In the U.S. and abroad, the brand communicates its aesthetic in the language of retail.
This story first appeared in the September 3, 2008 issue of WWD. Subscribe Today.
Some 800 stores worldwide carry a Calvin Klein nameplate, but only a handful are owned by Calvin Klein Inc. — with the 20,000-square-foot Collection flagship at 654 Madison Avenue in New York being the jewel in the crown.
CKI’s retail expansion has been slow and measured as the company waited for a concept it felt comfortable expanding, searching with laserlike precision for sites, not unlike the clean, flawless lines the brand strives for in its designs.
The company made no investment in stores between 1995, when the Collection flagship bowed, to 2007, when it opened five better sportswear (or white label) stores in the Beverly Center in Los Angeles; Lenox Square in Atlanta; Cherry Creek in Denver; The Mall at Partridge Creek in Bloomfield Hills, Mich., and Natick Collection in Natick, Mass. Today, there are 10 units.
If the store concept proves to be a success, CKI plans to turn white label into a 100-door chain. The company has singled out cities and regions such as metropolitan New York; Boston; Miami; Orlando, Fla.; Las Vegas; San Francisco; San Diego; Dallas; Houston; Chicago, and Scottsdale, Ariz., for possible openings.
“We feel that this could be a significant opportunity, but plan to use the next year to tweak and make adjustments to that retail concept before we open more doors in the U.S.,” said Tom Murry, president and chief operating officer of Calvin Klein Inc.
“The game plan in the U.S., now that we’ve taken the brand back in-house, is to build a retail network,” said John Walsh, president of Calvin Klein U.S. retail, adding there won’t be a decision about opening additional Collection freestanding stores for a few years. “The other piece of it is that there was really no infrastructure established for running a retail business. For the last five years, we’ve been building that. We started with three people, myself and two others I brought from PVH, and we built a team of 90 today.”
The white label stores are important because PVH hopes to grow the CKI business by an incremental $2 billion to $3 billion worldwide over the next five years, making it into a $7 billion to $7.5 billion global powerhouse. Total global retail sales volume for 2007 was $5.4 billion.
Calvin Klein has generally preferred to pass on or share the risk of operating retail businesses with partners or franchisees. The one area in which the company has opened multiple stores is its outlet business. Calvin Klein was something of a pioneer when it opened one of the first factory outlets in Secaucus, N.J. There are now 85 outlet stores, and a Calvin Klein spokeswoman said, “We’re still opening them.”
Unlike in the U.S., Calvin Klein hasn’t been timid about putting up nameplates overseas, with partners or licensees opening hundreds of freestanding stores. Clearly, it’s necessary to enter certain countries such as China and India with a partner, as the company did in India last year through a license with Murjani India Ltd.
“The Asia-Pacific region has become increasingly important in the last decade in terms of the brand’s buoyant international expansion outside the U.S. market,” said Edith Chen, senior vice president and managing director of CKI. “In the region, sales have leaped almost 150 percent over the past five years, excluding Japan.”
South Korea, Taiwan, Japan and Hong Kong have traditionally been the biggest markets for Calvin Klein. In addition to China, CKI is optimistic about other emerging markets such as India and Vietnam.
Another storefront, if you will, is CKI’s e-commerce site, which launched in late August. “It’s definitely something the consumer is looking for,” said Walsh. “They expect the experience of going to the Web site. They shop the store, shop the site and shop the store. We see it as a fairly large revenue opportunity. We are planning for it to be twice the size of a specialty retail store in terms of sales volume. We have 1,400 sku’s and will be adding more to that.”