MODERATE GOES MEGA: SAG HARBOR SETS PLAN FOR $3 BILLION EMPIRE

Byline: Anne D’Innocenzio

NEW YORK — Capitalizing on the aging baby boomer’s growing demographics that make up Sag Harbor’s core audience, parent Kellwood Co. is on a branding mission to build the label into a $2 billion lifestyle business at retail within the next two years and ultimately a $3 billion empire.
Sag Harbor’s traditional wool blazers and printed challis skirts might not make headline news for the fashion cognoscenti, but for the budget-conscious American woman who’s over 35, the brand has become one of her wardrobe staples.
Last year, Sag Harbor, launched in the mid-Eighties, generated wholesale volume of $700 million. Much of the growth will come from its fast-expanding licensing business, according to Robert Adler, chairman of Halmode, a division of Kellwood, and corporate vice president and director of licensing of Kellwood.
“We want to make this a megabrand,” said Adler.
Over the past five months, Adler has spearheaded the signing of 10 licensing deals, ranging from jewelry and hair accessories to hats and sunglasses. The launch of most of these products will be for fall, with the remainder set for spring retailing.
Sag Harbor’s licensed shoe line was in stores about six months ago, and watches hit stores this past spring. Adler is in the midst of negotiating with firms to develop home furnishings and slippers. There are also plans to produce lingerie and intimates in-house.
In addition, the Halmode Apparel division is launching a new line of special occasion dresses and eveningwear under Harbor Nites by Sag Harbor, for holiday selling, as reported in WWD. The company is also set to unveil a suit division, to be in stores for fall 2001. Halmode already produces dresses under the Sag Harbor label, which has become a $100 million business at wholesale.
To promote the brand, Sag Harbor will launch its first TV campaign for fall, which represents one of the first moderate vendor brands to take that route. The 30-second campaign, which has the tag line “Be Yourself,” uses nostalgia to capture the consumer’s attention, going back to parochial school days, teenage days and primping for the prom. It ends with the walk-off: “Isn’t it time that you dressed for yourself?”
The campaign was produced by New York-based ad agency Hampel Stefanides.
“We want to speak directly to the consumer,” said Martin Brody, chief executive officer and a founder of the Sag Harbor brand.
“There is a lot of potential for this brand,” said Barbara J. McGraw, brand manager for Sag Harbor, who assumed the new post on May 1. “We want to service all the customer’s needs.”
Sag Harbor, ranked generally as the number one moderate resource in department stores, according to a consensus of numerous market surveys, has posted 10 to 15 percent annual sales increases over the past few years.
About 80 percent of the Sag Harbor business is from 10 major accounts, including Sears, J.C. Penney, May Co. and units of Federated Department Stores. About 40 percent of the business is in special sizes, according to John R. Henderson, vice president of merchandising at Kellwood.
The brand already enjoys a high consumer recognition, according to surveys. Of 800 women polled in a recent survey conducted by research firm Daniel Yankelovich Inc., 67 percent of the respondents were aware of the Sag Harbor brand, 33 percent had purchased the label and 94 percent were loyal to the name.
The brand has benefited over the past six months from Penney’s and Sears’ paring down their mix of vendors in favor of major resources like Sag Harbor, Kellwood executives noted.
Sag Harbor differs from Alfred Dunner, ranked the second largest department store moderate resource, because Dunner’s core audience is in her 50s and 60s. Sag Harbor’s core age group is from 45 to 54. In addition, Alfred Dunner’s focus is in coordinates, as opposed to Sag Harbor’s emphasis on related separates.
“Sag Harbor is one of our largest resources on the moderate floor, and it has a much broader customer appeal than you realize,” said Kathy Bufano, executive vice president of merchandising at Macy’s East.
She added that some of Sag Harbor’s more classic merchandise appeals to a younger consumer in her 30s. The label, which is in all doors at Macy’s East, has been a “steady growth performer,” she said. Among spring’s standouts are linen pieces, woven two-piece dresses and camp shirts, Bufano said.
However, appealing to the consumer, who doesn’t have a lot of money to burn on clothing, isn’t easy, the Sag Harbor executives admit. Sag Harbor’s customer has an average household income of $60,000, and company officials believe that she doesn’t spend more than about 7 percent of household income on clothing — for the entire family.
Brody and Harvey Solomon, the company’s president, believe they’ve been able to win over the consumer with their price-value ratio formula. The company’s trademark basic wool blazers retail from $19.99 to $49.99, dresses are priced from $29.99 to $39.99, short-sleeve sweaters retail for $19.99 and cardigans sell for $24.55.
Brody said the company is able to maximize its sales through color multipliers. For example, wool blazers come in 15 to 18 colors and its acrylic sweater sets are offered in 23 colors.
The company, which has a 20-member design team, aims to translate the runway trends to make them understandable for its consumer. For example, for fall, the company will offer about 25 to 35 percent of its offerings in jackets, to reflect the trend toward more structured looks.
Sag Harbor didn’t go overboard with embroidery this past spring, but used touches on sleeves of dresses or collars of shirts. There are hints of animal prints in its clothing and on accessories, and python prints pop up in its belts.
“You have to understand who the customer is,” Brody said. “She wants to be comfortable and wear affordable clothing.”
Sag Harbor got its roots back in the mid-Seventies, when Brody and Solomon were among a group of partners that founded Parsons Place, which became Sag Harbor about 10 years later.
The firm, which at the time was a $50 million business, was acquired by Kellwood in 1986. In 1990, Brody and Solomon were put at the helm of the business and have steered its growth ever since.

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