Macy's Carves Out a Piece of Roy's Designer Brand

Designer Rachel Roy and her partners at Jones Apparel Group are looking for greener, or at least broader, pastures and so are creating a brand for Macy's. Formerly Roy's label was found only at luxury department stores such as Nordstrom, Neiman Marcus and Saks, but the new line, which Jones Apparel Group is careful to call a diffusion brand, will be a Macy's exclusive.

For years, Macy's was the victim of department store brands trading down to the wider audiences reached by mass-market retailers. Brands from Ralph Lauren to Martex sought sales that were shifting to discount stores, warehouse clubs and lower end department stores, the so-called mid-tier retailers such as J.C. Penney, Kohl's and Sears, which were winning more consumer acceptance as they introduced better quality and more stylish products. Some did so with the promise to protect their brand at the department store level by developing sub brands. In the Martex case, Martex Royal Legacy and Martex Indulgence were established as sub or diffusion brands for roll out at Target early this decade.

Something similar is happening now. Clearly, Roy and Jones Apparel want to protect the upper-tier business while taking advantage of the larger sales volumes generated by middle class consumers who shop Macy's, particularly in a recession when top-tier shoppers are more likely to trade down and Macy's shoppers are less likely to trade up. So, they've developed a diffusion or sub brand for Macy's called Rachel Rachel Roy at prices ranging from $40 to $299 in sportswear, footwear, jewelry and handbags.

For Macy's, Roy represents a top designer name now available in its stores to balance the mass-market and celebrity brands it has adopted to grab the attention of the even bigger potential customer base that shops at J.C. Penney, Target, Costco and the retail sectors they represent. Macy's needs to maintain a distinction between its stores and the mass-market retailers even if it borrowed from their playbook when it introduced the Martha Stewart and Jessica Simpson labels. Macy's wants to assure the Target customers who are willing to shell out to shop there when properly motivated that they will see cutting edge but affordable style even as it seeks to convince the well-heeled consumers who can afford to spend on its most expensive offerings that they will remain on the forward portion of the fashion curve.

In a statement, Macy's CEO Terry Lundgren summed it up this way:

Rachel's design sensibility is very appealing to our fashion customer who insists on great value and a perfect complement to the existing stable of high-profile designer brands available exclusively at Macy's. This new collection is another move in our continued effort to differentiate our assortments with the best, most desired brands on the market, giving customers another powerful reason to choose Macy's.