No-name clothes altering retail apparel landscape
A few months ago, Amazon. com representatives met with fashion designer Jackie Wilson as part of the expansion of Amazon’s surging apparel business. They wanted her to make a knit top for women that would be sold under an Amazon-owned private label. And they wanted the fabric to feel heavy and high-quality — the sort of attributes long associated in the shopping mind with name-brand attire.
“They are not concerned at all about how many units they sell, and they’re not focused on margins,” says Wilson, whose company in Syracuse, N.Y., makes clothing for Kohl’s, American Eagle Outfitters, and J.C. Penney. “They’re concerned about customer satisfaction. They want five-star reviews.”
Wilson’s knit top is in the vanguard of a private-label push that’s upended the $275 billion U.S. apparel sector. Amazon, Wal-Mart Stores, Target and other big retailers are beefing up their clothing lines to grab shoppers whose loyalty to established brands such as Gap and Nike has waned. Even supermarket chain Kroger is getting in on the act, attracted by profit margins that far exceed what they earn on bananas and paper towels.
This year Amazon will leapfrog T.J. Maxx owner TJX Cos. and Macy’s to become the second-biggest seller of apparel and footwear in the U.S., Wells Fargo estimates. In some categories, like the active wear that Americans increasingly wear all day, whether or not they hit the gym, private labels combined account for 20 percent of the market, according to researcher NPD. That makes store brands in aggregate larger than any single brand, which should strike fear in the executive suites of Lululemon Athletica, Nike, and Under Armour.
“Active wear is going like wildfire,” Wilson says, for the simple reason that “you don’t have to try on spandex pants.”
Store-brand apparel is nothing new. The Sears, Roebuck & Co. catalog first offered clothing in 1894, and Wal-Mart’s Faded Glory house brand began life in 1972 as a department-store label. But for years, private-label apparel was dull and dowdy, no match for branded threads.
That started to change in 1990 when British supermarket chain Asda Stores asked fashion designer George Davies to create an exclusive clothing line. The result, George, was a hit in the U.K. and caught the attention of Canadian retailer Loblaws Cos., which in 2004 hired Joe Mimran, co-founder of the Club Monaco chain, to do the same. His Joe Fresh expanded into standalone stores and a partnership with J.C. Penney in the U.S. But the brand didn’t click with Penney’s shoppers, prompting Mimram’s departure in 2015 and an overhaul of the business.
Despite its recent struggles, Joe Fresh “was a nice surprise to other retailers who said, ‘Hey, if they can do this, we can, too,’ ” says Adheer Bahulkar, a partner at consultants A.T. Kearney.
As retailers stepped up investments, connected with Asian suppliers, and poached fashionistas to head up in-house design teams, the established brands stumbled under the weight of declining mall traffic and heaps of unsold inventory.