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The Vendor Evolution

NEW YORK — Call them the bread-and-butter brands.<br><br>They may not have the flamboyance of a designer collection or the hip quotient of a junior label, but moderate sportswear and ready-to-wear lines have found the right combination of...

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NEW YORK — Call them the bread-and-butter brands.

They may not have the flamboyance of a designer collection or the hip quotient of a junior label, but moderate sportswear and ready-to-wear lines have found the right combination of fashion and value to become a dominant force at retail.

The evolution of moderate lines from boring, cheap basics to a stylish look at a sharp price has been evident at major conglomerates like Jones Apparel Group, Kellwood Co. and Liz Claiborne Inc. to independent players such as Teddi of California, Requirements and Alfred Dunner.

The soft economy of the past few seasons has heightened shopper motivation for price bargain hunting, while still demanding better-made, more stylish product. The rallying cry from vendors —from Sag Harbor to Gloria Vanderbilt — are words like “update,” “ageless” and “modern” to describe their business strategies.

“Manufacturers and retailers are trying to develop a slightly younger attitude on moderate floors and they’re looking to bring more fashion to the consumer at moderate prices,” said Kathy Bradley-Riley, merchandise manager for sportswear at The Doneger Group, the New York-based buying office. “For the most part, we’re not talking cutting edge or contemporary, just modern and fashion-right. She wants newness and quality, but a fit that is appropriate to her changing body type.”

In today’s penny-pinching times, cross-shopping has become a way of life for women on a mission.

“The same woman that goes to Saks also goes to Target, so it’s not an embarrassment anymore that she might have only paid $29.99 for a skirt,” Bradley-Riley said. “It’s really about an ageless attitude.”

“It’s a price, not a look,” said Jack Gross, president of Gloria Vanderbilt, which was purchased by Jones in March. “This consumer responds to fashion more aggressively than ever before and in many cases, I think we as manufacturers held back by not being more fashion-driven. Within the last year, companies have realized this consumer is a lot smarter and wants to have the same looks and styles that are offered in the better [priced] departments.”

The moderate segment of the Jones business accounts for about 25 percent of $4.2 billion on projected 2002 sales. In addition to Vanderbilt and its offshoot Glo jeans line, those brands include Joneswear, Evan-Picone, Norton McNaughton, Miss Erika, Energie, Currants, Jamie Scott, Nine & Co. and LEI.

Stephen Ruzow, women’s wear division president at Kellwood, which houses major moderate vendors like Sag Harbor and Koret, as well as Vintage Blue, dress maker Sangria, Studio Ease and Dorby, said the bottom line is shoppers are looking for value.

“The Kohl’s of this world are growing and rapidly catering to this customer,” Ruzow said. “Designer customers are shifting down to bridge, better customers are shifting down to moderate. There seems to be a lot less reluctance on the shopper who’s going to Target, Wal-Mart and Kohl’s to pick up something there. The perceived value is a black skirt is a black skirt. People are spending less on their clothes and they are surprised by the value.”

So, while school-teacher looks like classic wool blazers and matching pleated pants might have been synonymous with moderate not too long ago, vendors in the category today feature whatever is happening and trending — ruffled blouses, peasant skirts and sand-blasted, boot-cut denim pants are just some of the recent offerings.

In their efforts to grab a share of this consumers’ disposable income, firms are addressing this desire for more style and fashion by launching new lines, as well as sprucing up the more traditional collections.

Uri Harkham, president of the Los Angeles-based Jonathan Martin, which produces dresses and Jonathan Martin Studio Sportswear, said moderate shoppers are looking for fashion more than ever before.

“The last six months, we’ve updated the collection. In the past, we really treated the misses’ business as a stepchild, but now we’re focusing on it,” said Harkham, whose company does more than $100 million. “This customer is ageless and really wants fashion. All the romantic and peasant looks are doing well with her. It’s misses’ sportswear with a kick.”

