Trudy Sullivan's Take on Three Changes to Watch - June 2005


Liz Claiborne president Trudy Sullivan shared her thoughts on the major forces influencing the future of the apparel business with a packed room of Seventh Avenue executives at a seminar earlier this year produced by Emanuel Weintraub & Associates.

Sullivan focused on three major changes in the retail marketplace: consolidation, channel evolution and globalization.

On consolidation

Acquisitions on both the retail and vendor side will be driven by the need to tap new consumer segments, diversify product portfolios, leverage core competencies and achieve economies of scale, she said.

M&A activity "that makes you big simply won't be enough," she added, noting that companies must "identify new strategic combinations to help create a new competitive advantage. From these new ideas, new fashion will emerge as lifestyles evolve."

As prime examples of successful mergers and alliances, she described the success of Liz Claiborne's Juicy Couture and Prana lifestyle brands (relatively recent acquisitions), as well as Sephora's deal to put cosmetic shops in J.C. Penney.

"The key is to identify ways that we might be able to partner to treat new markets and to better serve an all powerful consumer," said Sullivan.

On channel evolution

Sullivan said she believes Federated "has become the dominant national player in the department store world," but she still sees room for "strong regional players" and luxury chains. Specialty chains most likely will continue to take market share in apparel, and the direct-to-consumer channels "will continue to mature," she said.

Sullivan called "coactive TV" -- the convergence of TV and the Internet -- "one of the most exciting developments."

As an example, she noted how someone watching Oprah would one day be able to use his or her remote to click on Oprah's shirt to buy it.

"In our instant gratification society, it is the ultimate in finding what they want when they want it," said Sullivan. "Today's consumer wants 24/7 access to brands that they favor, especially those that have come of age with the Internet. They don't want to be told; they want to discover. They are smarter and have more access to more information than they ever have before, and I think branding will have to speak to them in a radically different manner."

On globalization

Sullivan focused on exporting opportunities. "The world population is more than 6 billion," she said. "There are emerging consumer classes in India and China that are increasingly ready for Western brands, and the Internet is breaking down many barriers that existed in the past and fostering brand awareness and demand faster and in more regions than ever before."

A regional focus is necessary to capitalize on these opportunities, she said. "Localization allows organizations to understand and address the differences in different regions yet promulgate a global brand," said Sullivan.

The winning formula will involve lots of consumer research, micro-merchandising, marketing and product customization to arrive at a plan that caters to local conditions and idiosyncrasies, she said.

THOMAS J. RYAN is an Apparel contributing author based in New York.

For More Information:
"Retail/Apparel Landscape -- 2010 & Beyond"
Seminar Organizer: Emanuel Weintraub Associates Management Consulting Firm
T: 201-947-2404
[email protected]

Watch for Apparel's final installment of the seminar coverage in the next edition of "The Apparel eNewsletter." Here are links to reports on other presentations from the event:

VF on Apparel ‚¬ËœInformation Age'
VF Corp. president and COO Eric Wiseman says an abundance of consumer information will revolutionize the apparel business.

Analyst Says: Wal-Mart, Target Could Control Third of Market by 2010
At a recent seminar, Lehman Bros. analyst Bob Drbul discussed the aggressive apparel gains by Wal-Mart and Target and what it means for department stores.

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