So Old It’s New, Hopes Federated

Apr 18, 2003

Federated Department Stores is betting big on a new line of private-label sportswear
inspired by styles from the 1950s, 60s and 70s, according to an article from
the Cincinnati Post. The American Rag CIE line will be produced by a subsidiary
of Tarrant Apparel Group of Los Angeles, which licensed the name from a California
clothing store chain.

Although private-label lines are launched all the time, the scope of this introduction
is unusual, hitting about 100 stores in late summer of this year.

“Normally, we test-market a brand in a few stores. This is a very aggressive
strategy for us,” said Joe Feczko, executive vice president for marketing Federated’s
private labels. “We just had such a strong reaction from the division buyers.”

Jeffrey Stein, an analyst with McDonald Investments in Cleveland, sees the
move as part of Federated’s strategy to draw a new generation of shoppers. “It’s
part of what department stores need to do to get back into the game,” he said.

Moderator’s Comment: Will Federated’s aggressive private-label
strategy pay off?

With its market share dwindling and its same-store sales
falling as the discounters’ continue to rise, Federated has got to start making
its move. According to the article, “Federated’s sales of private label goods
has increased by about 25 percent in the last five years to about one-fifth
of all sales today”. The margins are certainly there, and vintage is definitely
hot…at least for the moment. Federated says they hope the brand will become
“a pillar in its stable of private brands.” Let’s hope it has some staying power.
Moss – Moderator

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