J.C. Penney Gets Exclusive on Liz Claiborne Line

Discussion
Oct 09, 2009
George Anderson

By George Anderson

The Liz Claiborne
line has sold well at J.C. Penney. The same cannot be said for its performance
at Macy’s. That’s why the apparel manufacturer felt secure in making
a deal to exclusively sell the Claiborne brand through Penney’s stores
and website. While Claiborne will be responsible for the design of its
line, Penney will take over manufacturing of the brand.

Bill McComb,
Claiborne’s CEO, called Penney, “The perfect partner to steward this
brand properly and profitably, given their financial wherewithal and
their many strengths, including brand management, multi-channel distribution
and operations.”

The
deal with Penney also brings to an end Claiborne’s relationship with
Macy’s. Jim
Sluzewsk, a spokesperson for the department store chain, told Dow
Jones Newswires
that the Claiborne brand “has sold
poorly in recent years and has continued to decline. As a result, we
could not justify expanding it.”

Mr.
Sluzewski said the chain’s customers had become “confused
between various brands carrying the Liz name, and the management of Liz
Claiborne needed to take corrective action.”

Claiborne
will continue to sell its Claiborne New York line brand through QVC.

Discussion
Questions: What do you think of Liz Claiborne’s exclusive deal with J.C.
Penney? What will each party need to do if the deal is to be mutually
beneficial?

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19 Comments on "J.C. Penney Gets Exclusive on Liz Claiborne Line"


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Dick Seesel
Guest
11 years 7 months ago
This news story is fascinating on several levels. First, it is probably the biggest development yet in the shift from national brands to exclusive brands over the past five years. Liz Claiborne simply couldn’t afford to let its signature brand languish in several struggling regional department stores and fail in its only national outlet. JCPenney provides the sort of national scale and moderate positioning appropriate for the Liz Claiborne brand. Second, this represents a major shift in the Liz Claiborne business model. JCPenney will be developing and sourcing goods through its own product development arm, rather than through the Liz Claiborne Company itself. Claiborne is pursuing what you might call the “Iconix model,” a much richer financial model tied to brand management rather than sourcing and manufacturing. Finally, the Liz Claiborne deal looks like a coup for JCPenney but also represents a big challenge. JCPenney has been guilty for the last several years of brand proliferation and duplication of assortment, especially coming out of its product development team. If Liz Claiborne is going to work… Read more »
Roger Saunders
Guest
11 years 7 months ago

This should prove to be a good deal for JCPenney, but Liz Claiborne has to make certain that they can control their brand–distribution, number of pieces, price points, interaction with the end consumer, etc. If the deal permits this, Claiborne can assure themselves that they are not an added “house brand.”

Sandy Miller
Guest
Sandy Miller
11 years 7 months ago

Obviously a good move for J.C. Penney and it will work for both if the line is vigorously promoted. From Claiborne’s perspective it says “we are a mid-tier brand.”

Mary Baum
Guest
Mary Baum
11 years 7 months ago

Okaaayyyyyy…Somehow I see these brands as having two very different shoppers, at two rather different price points. And I just checked both sites to make sure.

The JC Penney shopper expects to see a career jacket for $50-75, marked down from about $115. The Liz Claiborne wool jacket comes in at $150 or better, full price.

On the other hand, this year’s Liz line has some pieces that are completely outlandish, IMHO…great grist for the sale racks.

Len Lewis
Guest
Len Lewis
11 years 7 months ago

This gives JCPenney another step up on the fashion ladder. I think it’s a coup.

But the fashion house really has to get its act together. What Macy’s said rings true. The shopper is confused by all the brands associated with Liz Claiborne. This is the reason the founder cut all ties to the company after selling it–rampant overexpansion. She was proved right and a few years ago the company took some steps to consolidate its businesses. Time to re-examine and focus on the Penney shopper.

Paula Rosenblum
Guest
11 years 7 months ago

Macy’s is trying to make its private-label product (like Inc. and Style & Co.) legitimate brands. Good luck.

I think this is an excellent move for Penney as it continues to position itself as the value alternative to Macy’s. For Liz Claiborne, it’s just a new set of problems to manage. Too many brands within a brand, I think.

Phil Rubin
Guest
11 years 7 months ago

This looks like a great move for both companies and reinforces the move towards actual merchandise and brand differentiation among the mass department stores. While Macy’s has clearly moved away from its investment with Liz over the years, this will have some collateral damage for chains like Belk’s, who actually did a pretty good size Liz business.

Carol Spieckerman
Guest
11 years 7 months ago

Perhaps not as big of a move as it seems on the surface. Over the past few years, Liz, like VF and other hybrid retail/wholesale entities, has put more emphasis on its direct brands division (Juicy, Kate Spade, Lucky Brand, Mexx). That’s where Liz can control its brand destiny. When Liz granted Kohl’s an exclusive for Dana Buchman last year then handed its entire sourcing operation over to Li & Fung earlier this year, it signaled to me that Liz was moving its wholesale-partnered brands division toward a less cumbersome, pure brand marketing model (ala Iconix). Payless has shifted to a house-of-brands model as well, now calling itself Collective Brands. Brand management is where it’s at!…and Liz has plenty more non-Liz partnered brands that it can shift to direct on a whim: Monet, Kensie, DKNY….

