Last week's announcement that Macy's will become the exclusive retailer of Tommy Hilfiger sportswear beginning next fall is another step in the chain's strategy of differentiating by selling brands exclusive to its stores.
"We will bring our customers an increasing level of compelling and distinctive fashions that are consistent with their aspirations and lifestyles. Strong and well-established brands like Tommy Hilfiger set Macy's apart. So offering this brand on a much more exclusive basis is another powerful reason for customers to choose to shop at Macy's," Terry Lundgren, chairman, president and chief executive officer of Macy's, said in a press release to announce the deal.
Macy's estimates have exclusive and store labels representing roughly 35 percent of company sales at present. With Hilfiger and the addition of new lines such as Martha Stewart's, the company is obviously looking to push that percentage higher.
From the Hilfiger vantage point, this move comes at a time when the brand has been seeing shelf space reduced in many stores. Even so, a number of retailers including Bon-Ton, Dillard's and Boscov's will be looking to replace Hilfiger products that remain popular even if not to the degree as in the past. Hilfiger's men's and women's sportswear lines are estimated to generate roughly $200 million in annual sales.
Macy's and Apax Partners, which owns the Hilfiger brand, are anticipating the brand will do the same sales if not more under a single retail banner than it did being sold in various outlets.
"We have the scale to make the math work for a brand like Tommy Hilfiger," Mr. Lundgren told The New York Times.
Mr. Lundgren said that the company was working on a number of other exclusive agreements, but they represented "a big commitment" and it takes time.
"You shake your hand and all of a sudden the line does not look good the next season and you have to buy it," he said. “The vendor is not going anywhere else. That is why it hasn't gone as fast as we'd like."
Discussion Questions: Is Macy's on the right track with its exclusive and store brand strategy? Do deals with Hilfiger, Stewart and others provide Macy's with the clear point of differentiation it seeks? Are there any missing elements that Macy's needs to piece together to fulfill its goal of becoming a national retailing force?