NEW YORK — American Eagle Outfitters’ specialty spin-off is the latest in a wave of new concept launches by retailers that want to extend their customer reach and pull market share from department stores and national chains.
The focus of the new concepts vary; some cater to older demographics and others are carving a deeper niche within the market. The other notable trend is to market a lifestyle message with the retail brand.
Some of the recent launches and test concepts include: Jimmy’Z from Aéropostale Inc.; Forth & Towne from Gap Inc.; Ruehl from Abercrombie & Fitch; and Bigelow and Pink, two nameplates from Limited Brands. Polo Ralph Lauren is also testing Rugby.
The obvious goal is to grow market share and sales as well as the bottom line, and, for the publicly traded retailer, to drive up the share price. But financial success doesn’t happen overnight. A new specialty retail concept may take at least five years to mature, experts say. Still, it’s potentially worth the wait.
Abercrombie’s five-year-old Hollister division, for example, had sales of $199.8 million in the most recent second quarter, and contributed about 35 percent of Abercrombie’s consolidated quarterly sales.
Industry analysts and consultants say winning concepts require hard work and tenacity, as well as some out-of-the-box thinking. It’s also important that certain financial benchmarks are met before a concept is launched. A target level of operating income should be set so that the extra costs associated with launching the spin-off do not negatively affect overall results, according to analysts.