This year, Liz Claiborne launched the moderate and updated Axcess line at Kohl’s and Mervyn’s, while Kellwood will relaunch Bice as an updated, younger moderate label this spring. Also on board for spring are the following new arrivals:

l Leslie Fay will bring back its signature sportswear line as a younger, lifestyle-driven offering to compliment both its signature dress collections and its more mature Haberdashery line.

l Teddi of California will launch Strategy Inc., a moderate lifestyle brand geared toward a consumer 35 and older.

l Gloria Vanderbilt will launch Gloria, a more contemporary in attitude line, targeting the 25- to 35-year-old audience.

l Alfred Dunner will launch Hearts of Palm, also moderate and updated.

Pat Kinney, president of sportswear at Leslie Fay, which does much of its estimated $225 million in annual volume in the moderate zone, said its new sportswear line is for the woman who wants to be “on trend, but not trendy.”

“It’s what we call relaxed career, appropriate for the office but also for the weekend,” said Kinney, noting that this line will target consumers 45- to 50-years-old, while Haberdashery targets the 65-and-older audience. “Then we’ll do a segment of weekend wear with washed canvases and stretch denim.

“It’s all about lifestyle. Women today don’t just go career or casual, they buy a T-shirt and wear it under a suit. This line is a big diversion from where we were, it’s younger in attitude, updated and versatility is important. But we are keeping in mind who our consumer is and fit is important.”

Updated casual sportswear is the focus at Hearts of Palm, where wholesale volume is projected at $25 million to $30 million this year, with distribution in mid-tier department stores.

The lifestyle-driven line features an array of relaxed styles that still retain a dressy edge, increasing the versatility quotient.

“Hearts of Palm is relaxed, but it can certainly be worn to work,” said Pattie Pace, director of sales and marketing at parent Alfred Dunner, noting the line is catering to a “casual, updated woman” who’s between 35 and 55. “This woman has matured, had a few children, but is definitely not old-fashioned. And she loves to look fashionable. The things out there either look too young or over the hill.”

Wholesale prices don’t exceed $30, and most styles fall between $15 for a top and $25 for a jacket. Stretch plays a big role in the collection, and there are cotton and Lycra tops and stretch twill and stretch poplin bottoms. Among the styles featured are beaded tops, capris, safari shirt-jackets, festive Latin-inspired patterned tops and beaded bottoms, and novelty sweaters.

A less-relaxed career dress code is helping business at Danny & Nicole, a career label that’s projecting gains of 16 percent for 2002.

“Lots of companies are mandating that their employees dress up again. There’s a real move away from the casual Friday mentality,” said Kevin Zar, vice president. “Instead of seeing jeans and capris all over the offices, I think we’re going to see a return to softly interpreted structured styles, such as men’s wear influences paired with eyelet, crochet and femininity.”

Zar said the moderate category has become important in light of consumers’ extreme price consciousness.

“The consumer is so smart, educated and promotional-driven,” he said. “She looks for garments to hit the sales floor on sale. She doesn’t want to wait for anything to go on markdown. Retailers have trained the customer to think this way because they’re having so many markdown promotions. The moderate customer doesn’t want to pay more than $89 for a complete outfit.’’

Along those lines, Helen McCluskey, president of special markets at Liz Claiborne, which includes the brands Crazy Horse, Villager, Axcess, Emma James, First Issue and Russ, said companies, in general, are paying more attention to moderate sportswear because consumers are very price sensitive. The division generates roughly $400 million or 11 percent of Claiborne’s annual sales.

“It basically comes down to price,” McCluskey said. “There’s not a different taste level here. She wants all the same looks and styles as better [sportswear], but she has a smaller pocketbook. From a style standpoint, anything that is more fashion-forward is selling the best. We’re not in a cycle where basics are selling well. The customer is looking for newness and it has to be something that she really wants or needs.”

The challenge with producing moderate sportswear tends to be sourcing because price is so critical, said Lynne Fish, president of Jones’ moderate sportswear.

