CALVIN KLEIN TO OPEN FREESTANDING STORES IN EUROPE FOR JEANS

Byline: James Fallon

CANNES, France — Is Calvin Klein heading for Gap territory?
The designer expects to open two or three freestanding jeans stores in Europe next year as part of the continuing globalization of his brand, it was reported here Monday by Gabriella Forte, president and chief operating officer of Calvin Klein Inc.
Forte disclosed the plans during a speech to an international audience of senior executives of retailers and manufacturers at the first Global Retail Summit, an event organized by Fairchild Publications, the parent company of WWD, and the National Retail Federation.
Forte said the jeans stores would be opened by the Fratini Group, the licensee for CK Calvin Klein Jeans and CK Calvin Klein in Europe. She did not specify locations or size of the stores, but said they would carry the full CK Calvin Klein Jeans collections for women and men, in addition to accessories.
“There will be two to three test projects with the local licensee and in different dimensions,” Forte said in an interview following her speech. The format will be developed by Calvin Klein in association with Fratini.
Jeans stores in Asia might follow, she said, perhaps beginning in Taiwan. That too would be in association with Fratini, which also holds the CK Calvin Klein Jeans license there.
There are no immediate plans for freestanding jeans stores in the U.S., where the line is licensed to Warnaco, Forte said, pointing out there is already strong department store distribution of the collection in America.
The jeans stores would be the third leg of the company’s global retail expansion, which began two years ago, Forte noted.
Calvin Klein has opened CK Collection stores in New York and Paris as well as CK Calvin Klein stores in Europe, the Middle East and the Far East. The company now has 30 freestanding stores around the world, although it owns only the Collection units. The others are held by local licensees or franchisees.
The CK Calvin Klein stores carry the jeans collections as well as the CK Calvin Klein apparel lines and Calvin Klein underwear.
About 25 percent of the CK Calvin Klein stores’ selection is jeans, and those stores will continue to carry the line even after the launch of the freestanding jeanswear stores, Forte emphasized.
The three store formats form a key part of Calvin Klein’s drive to derive 45 percent of its sales from outside the U.S. by the year 2001. Total retail sales of the Calvin Klein brand worldwide are currently about $5 billion. Currently, some 35 to 38 percent of that comes from outside America.
“The stores were a test-pilot program, and we chose cities to do it in that enabled us to readapt the fixtures and the merchandise,” Forte said. “We are now determining the things we did right and the things we must change.”
The changes will begin in fall 1999, both in merchandise mix and in the way Calvin Klein targets its core customer, Forte said. The company has learned, for example, that its customers in the Far East tend to be younger than those in Europe, who are anywhere from 25 on up. That means it must adapt its product mix and price accordingly, Forte said.
The adjustments will come as Calvin Klein implements new information systems to improve its links with suppliers, customers and licensees, as well as a global pricing strategy aimed at a unified position. While prices will not be identical in every market, they must be at similar levels in each country to insure similar position for Calvin Klein worldwide.
“You cannot have enormous differences,” Forte said. “Our customer travels — they might be in Milan today, London tomorrow and New York the day after that — and they compare.”
But at the same time Calvin Klein is trying to gather better information and gain more control over its global pricing, it is giving more freedom to its operations in local markets, Forte said.
The company now has a European headquarters in Milan, an Asian base in Tokyo, and soon will open a third, probably in Australia, where the brand is growing strongly in jeans, underwear and other products, Forte said.
Although Calvin Klein’s global and U.S. headquarters are in New York, that office develops all advertising material, but not its allocation; the marketing and visual strategies, which are implemented locally, and all the training, Forte said.
“It is difficult for someone to decentralize because the tendency is not to trust,” she continued. “People do not want to trust the foreigners — but as a foreigner, I do.”
Forte said Calvin Klein still has a long way to go before she considers it a truly global company, adding that in her view there are not many real global players in the apparel industry.
“We’ve embarked on globalization, but to be truly global is a long process,” she said. “And it isn’t a textbook situation. You learn by your mistakes. You have to be flexible and change what doesn’t work. The whole point of managing a company is the learning.”

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