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Turning Up Fashion Volume to Compete

Makers have hit the fashion accelerator, keeping pace with trends seen in higher-priced lines, such as bright colors and bouclé jackets.

NEW YORK — Moderate makers have hit the fashion accelerator, keeping pace with trends seen in more expensive fashions and tuning in with bright colors and bouclé jackets.

Executives owe the more fashionable stance to an increasingly competitive environment, where stores are looking for differentiation and aren’t afraid to develop their own brands to get it. To meet this competition, the sharper fashion looks have been joined by a tighter hold on business and in some cases a major retooling of strategy.

With looks that generally retail for $20 to $30, the moderate market has always been characterized by razor-thin profit margins, but it’s big enough to amount to serious money for all involved. The total sportswear market, of which moderate-priced apparel is a substantial portion, grew 2.7 percent to $39 billion for the year ended May 31, according to STS Market Research.

“Inventory levels are so much more in line this year,” said Angela Ahrendts, surveying the moderate landscape compared with a year ago from her post as executive vice president of Liz Claiborne Inc., which markets moderate brands such as Axcess, Crazy Horse and Emma James.

Some retailers, such as Kohl’s Corp., got in an inventory bind last year and were forced to take a bottom-line hit to clear the merchandise. Kohl’s reaction to the glut — keeping a closer eye on inventories and preparing an offering of more updated merchandise — mirrors much of what’s happened in the overall moderate-priced arena.

“The product assortments are just so much stronger from a fashion perspective,” said Ahrendts. “Traditionally, the sector has always catered to a much more traditional consumer and I think a lot of the assortments got very commodity- or basic-driven.”

Precipitating the switch was pressure from both above and below, said Ahrendts.

“You take all of the mass guys and they’ve turned up the volume from a fashion standpoint,” she said.

Likewise, traditional department stores have spiced up their offerings with a focus on in-house brands, exclusives and more newness in the better-priced area, which saw the debut or relaunch this spring of several lines, including Jones New York Signature, Lauren by Ralph Lauren and Realities from Claiborne.

With a focus on moderately priced apparel, Kohl’s, along with Sears and J.C. Penney, are often referred to as national chains and taken separately from traditional department stores, such as Macy’s, which also sell higher-priced merchandise.

“The national chains were kind of getting squeezed in the middle, so they had to do something so they didn’t lose relevance,” Ahrendts said. “They had to aggressively evolve.”

Claiborne also had to evolve and last year revamped its moderate brands to have narrower and more updated assortments, she said.

The understanding that fashion doesn’t have to be constrained by price has come with a reevaluation of where moderate’s competition is coming from, said Lynne Coté, group chief executive officer of women’s moderate sportswear at Jones Apparel Group, which markets brands such as Bandolino and Norton McNaughton.

Until recently, Coté didn’t view better-priced merchandise as competition for the moderate brands. “Our competition was always other brands within moderate and now our competition is better and private label, so the playing field’s become more difficult,” she said.

The drive on the part of retailers to differentiate their selections, demanding vendors give them exclusive offerings, has also caused some upheaval.

“It has really, frankly, required an entire reengineering of the back end of these moderate businesses,” said Coté. “We’re having to spend our resources to support the design needs of 12 brands instead of four brands because everyone wants their own. I’m now making 2,000 samples a month just to get to market, where I used to make 150.”

Jones has used its financial and marketing muscle, as well as proficiency in the design and production of shoes and accessories, to meet this challenge.

One of the results is Bandolino, a better shoe brand that Jones has given a wider branding platform. Bandolino was moved into moderate sportswear last year and for spring will expand into denim, casual sportswear and dresses. A national advertising and marketing campaign is slated to help solidify and expand the brand’s image.

A wave of more sophisticated branding is sweeping moderate. Kellwood Co. is launching a national fall ad campaign for its stalwart Sag Harbor brand [for more on the campaign, see page 10]. O Oscar, which Kellwood produces under license from Oscar de la Renta, is also hitting the ground running for fall with an ad campaign that, along with de la Renta’s designer credentials, should help establish the brand in the moderate market.

Other moderate brands are going to have to pump money into marketing and advertising to keep up, while staying afloat will be harder for labels without a brand identity.

The laid-back Caribbean Joe line has had to evolve to continue its growth track, said Ken Sitomer, a principal at Apparel Holding Group, which markets the collection.

“What was 100 percent of our line last year is probably about 35 percent this year,” said Sitomer.

Caribbean Joe has branched out from its tropical theme for a more well-rounded sportswear collection that includes items like sheer fabrics and embellished knits and wovens.

The brand has worked to solidify its image by expanding into other product categories, with a suite of 12 licenses that includes swimwear, women’s accessories and home goods. Moderate brands often don’t develop such a fleshed-out licensed business.

This change in styling and branding cadence is increasingly making moderate look like its upstairs neighbor.

“The gap between moderate and better is closing in,” said Robert Rosen, chief executive officer of Bob Mackie Studio. “There’s tremendous growth potential for a brand right now that’s on target. It’s important to have the product, the price and the quality in conjunction with a recognizable brand.”

Price, the basic distinction of moderate apparel, might even be waning.

“Price point doesn’t seem to be that important anymore,” said Jack Weinstock, president of corporate brands at Intertex, which produces the Kikit label. “Some of the stores are moving some of the better lines into their moderate area. They’re taking better fashion approaches and putting them in the moderate area, and they’re looking to strengthen the moderate area.”

Moderate vendors are moving away from the time-worn practice of letting trends filter down from higher price points.

“Our point of view is to approach fashion at the same time that better does and the difference will be the price points,” Weinstock said.

Jamie Gorman, president of Only Nine, said: “People are really getting on top of the trends and are chasing the trend, but are also very anxious, waiting to see what the next trend will be.”

Buyers coming in for August market, she said, were looking further ahead, and into spring, than they were in the past. Hot styles, such as ponchos, broaches and flowers, are seeping into the moderate market almost as quickly as they are in the contemporary area, said Gorman.

One step closer to the end consumer, retailers are seeing the benefit of all the rejiggering in the lower-priced realm.

Boscov’s, a 41-unit moderate and better department store chain based in Reading, Pa., continues to chart growth in its moderate apparel business, said Tom Crystal, senior vice president and general merchandise manager.

“We’re seeing increases of about 6 percent in women’s moderate apparel,” said Crystal. “This customer is looking for value and style. It’s no longer just a pair of pants and a tunic top.”

Boscov’s, with annual sales of $1.05 billion, is delivering that value in part through an increased emphasis on private label goods.

“Moderate is a category that continues to become more important,” Crytal said. “Half of our sales floor is now moderate. We’re replacing some budget merchandise with moderate. I think, though, that the moderate landscape is shifting in terms of price point. What someone might have considered a better price point a few years ago might consider it a moderate price point today. This customer has always been savvy and the industry wasn’t paying enough attention to her.”

— With contributions from Rusty Williamson, Dallas