This fascinating article comes from Crains New York Business and focuses on the growth and success or Private Brands in fashion retailers. Check it out.
Private labels are back in fashion
Retailers protect margins with in-house brands.
Items from new apparel brand Bar III are flying off Macy’s shelves, with young fashionistas grabbing the line’s floral dresses and sheer ruffled blouses. Bar III is not the latest creation from a hot designer but is one of Macy’s private labels, which the department store designs, manufactures and markets in-house.
“Bar III has been on fire since its debut” in February, said Molly Langenstein, Macy’s executive vice president of fashion and new business development.
As they face unprecedented pressure from rising costs for raw materials, competition from online discounters and shoppers still reluctant to spend, more and more department stores are turning to a money-saving solution: private-label and exclusive apparel lines.
Such brands allow retailers to eliminate middlemen and capture more earnings. Exclusive partnerships, such as Macy’s with Madonna and J.C. Penney Co.’s with Liz Claiborne, are also on the rise.
At some stores, the mix of private and exclusive lines has risen to 40% from 20% a few years ago, according to retail consultancy Kurt Salmon. The development stands in stark contrast to the recession, when most department stores focused on big-name designers to get shoppers in the door.
“Retailers got more aggressive with the recession and are looking at how they can keep more of the dollars,” said Amy Klaris, a strategist at Kurt Salmon. She notes that producing clothes in-house has been trending up for the past five to seven years.