Pi-Consulting

Just as High Fashion decides it reigns supreme, something happens to disrupt the hegemony of the proprietary designer label. The battlements of America’s fashion retail business are being stormed by… retailers’ Own Label goods, of all unlikely new entrants.

Those who thought that Designer Label giants would rule the mall for a thousand years are blinking in disbelief at an upstart source of sales which was always supposed to be constrained to the point of insignificance by its relentless dowdiness. Top names like Liz Claiborne are staring into the abyss of precipitous sales fall-offs, while retailer JC Penney laughs all the way to the bank with the takings from its own labels such as Worthington, a.n.a, and Arizona. These “names from nowhere” already represent half of Penney’s clothing sales. Macy’s have turned over significant retail space to their own labels such as American Rag and Alfani. Far from being confined to the USA, similar trends are also overturning top brands’ presumption of supremacy in London stores like Harrods and Selfridges.

Some big designer names are shrugging their shoulders and joining the scramble. Oscar de la Renta and Elie Tahari have both signed up to create new labels for Macy’s, where private-label lines have been outgrowing wholesale by a three-to-one margin. Liz Claiborne has swallowed hard and started making lines like Dana Buchman and Ellen Tracy for department stores to sell. Middlemen are sidelined. Marked-up prices are slashed. Department stores get higher margins, and the whole equation is perpetuated by the price advantages they can accordingly pass on to consumers.

Not everyone goes with the trend, of course. There are Designer Label True Believers (the young and the well-heeled in particular, together about 20% of the market) who will never desert their icon brands. Nonetheless, even the die-hard label junkies pay attention when superstar clothes-horses like Madonna (her line is modestly called “M”) and Kate Moss launch their own purpose-built fashion lines in partnership with chains such as Top Shop.

Where will it all end? Industry analysts are already predicting the launch of separate free-standing outlets where store chains can “exclusively” showcase their new own-label branded offerings. Is that exclusive enough for you?