In-house fashion brands foster own identity

Associated Press

MEMBER OF THE CLUB: A model wears a Charter Club jacket. The in-store brand satisfies a niche for traditional Macy’s customers.

Expect more private labels for clothing in 2009.

NEW YORK (AP) — Apparel retailers are taking matters into their own hands: If designers don’t give them what they believe their customers want, the stores are making it themselves and sewing their own labels inside.

The idea of private label isn’t new, but increasingly in-house brands are becoming an important sales tool. They have their own identity — and their own discerning fans — instead of being a cheap trick to spark a little foot traffic.

In the coming year, look for defined in-store destinations for brands such as Macy’s fashion-driven INC, traditional Charter Club and trendy Style & Co.; Saks Fifth Avenue’s own namesake label in menswear and its upscale casual Clothes(Real) line for women; and Nordstrom’s workplace collection Classiques Entier and the feminine Halogen label.

At Nordstrom, the private label business already represents 12-14 percent of total sales.

What matters

The game-changers, say stores and analysts, are quality and attention to design.

The fashion industry is learning a valuable lesson from grocers, says Robert Passikoff, president of Brand Keys Inc., a New York-based customer research marketing firm.

The days of store-brand canned green beans with the most generic black-and-white block-letter label are over, he observes, and the no-name, practically disposable cotton T-shirt is going the same way.

But, Passikoff asks, if you can buy what is essentially the same button-down shirt from Macy’s own menswear Club Room brand for $29.99, why would any smart, savvy shopper pay $49 for a different name?

At Saks, the house brands have to live up to consumer expectations if they are to survive, pledges Thomas Ott, senior vice president and general merchandise manager of menswear and home. Saks is lucky to have its name to leverage, he says, but there is a flip-side risk if products are anything less than what the shopper is used to.

The company has put a lot of attention and resources into developing its labels, while being aware that it shouldn’t replicate or compete with current vendors. However, if designers missed something for which there is consumer demand, there’s no reason to pass over an opportunity, says Joseph M. Boitano, Saks’ group senior vice president.

“For us to make a dress that we can buy from DVF (Diane von Furstenberg) at the same price is nuts, but for us to create a product for the DVF customer to wear on the weekends or when she’s going to the gym is perfect.”

Win-win situation

Private labels should benefit both shoppers and retailers, notes Ott, as the stores can respond swiftly to regional needs — Florida or Phoenix stores can stock up on polo shirts instead of flannel suits even in the fall, for example — as well as fashion trends and manufacturing expenses.

When the euro exchange rate was at its height, Saks had trouble offering any of its core (mostly Italian) designer brands except at the very top price point. But, Ott says, even an upscale store needs a range of prices, and that’s where the private-label sportcoats, cashmere sweaters and outerwear fit in.

It’s the retailer’s theory that, to a shopper, the name Saks means as much to them as any other fashion brand — and analyst Passikoff agrees that stores can cash in on the cache of their reputations. It applies to a top-tier store or even a mass retailer such as Target, which has worked hard to carve out its own brand identity.

“Consumers aren’t making the distinction between private label and other labels, but the retailers and manufacturers are: It’s theirs so they are controlling costs and they have higher margins,” he says. “There are advantages to doing business this way.”

Exclusivity strategy

Macy’s treats its private labels like full-fledged national brands, with national media marketing and branded in-store shops. The goal is to create must-have items that are available exclusively at Macy’s, says Nancy Slavin, senior vice president of marketing, retail development, visual and shop development for Macy’s Merchandising Group.

Macy’s can decide whether “to step on the gas or lift up” depending on consumer trends, she says. For example, the retailer only slightly tweaked for this year the blazer silhouette favored by its very traditional Charter Club customer. Yet, says Slavin, the store would never do something like that for the INC shopper; she craves newness.

“Each brand fits a customer profile, whether more traditional customer or the contemporary customer. We’ve thought very hard about our portfolio of brands and we are meeting the needs of the consumer across all aspects of her lifestyle,” she says.

Meanwhile, Saks has increased its in-house trouser and activewear orders because they’re important items for the store’s customer, yet there was a dearth of designer options.

Saks’ Boitano emphasizes, though, that the renewed interest in private labels is not solely a reaction to the economic meltdown. “This has been in the works longer than that. This is not about heaping on merchandise,” he says.