Through a special arrangement, presented here for discussion is a summary of a current article from the Hurlbut & Associates blog.
In a Reuters piece that appeared on March 2, J.C. Penney CEO Myron Ullman said, "Department stores must keep ramping up exclusive lines of clothing and accessories if they are to win market share from rivals and thrive in the still sluggish U.S. consumer spending environment."
He then went on to say, "There are too many department stores that are the same. If everything is the same, then it's where you get the better parking spot."
It's a great way of putting it. If every store is the same, it all comes down to convenience and, by the way, price. Which is why retailers from Penney's to Macy's are chasing exclusive lines.
Mr. Ullman went on to tell Reuters that, "more exclusives will help Penney brush back the competition and boost the bottom line given their higher profit margins compared with widely available brands."
Not necessarily. It takes more than exclusive lines.
Department stores and every other apparel retailer have been offering customers a "sea of sameness" for several years now. The problem hasn't been the labels in the garments; it's been the garments themselves. To customers, whose eyes have glazed over, it's all become just stuff. When's it going on sale? When's the next markdown? (It's more likely that the best way for department stores to protect their margins in the current environment is to manage their inventories very tightly, and avoid markdowns as much as possible, as recent reports suggest.)
The challenge for department stores, and their exclusive designer lines, is how to create distinctiveness without taking the kind of fashion risks that might alienate their broad-based, middle-America target customer. More likely than not, at the end of the day, the fashions will be safe, and all that's going to be distinctive is the hangtags.
This is important for independent retailers to understand, especially fashion boutiques. Many have built not just their assortments, but their positioning around lines that they carry exclusively in their markets. Over the past year-and-a-half, however, that has been scant protection from the forces rippling through the retail world. Even to these customers, it's come to look like just more stuff.
Differentiation requires real difference. Real difference in the world of independent retailing begins with an entrepreneur's vision, and the compelling execution of that vision. For fashion boutiques, it might be the unique feel of the store, from funky to chic, or it might be the incredibly personalized service, or the discerning, captivating taste level of the owner or buyer. In this moment in time, however, it's got to be more than just the labels on the merchandise.
Discussion Questions: To what degree do you think exclusive labels are helping department stores differentiate themselves? How does the push toward exclusive labels by department stores affect independent retailers in the fashion space and how should they respond?