SECONDARY ALLIANCES: COMBINING ABILITIES
Byline: Arthur Friedman
NEW YORK — Some secondary types of strategic alliance are also prevalent in the industry. In the private label arena, retailers such as The Limited, Ann Taylor and Saks Fifth Avenue form partnerships with sourcing and manufacturing operations to produce their store brands on an exclusive or semiexclusive basis.
In The Limited’s case, the joint venture is with Mast Industries, which has worked well for years, while Ann Taylor’s venture with Cygne Designs fell on bad times.
“This is usually a value-added relationship,” said Andrew Jassin, a partner in Marketing Management Group. “It combines the best talents of each party and has generally proven to be a very good method.”
However, as Weintraub points out, “These manufacturers have relatively little clout with their strategic partner other than they can produce the product well, at the quality desired, and are able to conform to the store’s logistics. But those firms are replaceable by many others standing in the wings, hoping to become a strategic partner to a key retailer.”
A third category of strategic alliances is where a marketing or design firm joins forces with a full-process manufacturer. Jassin said examples of this type of setup would include Kathie Lee Gifford, Dennis Goldsmith or David Dart with the Kellwood Cos. or Girbaud with VF Corp.
“The advantage here is that the design and marketing firms have the benefits of the manufacturer’s expertise and financial ability, while the maker doesn’t have to focus its initial efforts on creating brand awareness and image,” Jassin said.
Last, but certainly not least, of the most common strategic setups is a licensing/marketing company licensing its name to a manufacturing and sales operation. There are numerous examples on both sides of the fence here, such as J.G. Hook, Evan-Picone, Perry Ellis, Nautica, GFT Corp. and Chaus.
“The epitome of this relationship right now is the Ralph Lauren licensing deal with Jones Apparel Group,” Jassin said. “The brand brings with it an established customer base, and the licensee brings the ability to get product made and into the stores.”