Carol Spieckerman
Guest
11 years 7 months ago

Throwing in an additional thought…I do have concerns about J.C. Penney’s exploding brand portfolio in women’s and teen apparel (and in home, for that matter). Ralph Lauren-produced American Living showed every sign of being Penney’s big evergreen and perhaps the last brand launch for a while. Then along came I (heart) Ronson, Twelfth of Eleven, Allen B, and the latest: she said. Converting Liz & Co (Claiborne’s current Penney’s brand) to Liz Claiborne and adding more “Liz” everything to Penney’s already bursting brand scheme may pay off for Liz Claiborne, but only if expectations are modest to begin with.

Marge Laney
Guest
11 years 7 months ago

I think it’s a great move for JC Penney because like all value retailers they are looking to keep the more upscale customers that they have attracted during the recession by providing some better brands for the long haul. Macy’s is struggling to gain profitability and is attempting to do so by emphasizing their private brands. This is a smart move if they can get traction but, like Paula, I have my doubts. JC Penney is gunning for the Macy’s customer and I think Macy’s better start paying attention instead of just turning up their nose.

Ryan Mathews
Guest
11 years 7 months ago

Doesn’t anyone remember what happened to the Gitano brand when it signed a similar deal with Kmart? Oh…of course you wouldn’t…these kinds of deals are fashion brand killers.

Mark Johnson
Guest
Mark Johnson
11 years 7 months ago

I guess I need to find a new favorite suit collection.

Lee Peterson
Guest
11 years 7 months ago

Another nail in Macy’s coffin. And a prolonging of Penney’s state of “almost best of the middle” (‘almost’ being the operative term). Overall, the immediate transfer of revenue from one retailer’s register to another’s is a coup. The brand connection, albeit very white bread and unmotivated, is at best, lukewarm. Sigh…is this all we’ve got in retail now?

Chuck Palmer
Guest
11 years 7 months ago

This seems like a shrewd move, but it is not the way to actively manage your brand. It’s true the Claiborne name became confusing in the marketplace, and consolidating under one retailer could force alignment, but as was stated, JCP isn’t exactly best known for well-edited and thoughtful merchandise assortments.

If anything, this poses a ripe opportunity for Macy’s to elevate an existing or new brand to prominence. It also shines a light on Macy’s questionable brand positioning.

Chuck Palmer
Guest
11 years 7 months ago

As an addendum to the discussion, check out The Shophound blog. They have an interesting take on Macy’s role and Claiborne’s willingness to “work” with retailers.

Claiborne Follow Up: Macy’s Is An 800lb Gorilla. http://bit.ly/31ofmi

Not being a Liz Claiborne or Ellen Tracy (Macy’s replacement for Liz) customer, I wonder what the consumer gets out of this.

Don Delzell
Guest
Don Delzell
11 years 7 months ago
Mary Baum makes a great point. A quick visit to jcp.com shows a shop-by-brand segment of the nav on the left side. The brands noted are St. John’s Bay, Worthington, and a.n.a. Expanding the list shows 19 brands. That’s a bunch of brands. And….while being positioned in the vast middle where JCP is does provide the opportunity for a wide selection of brand statements, one has to wonder about the viability of all of them. The mainstream department store industry is for all intents and purposes limited to Macy’s and a few regionals. JCP clearly is evolving into a national department store, with the benefit of having most of the brands exclusive, and many of them carrying some degree of shared or borrowed equity. Liz Claiborne cannot hurt JCP. The brand has very low negatives, and carries with it main-floor respectability. Warranted or not, there WILL be brand equity. Unlike the American Living launch which really didn’t get much of a brand boost from Ralph Lauren, this is a straightforward brand association. No brand-a-likes, no… Read more »
Craig Sundstrom
Guest
11 years 7 months ago

This was, of course, a strong brand dropping a weak one, but was it a strong LC dropping weak Macy’s, or strong Macy’s dropping weak LC? Obviously depends on who you ask–I don’t doubt it sold poorly at Macy’s, but whose fault is that?It seems like a good move for JCP.

Kai Clarke
Guest
11 years 7 months ago

This is perhaps more about J.C. Penney securing a deal with a declining brand. Liz is a brand that is clearly in decline, and the target market at Penney is probably a better fit for them than the segment that shops at Macy’s. This is about recognizing target marketing through product differentiating while this brand still has value. Everyone wins here, while before, Liz was clearly not appealing to the right segment at Macy’s.

Karen McNeely
Guest
11 years 7 months ago

Wow, I wonder what is going into the real estate of the relatively new Liz Claiborne shop in my local Boston Store/Bon Tons. As the writer who mentioned Belk alluded to, probably the real losers in all of this are the few remaining (relatively) regional department stores.

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