THE VENDOR RESPONSE
INNERWEAR: BIG SHIFTS
Byline: Karyn Monget
NEW YORK — As consumers shift allegiances from department stores to mass merchants and chains, innerwear executives say it’s not just the fickleness of the consumer that’s responsible.
Rather, they point out, it’s also the result of the concerted efforts of the lower-priced channels of distribution to capture this consumer, using many of the techniques department stores employed to build their innerwear businesses. These include more brands and expanded assortments — fashion items as well as regularly replenished basics.
And key makers have been keeping in step, responding by building brands for discounters and developing products for private-label chains, primarily Victoria’s Secret.
Among the innerwear brands that have been successfully targeted to mass distribution are Fruit of the Loom by The Warnaco Group, Hanes Her Way by Sara Lee Intimates and Vassarette by Vanity Fair Mills. Some of the brands developed for the mass market were once prominent department store labels that fell out of favor and now have been resurrected by smart vendors looking to increase their business through multiple channels of distribution.
Meanwhile, department stores have let a portion of their innerwear business slip away, vendors feel. Basics have been getting short-changed, even as a cautious approach is taken to fashion innovation and presentation. Additionally, price promotions have undercut the perception of value. But some executives feel department stores are beginning to reexamine what constitutes value.
Here is how executives of four top innerwear firms sized up the current situation, as consumer cross-shopping heightens the fight for market share among retailers.
“Discount stores are doing a better job in assortments and fashion, while the department stores have not been creative in their response to the discounters,” said Lee Chaden, president and chief executive officer of Sara Lee Intimates, a part of Sara Lee Corp.
As department stores tighten cost structures to compete with discounters, they are “giving up service and presentation,” said Chaden.
“The cost structure and margin targets of the discounters allow them to sell merchandise at lower prices,” continued Chaden. “They also are doing something nobody talks about — a much better job than department stores in keeping basics in stock. “Mass merchants have automatic replenishment on basic goods and almost never hold up fill-in orders because of open-to-buy issues.”
While Sara Lee distributes its Bali brand of foundations to department stores and Hanes Her Way bras and panties to mass outlets, the Playtex label is distinctive in its allocation — Playtex is sold to both department stores and mass doors.
“The reason,” said Chaden, “is the Playtex brand is the market leader, produces for the retailers, and has a hard-core following. However, we try to give lead time and new programs to the department stores.”
Linda J. Wachner, president, chairman and chief executive officer of The Warnaco Group, said, “There’s been an enormous shift of mass merchants to brands. At stores such as Wal-Mart, they’re going down on private label and up on brands like White Stag, Fruit of the Loom, Vassarette and Hanes Her Way.”
Wachner noted, “There’s also an availability of more open-to-buy dollars because mass merchants are switching from private label to more brands.” She added that Warnaco is “taking advantage of all channels of distribution.”
She broke down the distribution channel for Warnaco’s innerwear brands as follows: the Calvin Klein, Olga and Warner’s names are positioned for department store distribution; Van Raalte (a label the firm is reviving) is to be sold at Sears, and the White Stag and licensed Fruit of the Loom labels are allocated to Kmart and Wal-Mart, among other discounters.
Regarding brand loyalty, Wachner said the answer is simple: “It’s all about fit. The bra business is like the pantyhose business — it’s a commodity.”
Warnaco has had success with private label, most notably with Victoria’s Secret, but Wachner is not keen on department store private label.
“We don’t want to do private label with department stores any more, and we recently decided not to do private label with Dillard’s,” she said.
Private label partnerships with department stores are “just not good business; the runs aren’t big enough to command brand loyalty,” said Wachner.
Mackey J. McDonald, president and chief operating officer of VF Corp., parent company of Vanity Fair Mills, noted, “The trend is not switching one shopping channel to another channel; it’s consumers searching for innovation, price and convenience. What the mass channels have done is address value, but it’s also happening more at department stores.”
McDonald described the value equation as a combination of price, innovation through fashion and function, flow replenishment, merchandising and convenience of shopping.
“It’s my opinion we can deliver that value with brands,” continued McDonald. “But if the brands are depending strictly on names, it won’t work. It has to be the right product, the right price, and stores and manufacturers must have the capability of keeping it on the shelf.
“We feel we provide better service and have the capability to keep those innerwear products on the shelves,” he continued. “That’s been a much more important factor, especially with the rising prices for raw materials.”
In addition to the Vassarette label, which is distributed to mass doors, VF produces through its Vanity Fair Mills division the Vanity Fair brand of foundations, sleepwear and robes for department stores and private label.
Regarding private label, McDonald said, “We understand retailers’ need for exclusivity of product. We do some private label. It’s an important part of our business, but it really requires a very close partnership.”
Tom Wyatt, president of the Vanity Fair Mills division, commented on the importance of segmentation for fulfilling the various needs and expectations of the cross-shopping consumer.
“Even though a consumer is shopping in many different store types, she walks into each one with a different set of expectations, a different value objective,” he said. “The point is she’s not buying a store, she’s buying a product for a wearing purpose. So, it’s segmenting those different needs, and then segmenting the products and the stores that best deliver those needs.”
Charles Rumbley, president of the Kellwood Lingerie/Activewear division of Kellwood Co., agreed that segmenting innerwear business to address the distinct needs of different consumers and retailers is an important issue.
“We have even gone to the point of addressing different fabrications with different categories by product lines,” said Rumbley. A key example, he said, is the growing consumer awareness in all channels of distribution of Lycra spandex blend products, especially panties of nylon and Lycra.