Private label

   Beginning in the mid-1980s, in an effort to improve margins, reduce prices, and achieve product differentiation, retailers began to assume the role of manufacturer or jobber by offering apparel under their own "private" label. The downsides for retailers are that markdown money is not there and they have inventory ownership and management issues to deal with, which in turn can drag down their bottom lines. However, opening their own retail outlet stores has solved that problem.

   In the early days, there were several techniques used by department stores to create private-label merchandise. The first involved store buyers visiting overseas factories and creating knock-offs of styles already being produced for specific manufacturers, sometimes only changing a fabric or detail, then bringing it in under an "especially made for . . ." label or under their own "created" label. Another way was to knock-off a "big seller" from a national brand the following season. Or, retail buyers could make shopping trips to Europe, buy original store merchandise, and then have a contractor, a private-label contractor, or a manufacturer copy it for them, under their own label. In the mid-1990s, some department and specialty store chains realized how lucrative the private-label business could be and invested in the research and development process by creating their own product development teams equipped with a product development manager, designer or product developer, products buyer, technical designer, specification writer, and production manager.

   Having recognized the value of creating brand image, many stores invented their own brand names for their private-label merchandise. Examples of successful store brands are Macy's I.N.C. and Alfani labels; J. C. Penney's Arizona Jeans and Worthington lines; Target's Xhileration, Merona, and Cherokee brands; Marshall Field's Field Gear clothing; and Jacobson's Take Five, Take Five Sport, and Leyla Mitra labels. Even high-end stores offer private-label merchandise such as Barneys New York and Saks Fifth Avenue with The Works, Real Clothes, and Saks Fifth Avenue Collection. Some stores license designers' names to promote their private-label merchandise, such as Target's Isaac Mizrahi and Luella Bartley collections and J. C. Penney's Nicole by Nicole Miller.

   Private-label merchandise has helped shift power to the retailer in the industry and store brands are perceived as major threats to national brand manufacturers and private-label manufacturers alike. Kellwood, founded in 1961 as a private-label firm to Sears, has had to diversify and is now a $2.4 billion volume private-label producer and licensor of numerous national brands. Cyne Design, which began manufacturing private-label merchandise for Ann Taylor, The Limited, Express, and Casual Corner also has diversified as retailers are cutting out the middleman and going vertical, that is, going from manufacturing to retail. Private-label brands are priced some 15-20 percent lower than national brands and, in 2006, private-label merchandise accounted for between 15-50 percent of the merchandise mix at major American department and specialty chain stores. The future of fashion is most definitely in the hands of the retailer.