MEGABRAND STAKE BEGINS TO WEAKEN
Byline: Karyn Monget
NEW YORK — A wedge is developing between major department stores and one of their key businesses: designer intimates.
The overall picture — once rosy and optimistic — is now being clouded by poor sell-throughs, products that look like they’ve been cut from the same cookie cutter, and a demand for merchandise that has more of a fashion edge.
Retailers generally acknowledged they are facing a dilemma. Big megabrands — names that have a national presence at stores from accessories and fragrance, to sportswear and lingerie — continue to generate excitement in innerwear departments. The demand for more status brands, especially a burgeoning number of European labels in the foundations area, has also fueled the desire for a broader assortment of prestige undergarments, as well as sleepwear, and daywear and at-homewear items that have a sportswear flavor.
But the cachet of image-oriented names such as Calvin Klein Underwear at The Warnaco Group, and the licensed Ralph Lauren Intimates at Sara Lee Corp. and Donna Karan Intimates and DKNY Underwear at Wacoal Corp., is beginning to represent a double-edged sword.
Retailers are openly and privately complaining about slow turnovers and generic looks among the megabrands. A main gripe is what they describe as an overload of tailored underwear, daywear and sleepwear in two classifications — cotton knits and seamless microfibers.
Addressing the issue, Charles L. Nesbit, president and chief executive officer of Sara Lee Intimate Apparel, said, “The whole trend towards sleek, tailored, seamless products industrywide has made it more difficult to differentiate product. Microfibers in particular have no shine, and the focus has become more on the tactile feel of a product versus any dimension and esthetics.
“We as an industry are putting the challenge back on the material suppliers to overcome the limitations of fabrications that are popular in the U.S. marketplace. We’ve tried numerous approaches to renew interest in lace, which is extremely popular in Europe. But it seems the U.S. customer is still absorbed with smooth, seamless looks.”
Regarding profitability, merchants generally said megabrands are given an easier standard than smaller, independent brands when it comes to turnover. The selling strategy on the part of major manufacturers has been that big names and the huge marketing muscle subsidizing them is a sure-fire way of pumping up sales, boosting margins and improving overall department performance.
That tune, though, is beginning to change, as retailers — some of whom did not want to be identified for this article — are realizing that the labels that make the most noise do not necessarily produce hefty revenues. A majority of merchants noted that the March innerwear market will be a pivotal time, and some said they plan to hunt for replacement brands or increase the depth of assortments of top-performing names.
One factor that compounded the megabrand issue was Warnaco’s decision in December to sell Calvin Klein innerwear to J.C. Penney. It was a move that angered a number of department store executives such as Dillards Department Stores, which has reportedly dropped its Calvin Klein innerwear business.
But, Penney’s is apparently thrilled.
Ceil McDermott, divisional merchandise manager of intimate apparel and hosiery for Penney’s stores, said: “Our customers are looking for ego-sensitive brands like Calvin that build up their self-esteem. We are extremely pleased with the performance of Calvin Klein underwear thus far.
“It just hit our stores at the end of January,” McDermott said. “We are really looking forward to our first Calvin Klein Underwear ad, which breaks March 19. It will be supported with an in-store promotion and a semiannual sale.
“Assortments are not limited to basics. We have a lot of fashion. What the department stores have, we have.”
Meanwhile, the newest entries to the U.S. lingerie arena this year include several licensees — Tommy Hilfiger foundations, which are produced by Bestform Group, a unit of VF Corp.; Laura Ashley sleepwear at the Cypress Apparel division of Russell-Newman, and a sleepwear and at-homewear collection by Anne Klein 2 at JWE Silk.
In 1999, Jockey International introduced the licensed Liz Claiborne Intimates line of bras, and the Natori Co. successfully relaunched its Josie label as a contemporary sleepwear and daywear resource.
Discussing the status of megabrand business at Carson Pirie Scott, Robert Pawlak, vice president and divisional merchandise manager of intimate apparel, said, “I’m not planning any major cuts or increases. I’m being very careful. In general, the status brands such as Calvin Klein Underwear, Ralph Lauren Intimates, DKNY Underwear and Tommy Hilfiger sleepwear have not performed the way I expected.
“Status daywear will be flat and status sleepwear will decline in my estimation. We have to get some successes under our belts. Ralph Lauren [sleepwear] took a lot of rework. I have to see some success before doing more.
“We’ve used their [megabrand] shop fixtures and shop concepts, but we just can’t make it profitable. The turnovers and sell-throughs just aren’t there, even though we set a different [turnover] standard for them. It’s a real headache.”
