THE BIG SQUEEZE
FEAR ON THE FRINGES
Byline: Anne D’Innocenzio
NEW YORK — The race for space is getting fiercer in the moderate areas of department stores.
It’s being intensified by an aggressive effort by retailers to build their own private label brands as well as stock up on new name-brand labels at the expense of fringe resources.
The most vulnerable category on the moderate floor, say observers, is casualwear, as consumers show a willingness to spend another $40 to $50 to satisfy their workday casual needs with such lines as Liz Sport and Jones Sport.
Halston’s licensed sportswear line is the latest element to shake up the moderate market for spring. It makes its official debut in 200 department store doors next month, with plans to double that figure for fall. The fashions, designed by Randolph Duke, include H-printed silk blouses and cotton gabardine pants and jackets. They are being heralded with a $30 million marketing blitz that includes in-store shops featuring a mix of white wood and chrome, as well as outdoor and print advertising.
“Halston will change the rules of the moderate game,” said Andrew Jassin, a partner at Marketing Management Group, a consulting firm here. “Until now, there has never been any major marketing effort in the moderate area. Moderate areas haven’t had any real brands, and that has been a big problem.”
The Halston line, which is being shipped to key accounts such as Rich’s, Burdine’s, Macy’s East, Dayton Hudson and Mercantile, is expected to generate a wholesale volume of $65 million this year, and $200 million by the end of 1998, according to Carmine Porcelli, managing director of Halston International. Part of the plan is the introduction of a slew of licensed products, including accessories and hosiery, and a Randolph Duke for Halston designer collection for fall.
Then there is Emma James, an upper-moderate line from Liz Claiborne Inc. that was launched last month. The casual work line, which is in 300 doors, is expected to post a wholesale volume of $20 million for the year.
Meanwhile, retailers such as Federated Department Stores, Mercantile Stores and Carson Pirie Scott are continuing to forcefully build their private label businesses, marketing them with heavy advertising.
“These new lines, especially Halston, are putting more pressure on the traditional sportswear resources. We’ve had to edit some lines to make room for the new ones,” said Tony Buccina, senior vice president and general merchandise manager at Carson’s.
This spring, Carson’s is putting Halston in 13 stores, including one concept shop at its State Street location in Chicago. The goal is to put the resource in all 50 stores.
Emma James will be in seven of its doors for spring.
Another line Carson’s is adding is John Paul Richard, a new casual sportswear resource based in Los Angeles.
As for private label, Carson’s has plans to further develop its Great Lakes casual line and Hastings & Smith, a career line. Combined, they account for 20 percent of the retailer’s moderate merchandising mix, but Buccina wants to increase that to 30 percent within the year. He said this will be at the expense of some casual fringe resources, which he declined to name.
“We are developing power brands that are only available at Federated,” said Joe Feczko, senior vice president, marketing, for Federated Product Development, adding that 15 percent of the moderate area is in private label.
In the moderate zone, the retailer is highlighting INC, which offers contemporary fashions, and Charter Club, which offers more classic clothes, with a major advertising blitz and in-store concept shops. Both lines are carried in Federated’s stores except Bloomingdale’s and Stern’s.
Last fall, Federated kicked off an outdoor and print campaign for INC, which is in 200 doors. The outdoor campaign focuses on New York, San Francisco, Miami and Seattle with billboards and bus ads. Print ads, which continue for spring, are in major fashion publications.
The retailer expanded the INC brand to include intimate apparel last fall and, for spring, will roll it out in swimwear and accessories.
Charter Club, which is in 250 doors, will be heralded in an ad campaign this spring. The magazine lineup includes Martha Stewart, House & Garden and The New York Times.
“Branded labels are extremely important to our mix, and we are adding labels that we feel give the moderate world a new dimension,” said Sheila Kamensky, vice president and fashion director at Rich’s, which is adding Halston and Emma James in 34 of its 70 doors.
In addition, the retailer is further developing its private label brands, including Jennifer Moore and Innovations Sport, its active-inspired sportswear line.
She said the push into private label, however, will not be at the expense of other moderate resources, describing the change as “just doing some reconfiguration.”
“There’s no doubt that brand awareness is trickling down to the moderate departments,” said Burt Szabo, divisional merchandise manager at Mercantile Stores, which is picking up Emma James next month. “The key is how fast can you turn your inventory and on how big a margin? It is all about being able to get the most out of what you have. Because of the intensification of key resources, the moderate area is getting squeezed.”
Mercantile is also building a private label business. Over the past six months, it has eliminated several private label lines, consolidating them into one called Laura Gayle, a casual resource. Starting this spring, it will market the Laura Gayle line with in-store visuals and direct mail pieces.
“Laura Gayle will become a dominant force in our moderate departments,” said Szabo. He plans to increase its presentation but declined to say by how much.
Department store officials are quick to admit that their move to develop branded resources in moderate is a response to actions taken by their competition — namely, Sears, Roebuck and J.C. Penney, as well as specialty chains like Lerner New York, all of which are building private label businesses.
Take Sears, which since 1993 has not been bashful about developing its stable of store brands. They now include three misses’ lines: Crossroads, a denim line rolled out in September; Classic Elements, a casual line, and Apostrophe, a career line.
To make the products more appealing, Sears set up a fashion trend office three years ago, developed a design team last month and is currently building a design studio at its headquarters. So far, four designers have been hired, and there are plans to hire two more, according to Fran Yoshioka, fashion trend manager.
“We needed to improve the look of the private label merchandise, to make it more competitive and more compelling,” she said, adding that their imprint will be fully realized by spring 1998. “These designers will be applying the trend information directly to the lines.”
Sears will offer more design details in its casual lines, such as more contrast colors and a mix of fabrics.
Meanwhile, Lerner New York, which has seen low double-digit comparable store increases over the past six months, is developing more updated fashion under its New York & Co. brand. All of this is being spearheaded by Charlotte Neuville, who joined the chain in July as vice president of design. The 810-store retailer has also established a design studio.
Such moves are threatening department stores’ ability to keep their moderate customers. And to stay in the game, they are putting more pressure on their resources.
However, core resources such as Sag Harbor and Norton McNaughton should not see their real estate decrease.
“This spring, there is a definite space issue, but it won’t affect people like us, who have already carved out a big niche,” said Norty Sperling, president of Norton McNaughton. He admitted, however, that “it is getting tougher to increase our real estate.”
The department store push into upper moderates is forcing Norton McNaughton to trade up to that area, with more updated fashions, Sperling said. This spring, the company is shipping military jackets, clean-front skinny pants and frock jackets.
Others like Maren Inc. and Miss Erika are finding it more difficult to compete, but are fighting back with innovative fabrics.
“There is definitely a tightening of belts, and retailers are just focusing on big name brands,” said Alan Cohen, a principal at Maren Sport, a moderate casual sportswear line that is in Mercantile Stores, Dillard’s and Rich’s. “Right now, label identification is taking over. But I think fashion should be first, labels second.”
Cohen said he is fighting back with more innovative fabrics. David N., its upper moderate/low better-priced line, Maren Sport and Maren, its career line, are offering silk knits, cashmere blend wools and rayon linens.
Charles Marino, president of Notations, a moderate blouse firm with a wholesale volume of $60 million, said the company has been able to hold its own in a tight market because it can bring in big volume.
“We have actually benefited from department stores narrowing their mix, because the business has shifted to us,” said Marino, who said he expects an increase of 15 to 20 percent this year.
The losers have been some of the smaller firms that do isolated items in small quantities, he said, adding that Notations is becoming more diversified. For July, it will expand its offerings to casual cotton shirts.