THE RETAILER RESPONSE
FIGHTING HARDER FOR CUSTOMERS
NEW YORK — In intimate apparel, the cross-shopping phenomenon is accelerating.
Shifting consumer loyalties are sparking new retail strategies that affect brands, private labels, pricing policies and the profit picture.
It’s an all-out battle to win consumer loyalties, but generally shoppers are defecting from department stores and embracing discount stores, outlets and specialty stores for their bras, panties and sleepwear.
Over the past five years, discount stores have raised their market share by five percentage points in intimate apparel, moving from 22 percent to 27 percent of the $8.6 billion industry, according to The NPD Group, a consumer research firm.
Specialty stores have raised their market share to 13 percent from 11 percent over the same 1989-94 period, according to NPD data. That’s primarily due to Victoria’s Secret Stores, the phenomenal Limited Inc. division that has doubled its volume in the last four years to $1.2 billion.
At the same time, department stores’ market share of the intimate category has fallen from 30 percent to 23 percent, four points behind discounters.
Retailers cite several factors for the shift, but value and lower prices are the reasons most often mentioned. Among the retail channels, the quest to provide more value to the consumer has taken different tacks.
Discounters are enhancing their assortments with more brand names, but still keeping their price points low. National chains such as Sears, Roebuck & Co. and J.C. Penney are adding to their private label, which gives them price points several notches below department stores.
At Penney’s, a strong private brand program has helped drive the intimate apparel and hosiery business, according to Joe Rafferty, merchandise manager for intimate apparel and hosiery. Offering most national brands solidifies the stance, he explained.
Delicates, a private brand collection of sexy lingerie, is a star performer for the chain along with its other private labels: Adonna, Underscore, Fantasia and Nice and Spicey.
Though it varies by category, private brand comprises between 70 percent and 80 percent of Penney’s intimates assortment.
“Many of our stores have expanded the space devoted to lingerie in 1994,” said Rafferty. “And we can see this happening in more stores this year.”
He said he believes Penney’s intimates and hosiery assortments will continue to offer newness and be trend-conscious for the contemporary customer without alienating traditional shoppers seeking conservative styles.
A walk-through of Penney’s intimates department at NorthPark Center here found a plethora of promotions, including panty and bra sales on both private label and national brands.
Rafferty explained, though, that Penney’s strong private brand push keeps it from being locked in to suppliers’ promotional schedules.
Citing Penney’s intimate apparel value programs, Rafferty asserted that the chain’s percentage of regular-price retail business is greater than the traditional department stores. And department stores are trying to catch up by bringing in some private label while continuing to emphasize key brands. Still, most retailers are expecting consumers’ focus on value to continue to be a long-term phenomenon.
Sears, Roebuck, for example, said it is working to “take full advantage” of shifting purchasing patterns for intimate items.
“Our business is still very strong in intimate apparel and we are very aggressive in our plans with intimate apparel,” Robert L. Mettler, president of Sears Merchandise Group, said. “There are a lot of different businesses, whether it’s stretch satin, uplift or support. There are a lot of niches in the total picture.”
One of the thrusts of Sears’ intimate apparel business, according to another Sears executive, is private label.
“It is very clear to us that the customers are focusing on value,” the executive said. “A great deal of our intimate apparel business is private label, and that allows us to bring excellent value to our customers. This has been long recognized by our regular customers and I think more recently discovered by shoppers who perhaps hadn’t been in Sears in a while.”
The depth of Sears’ private label selection was apparent in the company’s store in the Flatbush section of Brooklyn. The intimate apparel department was about 90 percent private label merchandise. In cotton bikini briefs, there were four price points for private label items ranging from $1.33 to $3.99.
The Sears executive added that most department stores are doing the bulk of their intimate apparel business off-price with their brands.
“Even then they don’t achieve the values we are able to bring our customers,” the executive said. “In a nutshell, we see customers responding to value and that is where Sears has positioned itself.”
Mercantile Stores Co., Fairfield, Ohio, also is trying to offset the shift in the category by adding to its private label assortment and emphasizing key brands, according to Kathy Strohmeyer, divisional merchandise manager of intimate apparel.
This shift in consumer purchasing patterns is a result of upscale marketing at mass outlets, an increase in the number of factory outlets and the attrition of weak department stores.
“A baby boom and buying for kids is a big draw to the mass outlet,” she added.
In response, Mercantile is trying to emphasize private label “from opening price point to bridge,” particularly items that are considered commodities, she said.
Mercantile also wants to exploit trends and be the first to tap into new ideas, Strohmeyer said. “Enhancing the shopping experience through visual and customer service” is equally important, she added.
At Bradlees, intimate apparel outperformed the total store business overall in 1994 and is “definitely on an uptrend,” according to Len Casey, divisional merchandise manager of intimate apparel, junior sportswear and ready-to-wear.
“We see this year and going forward and into 1996 as still on an upturn,” he said.
Casey said some of the intimate apparel sales gains are due to more fashion in the category, influenced by current ready-to-wear trends that emphasize the figure.
“It’s not the ‘dumb basic’ category anymore,” Casey said. “There’s more fashion coming into the business and that’s helping drive it.”
Unlike Sears, however, Bradlees’ merchandising plan for intimate apparel is built around brand names.
The discounter stocks Vassarette, Hanes, Fruit of the Loom, Playtex, Best Form, Exquisite Form and Lovable brands and soon expects to add the “Self Expressions… a division of the Maidenform Worldwide Inc. family of companies” label, Casey said. Bradlees sells private label in panties, but not in foundations.
“The customer is looking for quality and value, and in the intimate apparel area at Bradlees, they see it and they’re responding,” he said.
Kmart, another discounter, also is attempting to showcase its intimate apparel area. The innerwear department at the igloo-shaped Kmart on Route 17 in Paramus, N.J., was clean and well-organized on a recent visit. It offered shoppers a selection of several brands, including Fruit of the Loom stretch satin bras for $7.49, Playtex 18-hour bras for $15.75 and $16.50, and Jaclyn Smith push up/plunge styles for $9.99. The size range was also expansive and included Exquisite Form Ful-ly for $12.40 and Best Form Silver Saver Full Figure bra for $6.99.
There were many styles of panties to choose from, all clearly labeled and displayed according to size. The raciest were Secretly Yours, a group that came in a gold lamA tiger print and silver lamA for $2 each. On the tamer side, there were Hanes Her Way Briefs.
In the sleepweardepartment, there were lots of traditional nightgowns to choose from.
A Federated Department Stores spokeswoman said, “In intimate apparel our thinking is value. We bring value to our customer, regardless. It would be unthinkable for us to pass increases along to our customer. “Plus, we also have a lot of private label goods where we can continue to offer value and still give 100 percent cotton goods if they’re asking for that.”