Macy’s gets a Hilfiger exclusive

Posted: September 03, 2008

CINCINNATI - Macy's stores across the country are renovating their Tommy Hilfiger shops and expanding how much of the designer's sportswear they carry. But fans of the brand soon won't be seeing those items at other department stores.

Starting next week, Tommy Hilfiger U.S.A. will have an exclusive alliance with Macy's that leaves it as the only U.S. department store operator offering the company's men's and women's sportswear.

The launch comes as department stores increasingly turn to exclusive offerings to set themselves apart in a market where shoppers are focusing on basics like fuel and food and turning to discounters for lower prices.

Exclusive deals have been among the bright spots for department stores amid the sales slowdown, but analysts say a big-name and popular designer like Hilfiger brings extra clout.

"With Tommy Hilfiger, Macy's also will be offering the non-diluted, full-meal deal," said Patricia Edwards of investment manager Wentworth Hauser and Violich. "They didn't just get the name, they got the same quality goods."

Among other chains that have struck exclusive deals are Kohl's Corp., which while cutting its inventory of basics introduced a line of apparel and home furnishings from designer Vera Wang, called Simply Vera, with prices far below what her designs usually command. Kohl's will also be the exclusive U.S. retailer for the Dana Buchman brand designed by Liz Claiborne Inc., while J.C. Penney Co. alone has the American Living collection from Polo Ralph Lauren Corp. and has developed labels with designer Nicole Miller and home furnishing expert Chris Madden.

Macy's, which has already had success with its exclusive home furnishings collection from Martha Stewart, is seeking more exclusive alliances with other major designers. Chairman and CEO Terry Lundgren said the timing of the Hilfiger deal couldn't be better, especially given the brand's strong sales.

"The menswear has always been good, but they really got their act together in design and continuity of the women's apparel," Lundgren said. "The merchandise looks younger and more modern, but still very Tommy Hilfiger."

Fred Gehring, chief executive of Tommy Hilfiger Group, said menswear sales were stronger than in the women's line when discussions with Macy's began a few years ago.

"They wanted to see how things would materialize with our new approach to the women's side, and that business is now extremely strong," Gehring said.

The alliance beginning Tuesday will be heralded with a week of events in Macy's stores, including appearances by Tommy Hilfiger and in-store promotions. Besides expanding the merchandise assortment in stores and on its Web site, Macy's is increasing the number of stores carrying the sportswear from 350 to more than 500. Hilfiger, who has appeared before in TV ads for Macy's, will be featured more prominently in the fall and holiday season. Macy's also will send its credit card customers a special Hilfiger catalog.

"To be able to say a product like this is sold only at Macy's is a huge benefit," said Lundgren, whose goal is to pick up all of the Hilfiger business that was transacted at other chains such as Bon-Ton Stores Inc., Dillard's Inc. and Belk Inc.

U.S. shoppers can still also buy the sportswear at the brand's own stores and Web site, and other products distributed through Tommy Hilfiger's various licensees will still be sold at other stores as well as at Macy's.

The exclusive alliance allows Hilfiger to deal with one retailer as opposed to several, while still reaching a large number of consumers nationwide, Gehring said, acknowledging that stores losing the brand weren't happy.

Bon-Ton spokeswoman Mary Kerr said the retailer had been replacing Hilfiger sportswear for a couple of years as part of a natural evolution, before the Macy's deal was announced.

"You go in and out of national brands," said Kerr, who declined to say what replaced Hilfiger.

Dillard's and Belk did not return calls seeking comment.

Analysts say the trend toward exclusive deals could create problems for smaller department stores that lose brands and may not be able to secure their own exclusives or even strong replacements.

"I think - at least on the high end - it will make it more difficult for them to compete," said Edwards, who thinks that it could eventually winnow out some weaker chains.

For consumers, the exclusives may mean they have to expand their shopping trips.

"I think it's good marketing for stores to be selective, but the price of gas makes it costly for people to go four or five places to get brands they want," said Emily Byrne, 22, of Cincinnati.

Melissa Richardson, however, likes designer brands for their style. "I like Hilfiger and I would go to Macy's for it," said Richardson, 21, of Cincinnati. "But it would be easier at more places."

Analysts say exclusives carry potential risks for the designer or retailer, especially if one has a downturn and they are locked in a deal. But Michael Appel, managing director Quest Turnaround Advisors, believes Macy's and Tommy Hilfiger know what to expect from each other.

"I don't think the Hilfiger line is going to change that drastically, and Macy's has a big commitment to a lot of brands, whether they are exclusive or not," said Appel. "It all going to depend how well the brand is merchandised and replenished and how well it's marketed."

Wendy Liebmann, president of the WSL Strategic Retail consulting group, thinks the alliance is a good move for Macy's, but stresses the need for balance.

"For the big retailer, it's having the right mix of exclusive and private label brands you can't get anywhere else with the highly advertised, well-recognized national brands that usually get people in the doors," Liebmann said.

comments powered by Disqus