More and more retailers are making headlines these days by closing down their secondary lines. Amid a period of economic strife, big name labels that have built an empire of smaller, specific collections are attempting to refocus their brands by downsizing to the extreme. "It is very smart for individual retailers to pull the plug at this
point because the time-horizon for these (secondary) concepts to break
even has grown substantially as consumer spending has slowed," Boenning
& Scattergood analyst Holly Guthrie said. Recent lines on the chopping block have been Pacific Sunwear's line d.e.m.o., Talbots' owned J.Jill, Eddie Bauer, and Abercrombie & Fitch's offshoot chain Ruehl.
In the case of Ruehl, Guthrie claimed the brand "didn't work" because the price point was too high, the product was not
sufficiently unique and the market was saturated with similar
merchandise—all problems that other retailers are beginning to notice. In more prosperous times, many companies expanded their labels to include trendier, hipper styles in order to broaden the age range of their customer base. As a result most retailers are now struggling within a market that offers too many choices of the same product. By pulling the plug on these secondary ventures, companies are attempting to return to their individual roots and offer a product and an experience that speaks to their core customer. "Retailers are finally realizing that they have to get their own
personality back … they can no longer look like everybody else," said
Marshal Cohen, chief industry analyst with market research firm NPD
Group.In addition to honing in on their targeted demographic, many companies are also trying to market the perks of choosing popular, well known brands over smaller, experimental labels. More research is being revealed that shows products that appeal to the masses are outnumbering ones that are more specialized in overall sales.
As for the future of this trend, experts project that "only half" of the expected number of dismantled companies has already occurred, though they do not expect many more well known brands to go under like Eddie Bauer and J. Jill. It is still to early to tell whether or not retailers' new movement of "back to basics" will pay off profitably in the end, though many claim that once the recession begins to ebb away in the next year or two, stores will go right back to their old ways. "Retailers are probably the most forgetful people I have ever met in my
entire career," Cohen noted. "(There is) pressure to grow and as the economy returns, they
will absolutely go right back to the same formula which is all about
brand extensions and store expansions." It seems time will only tell.
Article Source: Reuters
Photo Sources: discovered, boston.com, 1st news
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