DENIM BRANDS ARE CONTROLLING THEIR OWN DESTINIES
Byline: Janet Ozzard
NEW YORK — Category management has become a compulsory business strategy for denim vendors and retailers.
VF Corp., the Wyomissing, Pa.-based manufacturer of the Lee, Rider, Wrangler and Girbaud brands, has been involved with denim category management from the idea’s inception.
In a recent interview, VF chairman Larry Pugh said category management is becoming one of the services — like Electronic Data Interchange and flow replenishment — that have become obligatory, not optional, for denim vendors to offer their retailers.
“We’ve been asked by a number of retailers to put their departments together, and they trust us to make their whole department work,” said Pugh. “We accept that as part of our responsibility.”
Levi Strauss, the largest apparel firm, with $6.7 billion in annual sales, works with its retail accounts to tweak the mix of merchandise each month, said Judy Connelly, regional sales manager for women’s jeans.
“We start off with the account executives, who are out in the field and who know the customer, and the [consumer],” she said. “We build around a core product, which anchors the department, and complement that with seasonal or concept groups.”
Levi’s also provides merchandising advice and fixtures, operates an electronic ordering system and has just started to roll out a flow replenishment program, said Connelly.
VF works on category management with its top 20 accounts to a greater or lesser degree, said John Schamberger, chairman of its Jeanswear Coalition. That includes retailers ranging from J.C. Penney and Sears to department store accounts.
“It’s been going on at various levels for five to 10 years, but more recently the divisionals and general merchandise managers have been getting involved,” he said. “Now we have high-level executives getting involved, saying, ‘Here’s my vision. How is it working out?”‘
The benefits are many, said Schamberger, while drawbacks are few.
“I believe retailers come to VF and to our various companies because denim is our only business and we know it backwards and forwards,” he said. “A general retailer has 20 or 30 departments to manage. They can’t be experts on everything. We know what’s going on in the market in terms of trends, fits, silhouettes and washes. We can also bring our expertise on markets, not globally, but nationally and regionally.”
Retailers working with VF get everything from recommendations on display and presentation of departments to suggestions on what percentage to carry of each brand to inventory control.
But stores rarely swallow the advice whole, he added. “I think they always modify it to some degree,” he said. “I don’t think there’s any case with a vendor and a retailer where it’s carte blanche. In some cases we are the sole vendor being used for category management, but in others we’re one of a few. Category management is not strictly the vendor saying, ‘This is what it should be.’ It’s a blend of both companies working together.”
Conflicts rarely arise, noted Pugh and Schamberger, because it behooves vendors to take a broad view of the business.
“If we said, ‘Put in 80 percent Lee and 15 percent Wrangler,’ that would not be responsible,” said Pugh. “I would define category management as, one, having the right product; two, display and presentation on the retail floor, and, three, inventory management of that product on the floor.”
And keeping such a clean flow of merchandise to the retailer allows the vendors to pinpoint emerging trends. “Part of category management is testing — trying out a new product in a few stores, putting out new ideas to see what hits,” said Schamberger. “We might introduce something for back-to-school or holiday that we’d then bring back for spring.”
But when it comes to inventory, Schamberger said, each manufacturer is on its own.
“We’ll suggest that a retailer have so many racks of a brand and so many of private label, based on expecting each rack to turn six or seven times,” said Schamberger. “But when it come to keeping goods on those racks, that’s up to each individual vendor. You don’t want to have a whole lot of overlap with fits and finishes, because you don’t want to miss out on something like colored jeans.”
Overall, said Schamberger, category management is taking some of the pressure off retailers while allowing vendors to highlight and track their product.
“It’s where all the major retailers are headed today,” he said. “I can’t think of any drawbacks. It’s the best of both worlds. The retailer knows about stores and selling, and the vendor knows about the industry.”