Mass channel tops in managing private-label star power

DSN Retailing Today, Oct 25, 2004

For years, supermarkets took the lead in trying to get consumers in the United States to embrace private label, going so far as trying--with decidedly limited success--to transplant the successful Loblaws President's Choice brand across the border from Canada. Yet, mass marketers clearly are the retailers who have made store brands a significant part of U.S. retail culture, and they continue asserting their leadership this year.

Unfortunately for margin-pressed supermarket operators, their bitter rivals, the warehouse clubs, made the most significant gains in private label with brands such as Kirkland at Costco and Berkley & Jensen at BJ's.

Over this past year, however, mass marketers logged the highest profile private label gains in the home department, for this was the annum of the domestic expert. Perhaps, in part, because the nation's most recognized domestician, Martha Stewart, was heading to prison, retailers saw an opportunity to build on the success she has enjoyed with Kmart and other retailers.

Of course, the success of various home design shows played a roll in both the enthusiasm and timing as well. JCPenney, Sears, Linens 'N Things and even Office Depot instituted home furnishings programs with media-enhanced designers and decor authorities of various pedigrees to boost new lines and departmentwide programs. The goal, ultimately, is not only to have a new label but also to garner some of the prestige the experts have amassed.

Target, too, has plumbed the designer depths, but in its own unique way. More so than other retailers, Target always ensures that it is the brand promoted no matter what the label launched. Indeed, in keeping the banner bright, Target runs almost as many star designers through its stores as customers, reviving some periodically, as has been the case with Michael Graves, dumping others when their usefulness is used up, as was the case with Philippe Stark. The latest eclipsed brand at Target, the Mossimo apparel label, was overtaken by Isaac Mizrahi who is getting a chance to move beyond clothes into home furnishings. 111e Isaac Mizrahi for Target home collection is slated to hit stores in March 2005 the company recently announced.

Clearly, and at least temporarily, Mizrahi is the star Target wants illuminating the store most conspicuously. "Isaac is an amazing talent, and we are thrilled to bring his bold, signature style to life in a complete line of products for the home," said Gina Sprenger, Target's senior vp of merchandising.

Mizrahi for Target home will include decorative accessories, lighting, furniture, tabletop, bath, bedding, stationery and pet accessories. Among the other home designers remaining in the Target constellation are Graves, Cynthia Rowley and Ilene Rosenzweig, who partner with the retail on the Swell line, and Rachel Ashwell, the persona behind Simply Shabby Chic.

Upon completion of her prison sentence, Martha will be back and likely with a vengeance. But the advance of mass-market private label won't end with home goods. BJ's has rolled out a home meal replacement private label line over the past few quarters, clubbed Wellesley Farms, and Meijer has been building its lower-end Circle M line in multiple categories while rolling out a upmarket collection of signature wines. Wal-Mart developed its own brand of low carbohydrate products--dubbed Carb Focus--to pace trends, while Kmart has come to lean on its Thalia line to reach out to Hispanic consumers.

For the first time in U.S. retailing, private labels are becoming a significant force beyond the opening price point. So watch out for George. After a decade, it has become the foremost fashion label in the United Kingdom, and Wal-Mart expects George to achieve the same kind of triumph in Canada but to take only about three years to do so. "This is the crown jewel in our apparel branding strategy," said Rick Weinstein, vp/gmm apparel, Wal-Mart Canada.

The promotion of the line may have begun more gradually in the United States, but expect an increasingly vigorous promotional effort that may change how Americans rate Wal-Mart as an apparel destination.