PRIVATE LABEL MOMENTUM CONTINUES AT MASS CHAINS
Byline: Mark Tosh
NEW YORK — With shoppers searching harder for good values and stores trying to protect shrinking margins, private label brands will continue to gain ground in apparel assortments of discounters and national chains this year.
While 1995 was marked by a number of major private label launches, including the Kathie Lee Collection at Wal-Mart Stores, retailers expect to put more emphasis this year on improving and expanding the house brands already on the racks.
Kmart, for example, is likely to update its powerhouse Jaclyn Smith sportswear line, which has been around for more than 10 years, and Sears plans to keep its focus on Canyon River Blues, a line of denim and denim-related casualwear rolled out last summer, as well as some of its other house brands.
Still, a few private label innovations are in the works, which should further add to store brands’ penetration in women’s assortments, according to retailers and analysts.
Wal-Mart expects to introduce the McKids label, a children’s sportswear line once used by Sears, this month in conjunction with McDonald’s, and Kmart reportedly plans to launch the Route 66 label for back-to-school selling.
According to NPD Group, a market research firm in Port Washington, N.Y., private label accounted for 27.5 percent, or $9.2 billion, of the U.S. women’s apparel market in the first half of 1995. This compares with 26.9 percent, or $9 billion, in the same period of 1994.
John Costello, senior executive vice president of marketing at Sears, said Canyon River Blues has performed “very well” across juniors, men’s and kids since Sears introduced the line last summer to counter J.C. Penney’s successful Arizona Jeans Co. collection.
“We plan to continue emphasis on Canyon River Blues in 1996 as part of our overall strategy to grow our overall denim business,” Costello said. “We have a long-term commitment to develop Canyon River Blues into a major Sears label.”
Still, Costello said, Sears wants to maintain a balance between Canyon River Blues and national branded denim lines.
“We want customers to have the best of both private label and national brands,” he said. “So for example, while Canyon River Blues is very important, it’s also critical to continue to increase our Levi’s jeans business.”
Sears also will emphasize Fieldmaster, a men’s wear private label, and Circle of Beauty, the retailer’s new cosmetics line, which will continue rolling out to cosmetics departments in remodeled stores.
“We plan to continue our strategy of having the best combination of private label and national brands in 1996,” Costello said. “The balance is important.”
Kmart has been successful with its Jaclyn Smith line — the 47th-most-recognized women’s apparel brand in the U.S., according to the Fairchild 100 consumer survey — and its Kathy Ireland private label. Last year the discounter expanded Jaclyn Smith into plus sizes and Kathy Ireland into the rugged outdoor category. But the 2,172-unit chain is in the midst of reorganizing its assortments following a series of management changes.
Warren Flick, who was chairman and ceo of Sears de MAxico, joined Kmart on Jan. 2 as president of U.S. Kmart stores and chief merchant.
“Jaclyn Smith and Kathy Ireland will remain strong in 1996,” said a spokeswoman for Kmart.
ShopKo Stores, a regional discounter based in Green Bay, Wis., hopes to increase private label sales by 15 to 20 percent this year, according to Skip Chustz, senior vice president and general merchandise manager for apparel.
“Consumers are looking for better value — that’s the key,” Chustz said.
Private label represented about 15 percent of ShopKo’s total apparel business last year, with key labels being Willow Bay and Northcrest.
No new labels are planned, but ShopKo will add more depth to existing assortments, he said.
“Where brands make sense and where there’s brand equity, we’ll continue to grow with the brands,” he said. “In categories where brands do not count as much and we can offer better value to the customer through private label, we’re increasing our penetration of private label rather dramatically.”
However, in categories where fit is critically important, such as intimate apparel and jeans, ShopKo will continue to focus on branded goods.
“One of the trepidations for a regional or any store looking to do private label is whether they have the marketing muscle and expertise to pull it off,” he added. “The brands tend to do a better job than the retailer can do with those issues.”
Emanuel Weintraub, president of the consulting group Emanuel Weintraub Associates, said he believes retailers will “accelerate their move to private label,” but also continue adjusting assortments as consumers’ perceptions change.
“Consumers, up to a point, are responding well to [private label] as they perceive value,” he said. “Where you begin to get a divergence, for example, is where the consumer says she needs her jeans to say Tommy or Calvin.”
Weintraub said some high-profile brands have developed an allegiance among consumers, which means store brands are more likely to tilt toward more basic merchandise. Sears has been successful with Canyon River Blues, in part, because it’s a basic apparel item, he said. It’s more difficult to market more fashion-oriented private label merchandise.
“You don’t hear about Arizona dresses or Canyon River blouses,” he noted.
Weintraub said he believes Wal-Mart has been able to revitalize labels such as White Stag and Catalina, which are now exclusive to the giant discounter, because of the labels’ “residual value” and shoppers’ trust of Wal-Mart.
“Implicit in a purchase is trust. Either I trust the store or I trust the brand,” he said. “Wal-Mart has grown to its gargantuan size for a lot of reasons, but basically, its customers trust Wal-Mart.”