“We have to be in countries such as Bangladesh and Vietnam and really push the envelope…to source wherever the opportunities are,” Fish said. “You have to go where it is most advantageous to the price category. But we’re able to get a consistent quality because we can keep a factory 100 percent busy.”

Still, Fish said she thinks Jones has room to grow in moderate.

“We probably have a market share of 10 to 15 percent of moderate sportswear,” she said. “There are fewer and fewer players in this market, as Jones, Liz and Kellwood consolidate their efforts under large umbrellas to leverage operating costs so you can be more competitive. Leveraging yourself this way allows for the ability to pass on a better price-value relationship to the customer.”

The styles shouldn’t be too trendy, though, said John Henderson, executive vice president of Sag Harbor, adding that retailers have responded well to the updated look of the line. Analysts peg Sag Harbor to have annual sales of $500 million to $600 million.

“When we changed the line, we didn’t reinvent it. Just added subtle details, like more color and embroidery,” Henderson said, adding that the new Sag Harbor Sport division is also performing well, achieving about 25 to 30 percent of brand sales for spring.

“You have to be careful not to update to the point that you step out of your box. One of the challenges is the stores. In their desire to attract the younger consumer, they sometimes don’t maximize the customer that’s already there. You have to hit the fine edge of stepping over and staying there.”

Tapemeasure has also been reworked and, starting this spring, will go back to its related separates and wovens roots.

“People are dressing in a lifestyle way and we feel this is an updated look,” said Sally Foster, account executive for the New York-based line. “It’s taken a good 12 months to revamp the line to where we feel it’s an update, and we think this will increase business by about 10 percent. Reaction has been good and retailers thought the knits looked great.”

Meanwhile, companies offering faster, trendier looks like Biyaycda, Ninety, Susan Lawrence and Milano Ltd. have all reported healthy increases this year, concluding that fashion is selling.

Lisa Minardo, president of Biyaycda, said by taking the top trends from Europe and adopting them for the 35- to 50-year-old, she’s doubled her volume to an expected $40 million this year.

“We take the trends and interpret them for this misses’ moderate woman,” said Minardo, who shops London and Paris regularly for inspiration. “My forte is that I can look at anything and know what will sell. For instance, if suede is big, we’ll do a sueded look at this price.”

Jamie Gorman, vice president of sales at Ninety, a division of Central Park West, pointed to being able to turn merchandise quickly as one reason why they’ve experienced such a strong year. The company has factories in Brooklyn, which enables them to produce goods in three to five weeks time, Gorman said.

“We’ve added stretch wovens and blouses and the business is just growing,” said Gorman, adding the company does about $35 million in annual sales. “I believe our capability of just turning goods is really the strength.”

Ninety’s audience is “young misses’,” loosely meaning someone from 25 to 45 years old, so it’s not surprising that its best orders have been for peasant blouses with ruffled sleeves, asymmetric looks, slit tops and ruffled skirts, Gorman noted.

“Moderate used to be very traditional and dumb, but now it’s young and fun,” Gorman said. “But we don’t want to get too fast. People are looking for better prices and don’t want to spend too much on a fashion top.”

But fashion is what’s selling in this category, said Garry Bennett, vice president at Milano Manhattan, Ltd., a firm doing about $25 million in yearly volume.

“Everything that’s retailing points only to fashion. Basic merchandise is covered by mass merchants like Wal-Mart and Target,” Bennett said. “So more fashion is the answer and we emulate a lot of contemporary stores like Zara and Bebe and Cache, but designed to fit a misses’ customer.”

The bottom line is that the baby boomer consumer — the core moderate shopper — doesn’t dress the way her mother did at her age, companies theorize and, oftentimes, it is only her budget and not her figure or lack of style that dictates her wardrobe.

“This customer thinks young and if you don’t have the right product with updated styling you’re not going to make it,” said Ken Gilley, vice president of Susan Lawrence, a $30 million firm that has doubled its volume in one year. “We have people who have carried traditional bodies and when they come here and try our updated slinky bodies, they have double-digit sell-throughs each week.”