One department store executive who did not want to be named said, “I don’t want to sound catty, but it’s really a shame. The big megabrands have the big resources. You would think they could inject more creativity into their brand presentations. They should be the leaders.
“The little guys that have three people working for them and two T stands on the floor have a lot more creativity than some larger operations that have 47,000 employees at their disposition.”
One retailer who said she was “very pleased” with status brand business — particularly prestige bra brands — was Liz Dixon, divisional merchandise manager of intimate apparel and hosiery at Bloomingdale’s.
“Status brands are still a big chunk and an important part of our business,” Dixon said. “I’ve seen a recent upturn in our [status] bra business after a sort of challenging fall ’99. Colors as well as anything new and anything that has a look of fashion is selling.”
Best-selling designer brands at Bloomingdale’s include foundations by Natori, Wacoal, Chantelle, Gemma and Lou, said Dixon. Suggested retail is in the low $40 range.
“We can sell the higher-priced merchandise,” she said. “The consumer is willing to pay for these status brands as long as value is attached to them.”
Barbara Lipton, vice president and divisional merchandise manager of intimate apparel at Saks Fifth Avenue, said, “Overall, designer [intimates] business continues to be very, very strong for us. We had a very good fall ’99 and it’s continuing into spring in foundations and sleepwear, with increases in the high teens.”
Lipton said Saks has “intensified” the depth of assortments of key resources that are proven bestsellers.
“Contemporary assortments are selling extremely well,” she said. “Sell-throughs of all Natori products are excellent, and our introduction of an upscale collection of Ralph Lauren sleepwear last week of beautiful wovens and cotton knit separates generated sell-throughs of 15 percent.”
Lipton added that she is “definitely” looking for more European resources, noting, “It’s a main goal for spring. We are looking for merchandise that’s younger looking and contemporary.”
Asked why Saks does not have in-store shops for lingerie, Lipton replied, “We want nothing to do with shop concepts for intimate apparel. Our strategy is people come to Saks to shop the best assortments.”
For example, Lipton said Saks closed its shop environment for Calvin Klein Underwear and stopped selling the designer’s innerwear six years ago, because “it had become very mass market.”
From a vendor’s point of view, John Bowman, president of the Donna Karan division of Wacoal, said, “There could be a falling out of [megabrand] vendors. To a certain extent, some are starting to look very much alike, and that could produce a shakeout. From our perspective, the real test is the value of the product, bringing meaningful product to the table.”
Bowman said retailers “want to see product that in their minds represents a status name, something edgy like DKNY or Tommy. It has to have an attitude.”
“Stores need to separate their profiles, and some have begun by looking for different brands for the Generation X and Y shoppers, who get bored very easily,” said Niki Sachs, president and ceo of Hanro USA, an upscale Swiss label. “We are addressing that with our new Skiny brand.”
“A shakeout has begun,” continued Sachs, “but I think it started before Linda Wachner made her decision to sell Calvin underwear to Penney’s. Many stores at this market will be looking for brands to replace megabrands.”
Martha J. Olson, president of the licensed Ralph Lauren Intimates at Sara Lee, said reaction has been “very good” to a secondary line of sleepwear called Ralph by Ralph Lauren.
“We introduced it last fall for younger consumers,” Olson said. “There are a lot of younger shoppers, and they have a lot of spending power.”
Wendy Shum, vice president of sales for the licensed Anne Klein and Anne Klein 2 sleepwear and at-homewear collections at JWE, said, “Stores are totally overcrowded with megabrands, and I don’t think a single one has an all-inclusive line. They are mostly comprised of cottons, and while Jones New York does polyester charmeuse, it tends to be too tailored.
“We will be giving retailers what they’ve been asking for in Anne Klein 2 — a wide range of poly charmeuse, cotton yarn dyes and knits in an abundance of key items in basics as well as fashion styles and colors,” said Shum.
Meanwhile, other companies such as the Bestform Group, a unit of VF Corp., are pushing the envelope in another direction — discontinuing its Oscar de la Renta foundations license and launching a major initiative called X Bra by Lily of France this spring.
“It’s received phenomenal reaction, and stores love the multimillion-dollar ad campaign and in-store collateral we’ve planned,” said Tobie Garfinkle, vice president of merchandising for Lily of France and the licensed Natori and Josie lines.
“Retailers are looking for the next best mousetrap, and many are looking at X Bra as a classification they can build,” she added.
The ads, which feature a variety of women in posters that would appeal to James Bond movie goers, feature tag lines such as “Adjust to Stun,” “Draw Your Weapons,” and “Your Secret Weapon.” All packaging and hangtags will be bright green, a color retailers believe will “make the selling floors pop,” said Garfinkle.