J.C. Penney's Partnership with Liz Claiborne Is Too Ambitious
J.C. Penney (JCP) will reintroduce Liz Claiborne to its sales floors as the brand's exclusive department store seller, but the impact may be diluted by the execution of the brand strategy.
The dilution happens almost immediately and is based on how J.C. Penney intends to position the brand in its stores. Basically, that can be summed up in one word: everywhere. The retailer noted that 30 categories will have a presence, including some in the men's and home departments. The utility of the brand there is questionable.
Of course, J.C. Penney is counting on the women who have been won over by the brand to snap it up all over. So even if the men in their lives aren't keen on wearing Liz, women will purchase it for them. Whether the label will be worn and purchase repeated is open to question.
As for home, the idea that customers who wear Liz will want to sleep on it and even drag it on airplanes -- luggage is included in the deal -- comes with no guarantees. In fact, major apparel designers labels, including Ralph Lauren and Nautica, have had limited success in home fashions. Even as department stores touted them, consumers shifted their purchasing to the mass market and brand such as Martha Stewart. Things got to the point that department store brands such as Fieldcrest wound up in stores such as Target because that's where the purchasing went, and Martha wound up in Macy's (M) because it wanted lost home furnishings sales back. Although Macy's is losing Liz Claiborne to J.C. Penney, the overlap between department store and mass-market retailers that has become more pronounced over years of chain consolidation and brand swapping will mitigate any effect of the transition. Most J.C. Penney shoppers already visit Macy's as well. Major customer migration is unlikely.
J.C. Penney has had success with its CONCEPTS by Claiborne and Liz & Co. labels since they launched in 2007, and the retailer cites customer studies that say shoppers want more. However, that eagerness comes with the prospects of cannibalizing existing sales even in the categories where Penney might expect to do best.
Not only that, but the brand isn't necessarily going to remain the same in the J.C. Penney environment. In announcing the Claiborne relaunch and how it meant to handle it, the retailer conspicuously declared that its partner would do all the product design, which may be true. Technically. Ultimately, thought, the retailer has the final say about what is presented in stores and how, which means its expectations will weigh heavily throughout the development process.
The style input should help J.C. Penney boost its fashion credibility and may even provide expertise the retailer can apply throughout its apparel business. Yet, Penney's influence will narrow the flexibility Liz Claiborne designers exercise as the retailer directs their focus to its core customers, the ones it surveyed and whose positive response it is touting. A brand that is so widely distributed across the store must have major core customer appeal to generate the sales that justify the space committed. Liz Claiborne certainly will target non-core customers by introducing avant garde looks, many confined to jcpenney.com, but the overall effect is likely to be a homogenization -- or Pennizination -- of the brand. That doesn't mean Liz Claiborne won't give J.C. Penney a boost, but, long term, the effect may be muted.
Another thing to consider is that Liz Claiborne has brands that it operated directly, such as Kate Spade and Juicy Couture, that posted sales increases in the latest quarter. And it has problems in the Mexx Europe business. Those operations will demand executive attention. Parking the Liz Claiborne brand at J.C. Penney may stabilize it but not necessarily revitalize it.
Sales related to the Liz Claiborne brand have declined during the transition to its new structure, which includes distribution through QVC and well as J.C. Penney. Dealing with Mexx and supervising the brands it continues to operate directly -- which have attached outlet retail operations of the sort Liz Claiborne is stepping away from with its namesake brand -- are additional factors that could weaken the collaboration and temper its impact at J.C. Penney.
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