Mid-price retail chains turn to private brands
Stores also cut deals for exclusive designer lines
NEW YORK -- When J.C. Penney Co. Inc. opened a temporary store in Times Square this year, the location was filled with a wide mix of clothes and furniture that are sold exclusively by the retailer.
J.C. Penney said it hoped its displays of Arizona jeans, trendy Miss Bisou clothing, and furniture by Chris Madden would show shoppers that it now stocks contemporary, unique merchandise that is worth a trip to its stores.
Penney is not alone in trying to draw shoppers with the promise of exclusive products.
As mid-priced department stores try to win the business of penny-conscious and time-strapped consumers, they are increasingly developing their own private brands or striking deals with designers to sell exclusive lines of merchandise.
The trend is expected to accelerate. Research firm NPD Group predicts that by 2010, 60 percent of the merchandise mix will be private brands and labels, up from 25 percent in 1975.
But the effort is not foolproof. Department stores can find themselves swallowing large markdowns if their own brands fail, or if unhappy shoppers say stores have not offered the right mix of exclusive products and name-brand items.
``Not everyone in the fashion business is always fashion right," said NPD chief analyst Marshal Cohen. ``We're going to see some interesting tap dancing done by some of the retailers, who sometimes may get it right and sometimes may not."
To offset waning sales and ongoing predictions of their demise, department stores have developed their own brands. This private branded merchandise typically sells for less than competing name brands and provides retailers better margins.
``Private labels have evolved from tactical opportunities to strategic necessities," said Darrell Rigby, head of Bain's global retail practice. ``I don't know a single retailer that isn't currently looking for ways to improve their private-brand capabilities."
