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The Road Runs Out: Streetwear Adapts As Market Implodes

It's crunch time.

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It’s crunch time.

At the start of the decade, hip-hop was on fire. Record sales were booming, chart-topping artists seemed to pop up daily and the music generated a whole new fashion look. Musicians and producers like Jay-Z, Jennifer Lopez, Sean “Diddy” Combs, Beyoncé Knowles, 50 Cent and Eve were eager to extend their brands into apparel, spawning labels such as JLo by Jennifer Lopez, Rocawear, Sean John, House of Deréon, G-Unit and Fetish. The result was what seemed to be a newly formed urban women’s apparel sector, boosting the industry’s revenues by hundreds of millions of dollars.

Today, record sales are plummeting and many music artists’ lines are struggling. As hip-hop’s popularity has dropped, so has that of the apparel brands that rode the wave — labels like Deréon and JLo have gone through numerous reinventions; Liz Claiborne Inc. said it would stop production of its Lady Enyce brand beginning with 2009 deliveries; Pacific Sunwear of California Inc. continues to close its 154 D.e.m.o stores; Sean John stopped producing women’s apparel for the second time; rapper 50 Cent and Marc Ecko parted ways on the G-Unit brand (although rumor is they could be getting back together in some form), and independent urban specialty stores have either shuttered or scaled down. (See WWD List, page 16.)

Perhaps part of the reason for this is that hip-hop had to become more mainstream in order to grow — focusing less and less on urban specialty stores and more on department stores such as Macy’s and Dillard’s. That in turn alienated those consumers who wore it because the look was considered to be cutting edge. Now, once-notorious rappers like LL Cool J are doing collections for retailers like Sears, which will introduce an LL Cool J-branded junior, young men’s and children’s wear for back-to-school selling. And even at their height, these brands often wrestled with the “urban” identification, fearing it would turn off consumers and insisting on being called “streetwear.” Now even that is seen by many of them as pejorative, as they recast themselves as junior or contemporary brands.

In the women’s category, brands like Baby Phat, Southpole, Akademiks and Apple Bottoms continue as top labels in the junior market. Their secrets of success are clear — they’ve evolved with their customers, integrated themselves into the mix of other junior brands in department stores and changed with the trends. And that gives vendors and retailers hope the urban market hasn’t gone away but is simply smaller and more focused — and going by another name.

“This girl really is not as brand driven as she used to be, she is more item driven,” said Aaron Jones, merchandising manager at drjays.com. “That’s why it’s harder than ever to break into this market as a new brand.”

Jones said Deréon, Apple Bottoms and Baby Phat remain best-selling brands for the site, but the company has also launched two other sites, DJPremium.com and StreetSwag.com, in order to capture a new customer base and gather a larger cross section of shoppers.

“We are doing really well with brands like Miss Sixty, Creative Recreation and True Religion on DJPremium,” Jones said. “I think it works well since our customers always like to mix up their looks with an H&M shirt, Akedemiks bag and True Religion jeans. They will pay a higher price for those premium jeans.”

Jones said StreetSwag.com, which sells more street-skate-inspired brands such as Cheap Monday, Famous Stars & Straps and Tokidoki, has been a bit of a challenge since it has become so well known for its hip-hop-inspired wear.

The key to success in the industry as a whole, said David Strumeier, vice president of marketing, licensing and new business development for Wicked Fashions, is to constantly evolve and grow with the customer. The company, which produces brands such as Southpole and Lot29, decided to rush to do just that last year when it launched Southpole Collection, a dressier, slightly higher-end label to fit the needs of girls looking for clothes to wear after school or work. This brand, he said, has been successfully growing at retail and now sits in a range of mainstream retailers including Mervyns and Sears.

“No one wants to deal with a shrinking industry and, for us, the industry isn’t shrinking because we go after other opportunities in the junior category,” Strumeier said. “We have been fortunate enough, as hip-hop starts to tail off, to see opportunity for other areas in the industry. Urban today is a lifestyle. It is not just assigned to the ‘hood or inner-city anymore. It is a lifestyle that has been accepted by Gen-X and Y. It encompasses celebrity, entertainment and sports. There has been a massive shift over the past 15 years from an inner-city image to an entire lifestyle transformation. We have been working to ensure that our product represents that transformation.”

