Byline: David Moin

NEW YORK — In the increasingly complex game of private label merchandising, Mercantile Stores Co. is emerging as a formidable player.
Last year, the $3 billion department store chain created “brand teams” to elevate the quality of in-house lines, set a goal of building its private label program to 18 percent of overall volume by the turn of the century, and decided to drop some labels.
Now the chain is reportedly developing a new in-house sportswear concept called The City Loft Shop. It’s expected to be launched in June. With certain details of the program yet to be finalized, Mercantile officials declined to comment on the project.
However, a source said Wednesday, “They’re going after the same kind of customer as Hilfiger, A|X Armani and Polo Jeans. It’s sportswear for a casual way of living.”
In the past few years, private label retailing has become a more sophisticated, industry-wide trend. Federated Department Stores, Dillard’s and Sears, Roebuck, among other retailers, have been trying to sharpen the image of private label with intensified marketing and higher design standards. They now have their own design and marketing teams for private label, and support the products with in-store shops and strong advertising.
The days of just sticking store labels on products designed and manufactured by others are over.
According to retailers, private label merchandising brings higher margins and some uniqueness to the selling floors, though it’s been criticized for being too overloaded with basics.
To achieve the 18 percent objective, Mercantile is shooting for a 50 percent increase in private label sales by the turn of the century, according to the firm’s 1996 annual report. That puts Mercantile’s current private label penetration at roughly 12 percent of overall volume.
One of Mercantile’s most comprehensive private labels, 955, is seen in several categories, including men’s, juniors, infants and some big and tall areas. Laura Gayle is another key private label in moderate sportswear, home, accessories and intimate. In addition, there’s Elizabeth Westley, a better-priced worsted wool collection.
Last year, the Fairfield, Ohio-based Mercantile opened five full-line stores and added about 1 million square feet of selling space, which is more square footage than it had ever added in a single year.
Stores operate under 13 names, including McAlpin’s, Gayfers and Castner Knott, and are generally around 170,000 square feet.

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