities for this new line, which include its own stores. He spoke of everything from fragrances, to makeup and interesting packaging as opportunities to fill out the better brand.
“I’ve already scouted out the locations for the stores, and in New York, I would do uptown. I think it would be cooler for this line to be uptown [than downtown],” Duffy said. “And I want it to be a whole sportswear base, not just all jeans or denim, but what real people wear. This line won’t be about an age, but a price. It’s going to be Marc Jacobs designing a line at this price. I don’t get these categories like better, bridge, blah, blah, but we’ve wanted to do this since the beginning.”
The attraction to the better market, noted Duffy, is its money-making potential.
“When Marc by Marc launched, it was launched in the same store [as the designer line] and it has grown by leaps and bounds,” he added. “It has probably doubled or tripled its volume.”
According to STS Market Research, the overall women’s sportswear market rang up sales of $38.8 billion in 2002, of which the moderate and better areas make up the lion’s share of volume.
Retail consultant Andy Jassin of Jassin-O’Rourke, said the reason all these designers are suddenly gravitating toward better sportswear is that consumers are looking for value and identifiable trademark brands wherever they shop.
“Because of all the discounting that’s going on, it’s difficult to survive at the top tier only and yet that’s where people develop their notoriety,” Jassin said. “Often, designers develop their following at the couture levels, but in essence the size of the market is very small. From a purely economic standpoint, it’s apparent that better or moderate sportswear affords the opportunity for these brands to expand to where more customers exist.”
Jassin reasoned that diffusion lines are good ideas if designers stick to a smart strategy and not compromise the standards set by the upstairs brand.
Dan Shamdasani, president of Public Clothing Co., which holds the license for the better-priced Perry Ellis line, noted that over the last few years there’s been a major influence of design which has transcended many industries — take the Volkswagen Beetle, W Hotels, Jet Blue Airlines and the iMac, for instance.
“The common denominator is that it has to have good design and good value,” he said. “In apparel, the designer and bridge areas are still inaccessible to a large population and the better zone is the perfect area to do business in. There are a number of companies coming into the area and the ones who execute the best will win. The trick is to do it in a proper manner and keep each business pure.”
Frank Doroff, executive vice president at Bloomingdale’s, said he is looking for new labels for better sportswear, an area which is now dominated by big brands like Liz Claiborne, Jones New York, City DKNY and AK Anne Klein.
“We need new ideas, new resources, new thinking,” Doroff said. “But it’s all about the product. I think it’s great that there will be so many new entrants and the name on the product certainly does not come close to ensuring its success. But it’s still about the product, product, product, and can they come up with the concept. Obviously, Marc Jacobs is great and one of our best-selling lines, and if he can come up with something fresh, then terrific.”
Doroff said a lot of established better players would lose ground if all these new entrants succeed — as there’s only so much pie to go around.
“In the better sportswear arena, you could see some people falling off the map,” he said. “But a lot of these things aren’t that easy. You take the price level down and sometimes the clothes don’t live up. It helps if the product is good. I’d rather have great product with no designer name than vice versa.”
Jane Elfers, president and ceo of Lord & Taylor, said she thinks these new entrants into better will be positive for the chain’s customers, since better-to-bridge sportswear is the core of the store’s assortment.
“It will really energize the better sportswear floors, which are in need of energizing, and give the customer a reason to shop for better apparel,” she said.
On the other side, Robert Burke, vice president and senior fashion director, Bergdorf Goodman, said there’s something to be said about designers like Chanel and Manolo Blahnik who have never stepped out of the designer realm.
“It’s the fact that the name is held in the highest esteem,” Burke said. “Meaning if it’s a Chanel or Hermès, it means something to our customers. I am not saying you can’t go there, but I feel strongly that it means something to our customer. Look at Manolo Blahnik. He’s never done anything but at a certain price, whether that customer has bought Manolos all her life or she’s young and saved up, it means something. There’s a name there.”
Still, Burke said he thinks this pool of new designers looking at better have a lot to bring to this market, which he described as stale and “less than inspiring.”
“It’s rather positive in that sense,” he said. “But it changes the perception for the designer consumer. I can see why they’re doing it and it could be quite successful. But there might be the idea that all of a sudden, if someone like Manolo starts doing a $200 shoe, then the $400 shoe doesn’t have the same sort of cachet.”