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Raising the Heat in Arizona

NEW YORK — It’s getting sexier in the heartland. <br><br>J.C. Penney’s Arizona brand, with its low-slung hip-hugging jeans and bare-belly looks, has a less-layered approach this season, reflecting an ongoing buildup of design talent...

NEW YORK — It’s getting sexier in the heartland.

J.C. Penney’s Arizona brand, with its low-slung hip-hugging jeans and bare-belly looks, has a less-layered approach this season, reflecting an ongoing buildup of design talent at the chain.

For the past year, Penney’s has been slowly but steadily luring design talent to its Plano, Tex. headquarters. The process is about halfway there, with 17 designers recruited so far, mostly for Arizona, Penney’s best-known brand.

About another 17 are expected to be recruited over the next year to modernize Penney’s other top in-house brands: St. John’s Bay, Stafford, Worthington, Delicates and J.C. Penney Home Collection. About 150 candidates have been interviewed so far, primarily from New York, Los Angeles, Miami and the Dallas areas. St. John’s Bay, for example, is now seeking to appeal to a narrower demographic of ages 35 to 54, and hopes to expand the design team from the current staff of five.

Currently, the biggest in-house brand is the J.C. Penney Home Collection, which has sales in excess of $1 billion a year. Arizona is second and St. John’s Bay ranks third, at around $800 million.

The most work has been done within Arizona, where fashion items and higher prices have been added to the denim-driven collection and the marketing is more focused on ages 17 to 24. For example, jeans with more fashion are priced at around $36, while the core jeans are priced at $19.99. There’s also a middle price rung of $24.99. Advertising has been stepped up, with key placement in Vibe, Maxim, Seventeen, ESPN the Magazine, Sports Illustrated and Cosmopolitan. Fifty percent of Arizona’s apparel volume is in jeans; the other 50 percent is knit and woven tops and outerwear. Juniors is doing extremely well for Arizona, including stretch jeans, lace-up jeans and ankle-slit styles.

At Arizona, some categories were dropped, resulting in a volume decline to around $900 million at retail this year, from $1.2 billion last year. But Penney’s doesn’t mind: Arizona’s got attitude and a more competitive spirit. “It’s not about the volume,” stated Peter McGrath, Penney’s senior vice president and director of private brands, formerly with Izod. “It’s about sales velocity and turn, which drives gross profit, and staying focused.”

This story first appeared in the October 29, 2002 issue of WWD.  Subscribe Today.

McGrath also said it’s possible that Arizona ramps up in volume again, as products could be reinstated within a season or two once they’re overhauled.

To some extent, Penney’s is playing catch up with other retailers. In the Nineties, Limited Inc. and Federated Department Stores put together design teams in New York, where the pool of talent is deepest, to create proprietary products, rather than relying on knocking off market offerings. More recently, May Department Stores established a design team here for the same purpose and started showing trendier, updated product for this fall. Sears, too, also has been revising its private label strategy, introducing the Covington label this fall.

At Penney’s, “About a year ago, Allen challenged me to raise the bar on private label, and focus on creating a trend-right fashionable product,” said McGrath, referring to Allen Questrom, Penney’s chairman and chief executive. The company had been copying, rather than creating, product. Another key hire was Jeff Bergus, corporate product develop director, Arizona Jean Company, to sharpen the Arizona point of view.

“I’ve been really pleased with our ability to attract people to Dallas,” McGrath contended. He cited a post-9/11 mind shift where more designers “are apt to go for lifestyle changes or changes of scenery. We haven’t had the problems in attracting the people I thought we would.”

According to Bergus, the biggest challenge in the first year of revamping Arizona, was giving the label’s five divisions the same point of view and look in merchandising, graphics and packaging. “It was all over the place,” he said. Also, “Arizona wasn’t appealing to younger consumers. We were about a year behind on trend and really had no vision for the brand.”

He described the label as hipper, sexier, and current to where other teen brands, such as Polo Jeans, American Eagle and Abercrombie & Fitch, are. “It’s about the tomboy who is going to be the homecoming queen,” he added. “It’s not the pretty boy and pretty girl look…. I don’t think it’s on the edge. I think it’s trend right. People are looking for newness and willing to pay the price for newness.” Their closets are filled with “the basic dumb five-pocket.”

Arizona remains denim and casual-driven, with key items being jeans, in vintage looks with a modern twist, varsity looks, baggy fits, and tinted to look a little dirty. Prices are somewhat higher. “The average jean was around $21.99 out the door,” but will be higher with this season’s introduction of jeans priced in the $30 range. That could make up for some of the volume decline, which is seen for another six months. Some of the discarded product could wind up under different house labels. “We backed off a lot of categories, in home, accessories and boys merchandise,” McGrath said.

Arizona currently does a huge juniors jewelry business, and was once in belts and handbags. Belts are being tested in three stores, for a possible return to that business.

“Arizona is going well,” McGrath said. “I really enjoy hearing that we are selling fashion. The biggest challenge with some of the buying team was to get them to try some fashion items.”