Wardrobe decent, but racks need refreshing - Apparel & Accessories; Kmart

DSN Retailing Today, March 8, 2004 by Emily Scardino

Kmart's apparel offering has undergone some of the most dramatic overhauls of any of its merchandise categories--before, during and after the company's foray into bankruptcy. It introduced a host of new brands that significantly updated the fashions in its assortment. Now the question is, What is the company doing today and through 2004 to maintain consumer interest and drive much-needed growth?

It would be a fair guess to say Kmart will add yet another exciting brand to its assortment for back-to school, based on the success this tactic has brought it over the past few years. Certainly some major changes should be underway behind the scenes, as Kmart continues to build this lucrative, high-margin merchandise category. After all, the company hired a chief apparel officer for the first time last year, John D. Goodman, who since Jan. 1 2004 has also served as category senior vp.

"CAO," as the position is known, is the highest-ranking apparel position in company history. After a long series of layoffs and resignations in Kmart's apparel division, it is obvious the company has implemented a stronger leadership role than ever to maximize results. Kmart ceo Julian Day's comments about Goodman indicated he was looking for consistent, expert management and stressed his hire's strong foundation of experience and "track record of success" at retailers including Gap Inc.

The goal is to maintain Kmart's track record or success in apparel. First, Disney joined Sesame Street in children's wear. Then, the company launched Joe Boxer, the specialty and department store underwear brand, turning it into an exclusive lifestyle offering. As a major hit, Joe Boxer was credited by executives for having helped Kmart emerge from bankruptcy. And last year, the company put its money where its mouth is in terms of positioning itself as a resource for multicultural consumers introducing Thalia Sodi, a young misses line with fashion flair based on Latina pop star of the same name.

While Kmart's recent track record in apparel has been positive, specially when it comes to these brand introductions, one critical area it needs to refine is follow-through. The company has proven that it is good at Launching new apparel lines, but once the initial launch period is over, the company has not shown the strongest effort in supporting established brands, particularly at point of sale. For instance, the signage atop the Disney fixtures in children's wear in its initial 2001 launch--vibrant lifestyle imagery--is now faded, having never been replaced. Compared with the launch, which featured a Disney-specific national advertising campaign that tied in with the now-aging signage, the contrast is dramatic. Though the wardrobe itself is on-trend, the racks need refreshing.

While an apparent lack of follow-through could be blamed on inconsistent brand management, it could also be attributed to a general lack of funds. Still-negative year-on-year results have kept Kmart's marketing budget at a level where it has to choose which of its apparel lines to advertise nationally. Indeed, Kmart has done a good job of advertising Joe Boxer, giving it a strong identity with the "dancing Joe Boxer guy." Kmart has continued to build the brand, rolling out a line extension, JBXR, starting in fall 2003, which features misses wear-to-work apparel, dressier than the standard Joe Boxer fare. However, according to director of product and brand communications Michele Jasukaitis, this is a test, and JBXR may not be in stores come fall.

Besides Joe Boxer, brand marketing for other apparel lines, like Thalia, has been less intensive. While the singer is featured in ads in the "Right Here. Right Now." campaign, only someone already aware of Thalia's identity and who already knows her product is a part of Kmart's apparel assortment would pick up on the reference.

It could be argued that since Thalia is not in all Kmart stores, it would not make sense to hype the brand. Still, a variety of Thalia items are available on kmart.com, and in that sense, it is a national brand.

So far, nothing new in terms of its apparel assortment is on the immediate horizon. Standby Kathy Ireland is still on the floor, though in some urban stores Thalia has displaced it. Likewise, Jaclyn Smith is still a major presence, offering baby boomers classic sportswear, suiting and accessories.

While Kmart's existing brands continue to help improve Overall sales at this still-struggling retailer, Kmart is currently "examining what is already on the floor to determine how to best improve sales," according to Jasukaitis.

For whatever changes lie ahead for Kmart's apparel departments, expect apparel brands, old and new, to once again come to the forefront.