The challenge, Gilley said, is to convince retailers to take a chance on new merchandise.

“[Retailers] have been so conditioned to lay their dollars out six to nine months in advance that it’s challenging to get them to buy closer to need rather than through a crystal ball,” Gilley said. “I had someone in here wanting to look at fall 2003. But the matrix has loosened up, with retailers looking to differentiate.”

It’s been an active year for $175 million American Apparel Group, the Compton, Calif.-based parent company of the Teddi brand. Teddi served a traditional 50-plus customer for nearly half a century, but in recent years has seen its department store real estate deteriorate and customer base slip away. Despite spending several years trying to spit-polish the Teddi brand with a sleek ad campaign and updated looks, Stuart Weiser, chief executive officer, said he finally realized the label itself was an Oldsmobile.

“The customer just didn’t want to drive her mother’s brand,” Weiser said. “They couldn’t see a garment as ageless and hip if it had the Teddi label on it.”

In response, the company launched two new lines: Strategy, a contemporary-styled offering targeting 35-year-olds and up, and T & Co., an updated version of Teddi. By year-end, the T & Co. label will have replaced the Teddi tag.

Weiser has also begun moving some production out of the Far East to Mexico to cut lead times.

“We weren’t able to turn around and give the consumer what she wanted because we were working six to seven months out,” he said.

Net income will be up around 9 percent this year, mostly from bottom-line growth.

New York-based Requirements has also seen returns from a beefed-up design and merchandising staff and a concerted effort to be more nimble with trends.

Its strategies for being faster to market include honing in on a few factories that offer multiple services, paying closer attention to fashion cues from other categories and working more closely with retail customers.

“Our bigger merchandising team has allowed us to work big customers separately,” said president Marc Abramson. “We sit down with a store and tell them what we’re planning for our line. We find out what they want, what they’re already buying for private label. It alleviates duplication in the stores.”

The company, acquired in 2000 by the publicly traded Hampshire Group, is “working toward double-digit growth” after several years of single-digit increases, Abramson said. It has also shaved six to eight weeks off lead times.

Working closer to season — and saving money to finance reorders — has paid off for First Options. The $75 million company is on track to grow 15 percent this year.

“We ask our customers to save open-to-buy each season, although they always want to spend all their money,” said vice president Darren Cohen. “We don’t turn down reorders.”

The company will air-freight goods to restock key customers with strong sellers.

“The big companies own the collection department, so our strategy is to go after separate bottoms and jackets. to react faster than they can to trends,” he said. “We constantly challenge ourselves to deliver faster.”

Cohen said his designers look to contemporary firms like ABS and Laundry by Shelli Segal for direction in creating the “casualized career looks” he believes are driving the market. Taking a page from those vendors, First Options has dropped its pants rise by an inch and a half, added belts and more novelty pockets.

Cohen said the misses’ market should test goods more often in pre-season, mirroring a common practice in the junior market.

“We want to do more depth tests, but it’s hard to convince retailers, putting a substantial amount of merchandise in a few stores, whereas putting 12 pieces in 50 stores where it gets lost,” he said.

At John Paul Richards, the six-year-old firm that has grown rapidly into a $150 million business, the key is providing “wear now” pieces.

“For example, we don’t sell constructed jackets past March,” said Bertan Kalatchi, president of the Calabassas, Calif.-based firm. “We give her what she wants to wear that month.”

The company, which produces under the Studio JPR, Outfit JPR and Uniform JPR labels, has done well with activewear looks. But, with all the frenzy to be updated, Kalatchi cautioned moderate producers not to hurry past the customer. The company’s fall orders have been softer than expected, which Kalatchi blames on being too “fashiony.”

“We went a little too item-driven, a little too fashionable, and I think we ended up leaving some money on the table” in missed opportunities, he said. “You shouldn’t repeat your successes, but you have to reinvent them.”

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