For James Ferrell, vice president of marketing at Apple Bottoms, the brand backed by rapper Nelly, new consumer buying habits have forced the company to adapt. Part of that change came with the launch of Apple Bottoms Signature, a higher-end label selling premium jeans which retail for up to $175. It’s because of changes like these the brand has begun to enter the department store segment — Apple Bottoms will open 26 Macy’s shop-in-shops this year, Ferrell said, beginning with the Herald Square flagship on July 10.

“We have changed the way we think about design in order to go after that crossover customer,” Ferrell said. “We’ve really worked to branch into capturing a more diverse customer base.”

At Rocawear, which will celebrate 10 years in business in 2009 — a major milestone in a market known for notoriously short-lived labels — Alicia Galitzin, vice president of merchandising, said she has seen the urban market come full circle.

“The key players are moving around and some are even disappearing,” she said. “It’s because it used to be all about branding and not so much about the product. Now that’s switched and it’s not so much about wearing all one brand. At the end of the day, it’s about the fabric and the fit and hitting the trends of the moment.”

Galitzin said that as the customer has become more online savvy and even more aware of what the celebrities in magazines like Us Weekly are wearing, it has become even more important for a brand like Rocawear to pay more attention to trends and less attention to logo-driven merchandise. Simone Berry, creative director at Signature Apparel, the licensee for Rocawear juniors and Fetish brands, agreed.

“There have been changes in the lifestyle so the fashion has to follow,” she said. “Girls today are inspired by rock music and celebrities like Nicole Richie and the Olsen girls. We have this whole boho chic thing happening.”

Berry is currently working on the relaunch of Eve’s Fetish brand, which will hit stores for holiday. That line, which used to have a clear hip-hop-inspired vibe, has a fresh new contemporary look with jersey dresses, leather blazers and motorcycle jackets and premium denim jeans.

Bernt Ullmann, president of Kellwood Co.’s Phat Fashions, said the Baby Phat brand’s racially and economically diverse customer base mixed with its fashion-savvy product offerings have secured them into Macy’s stores with its own shop-in-shops on the junior floors. Today, the brand has one of the larger shops on the floor, sitting next to mainstream junior labels ranging from DKNY Jeans to Guess and Rampage.

“Our girl is moving and it’s our job as a brand to evolve with her,” Ullmann said. “We have been very fortunate in a tough economy. Our numbers are ahead of plan and our business overall is up dramatically. Part of the reason for this is Kimora’s [Lee Simmons] tremendous understanding for what works and what our girl resonates with.”

With that said, Ullmann said the closings of specialty stores in the sector are of concern, but as long as they continue to evolve with the customer, they should be fine. One recent sign of this evolution was the launch of the KLS Collection, a higher-end contemporary line sold at specialty stores like Scoop. Ullmann said that while the distribution for KLS is kept tight, the brand serves as a “halo for everything we do” and gives the Baby Phat brand a boost in making the customer feel even more prestigious when they wear it.

While the Akademiks brand also continues to thrive and gather even more crossover appeal, founder and creative director Donwan Harrell said he is concerned about the specialty store closings happening across the board in the urban segment.

“D.e.m.o was a huge account for us, so now we have to put more effort into Macy’s and we are going more heavily toward the department store business because there is more money there,” he said. “But across the board, because the market has become less collection-driven and more item-driven, stores are being more safe about what they buy. This isn’t good for us since we would much rather sell an entire collection. We are forced to be safer about what we buy to make these items.”

PHOTOS BY TALAYA CENTENO. MODELS: NICOLE FISCELLA AND ISIS VALDEX, BOTH AT NEW YORK MODELS; HAIR BY PETE LENNON AT DE FACTO FOR REDKEN; MAKEUP BY MISUZU MIYAKE USING MAKE UP FOREVER; FASHION ASSISTANT: DANA COVIT; STYLED BY KIM FRIDAY

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