THE BLOG

Brand Expansion Is the Way to Retail Recovery

02/10/2012 10:28 am ET | Updated Apr 11, 2012

This past Wednesday, New York Fashion Week kicked-off Fall 2012's projected trends

in fashion. This in the midst of the economy entering yet another recessionary period

marred by news of January's decline in retail growth. The road to retail recovery is in

brand expansion.

As new looks are seen at places like MILK Studios and on the runway at Lincoln Center,

fashion houses take calculated risks appealing to their target customer whom they hope

will spend thousands of dollars on a single dress. The clothing is often not the bread and

butter of the fashion houses but serves as a template for the muted versions of the high

concepts seen in shows. The problem lies in the fact that these versions are not sold at full retail price and are heavily discounted months later, hurting the potential profits. For example,

the deeply discounted inventory available at the bi-annual Barneys Warehouse sale where

early bird shoppers can score a Balenciaga knit top from a previous season marked down

40% from $125.

That's not to say the thousand dollar dresses seen during Fashion Week are not

financially justifiable by the costs associated with fabrics, time, and labor going into a

single sample presented. But some labels have successfully been able to keep their brand

appeal to the established customer and reel in new ones by expanding their markets to

cater to lower price points.

How does a designer like Marc Jacobs amass sales revenues close to $1 billion and avoid

being a cliché among ready-to-wear patrons and consumers with limited disposable

income? Catering to all. With different target markets, (The Marc Jacobs collection that

appeals to the career professional that can spend over a thousand dollars on a dress, Marc

by Marc Jacobs that caters to the young casual consumer who can spend about $200 on

a dress and Little Marc, for children) additional lines in menswear and accessories, plus

serving as the creative director for Louis Vuitton since 1997, Marc's involvement in all

these segments has not hurt any of his brands' images. It has in fact enhanced his brands'

prestige.

Just how does a brand experience financial growth and brand value retention?

Here are two suggestions for the short and long-term:

1. Test your new market by offering limited edition -- seasonal items at lower price points

online. Offering a limited edition, low-cost apparel or accessory on-line has the potential

to introduce your brand not only to a customer that values the company, but also to tech

savvy consumers and those and willing to discover a new brand. The appeal could reach

even further if your website is available for m-commerce opportunities, putting you at an

advantage with the app savvy.

2. Develop a long-term strategy to target customers early -- just like Marc Jacobs Inc.,

the variety in the different lines provide stepping stones to brand loyalty. Why not start

with a basics diffusion line? Showcase your simple techniques for the mass consumer like the T by Alexander Wang line. Another idea? Add an accessory line. As new and

old customers are paring down their wardrobes, accessories tackle the challenge of

completing a look at a lower cost.

A recession economy needn't be the demise of fashion brands, as there are certainly more

than enough opportunities to get back to black with the brand value intact. These fashion

houses should change up the strategy to seek new clientele and new business growth.