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This story first appeared in the March 30, 2010 issue of WWD. Subscribe Today.

ENCINO, Calif. — First Kohl’s and Avril Lavigne, then Wal-Mart and Miley Cyrus, and recently J.C. Penney with Mary-Kate and Ashley Olsen. Now, it’s Kmart’s turn to rejuvenate its juniors department with Selena Gomez.

Gomez, the 17-year-old star of Disney Channel’s “Wizards of Waverly Place,” is taking the fashion line she’s launching for back-to-school exclusively to Kmart’s 1,327 stores across the U.S. and in Puerto Rico. With retail prices capped at $24, Dream Out Loud by Selena Gomez will play a central role in Kmart’s strategy to double the size of its juniors section, where the company will weed out lesser-known labels, introduce new brands and create a shopper-friendly space. Gomez’s team is dreaming big: Retail sales are projected to hit $100 million in the first year.

“She will be the centerpiece of the juniors business and hopefully add credibility to the apparel business in the whole Kmart store,” says John Goodman, executive vice president of home and apparel for Sears Holdings Corp., the Hoffman Estates, Ill.-based parent company of Kmart and Sears, Roebuck and Co. “This is part of the plan to revamp and revitalize the apparel business at Sears and Kmart.”

To fulfill that plan, Kmart is taking a page from rivals such as Penney’s, Kohl’s and Wal-Mart, which all have snared exclusive apparel deals with young celebrities. It’s also tapping the trend-right styles and bargain prices that have catapulted fast-fashion retailers including H&M and Forever 21. Gomez, who is of Mexican descent and hails from Grand Prairie, Tex., hopefully will appeal to Kmart’s sizeable Hispanic customer base.

“It’s going to attract the junior customer,” Goodman predicts of Kmart’s new approach. “Our competitors have done a really good job in having exclusive brands. That will be an important part of our strategy going forward.”

Kmart is no stranger to celebrity endorsements. Actress Jaclyn Smith has sold everything from cashmere sweaters to oven mitts bearing her label at Kmart for 25 years; model Kathy Ireland’s name has been branded on stately furniture, and domestic doyenne Martha Stewart was a fixture in Kmart’s home department until her contract ended last January.

In the juniors section, Gomez’s name will be the most famous, her designs the most feminine. Kmart’s current junior selection includes $19.98 crinkled skinny denim by Glo Jeans, Piper & Blue’s $16.99 white Ts that have been shredded in the back and paired with removable chain necklaces, and $19.99 hot pink oversize cardigans by Route 66.

Goodman says that, as part of the juniors department’s makeover, Kmart will cease offering Piper & Blue this fall and convert Route 66 to a contemporary women’s resource. Dream Out Loud will claim prime space on the retail floor in juniors and throughout other sections such as shoes, socks and fashion accessories.

“I was completely thrilled when he told me that,” says Gomez of her reaction to Goodman’s plan for the brand.

Gomez unveiled Dream Out Loud last October with Cynosure Holdings, the New York-based branding and licensing company that runs the label. But Cynosure had been searching for a retailer to pick up the line. Kmart inked the deal, which can be renewed on a yearly basis, two weeks ago.

Wearing Dream Out Loud’s off-the-shoulder fuchsia T-shirt, dove-print tank top, black leggings and tan cowboy boots straight from a WWD photo shoot held in a modern barn on her family’s estate here in the San Fernando Valley, Gomez says she’s happy with the line’s development. Dream Out Loud reflects who she is, which, in her words, is “the whole Texan cowgirl meets the glam Boho chic of Hollywood.”

The collection encompasses black jersey blazers with unfinished hems, studded skinny belts, gray boyfriend cardigans ruched in the front, purple fringed ultrasuede purses and cream tanks attached to purple floral-printed polyester chiffon skirts and accessorized with wood charm necklaces.

“Since the announcement, we added a lot of accessories,” Gomez says, touching the collection’s gray Lurex scarf wrapped around her neck. “I love scarves, and long necklaces and cute bangles. It’s constantly changing, which is cool. It will change with me.”

Kmart approves of Gomez’s styling. “It definitely articulates the spirit of Selena. It’s optimistic and playful and it’s really on-trend,” says Tara Poseley, president of Kmart apparel. “The branding is quite subtle, so it’s not going to alienate people who are walking in the store if they don’t know Selena or aren’t one of her fans.”

Still, it helps that Gomez has more than 4 million fans on Facebook. In addition, she’s starring in a new comedy film, “Ramona and Beezus,” which will hit theaters eight days after her fashion line launches July 15 at Kmart.

Sandra Campos, who started Cynosure Holdings with Dream Out Loud creative director Tony Melillo, says they’re considering wrapping ads for the fashion launch around popcorn buckets and soda cups sold at screenings of “Ramona and Beezus.” In addition to a new Facebook page for Dream Out Loud and an iPhone app, Campos said TV ads will begin airing in August during prime-time shows targeting 11- to 17-year-olds on ABC, CBS, NBC, Fox, Nickelodeon and Disney. That same month, a print promotion will appear in either Teen Vogue or Seventeen.

“[Kmart’s] going to make a substantial investment in marketing and advertising the brand,” Campos says.

Gomez envisions gathering her friends from Los Angeles and Texas to frolic in the grass for the ad campaign’s photos. The way she describes it, it’s “not cheesy, but fun — really the American Eagle style about how they’re outside,” she says.

The rollout at Kmart will precede the August launch in Australia at discount department store Big W. Next year, Dream Out Loud will hit Mexico, Spain, Canada and Europe. If the multitasking Gomez has her way, a young men’s line could appear as early as fall 2011.

“She’s so ambitious and willing to do things,” Melillo says of his young collaborator. “We’re betting on her.”


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