Designers Playing Musical Chairs

Posted on March 10, 2008

The New York Times reports on the amazing game of musical chairs that designers are playing with major retailers today. It seems like everyone is leaving one store to go somewhere else.
It's free-agency season in American fashion. Isaac Mizrahi, the everyman's fashion oracle, is about to leave behind his wildly popular cheap-chic clothing collections at Target to be the creative director for Liz Claiborne, the stalwart shopping-mall label. Dana Buchman, a longtime favorite of customers at upscale stores like Saks Fifth Avenue and Neiman Marcus, is decamping this fall to the budget-conscious Kohl's.

And Tommy Hilfiger, a constant in department stores like Dillard's and Bon-Ton for two decades, now says he will sell his clothes only at Macy's. Over the next year, an unusually large group of famous clothing designers, motivated by lucrative deals, plan to shift their retail allegiances, in many cases abandoning stores and customers who have supported them for years. So like angry sports fans wounded by a the trade of a star player, consumers (and even stores) are left to wonder: What ever became of loyalty?

The sudden flurry of designer address changes - J. C. Penney, Gap, Old Navy and Wal-Mart have also recruited their own designers over the last six months - is likely to create jarring transitions for American consumers as they try to navigate the once-familiar aisles of their local clothing chains, wondering where to find Isaac, Dana and Tommy, among others. "There will be a period of dislodgment and disenfranchisement," said William L. McComb, chief executive of Liz Claiborne, whose efforts to revive flagging sales hinge upon his company's aggressive wooing of Mr. Mizrahi from Target. After Claiborne announced the move in January, Target responded by saying it would end its relationship with Mr. Mizrahi at the end of the year, leaving, for now, a void in its lineup.

The motivation behind these defections and poachings is equal parts economic and egocentric. Clothing manufacturers are responding to a seemingly insatiable appetite for fashion across every income bracket. They are also benefiting from a lively, and occasionally vindictive, competition between mass retailers (Wal-Mart and Kohl's) and the traditional department stores (Macy's, Bloomingdale's and Lord & Taylor) that remain after years of industry mergers. When it comes to luring designer brands, it seems that popularly priced chains are suddenly on equal footing with their glossier rivals.

For decades, department stores like Saks had a virtual lock on designer clothing labels, until Mr. Mizrahi broke that barrier with his collection at Target in 2003, which, rather than burying his career, became an estimated $300-million-a-year success. Once the stigma of crossing into mass-retail territory lifted, such high-low designer partnerships became commonplace, with Vera Wang selling a line at Kohl's and blue-chip names like Karl Lagerfeld and Stella McCartney creating lines for H&M.
Isaac leaving Target is a very bad thing for Target. To make up for it, perhaps, Target has heavy tv ad buys promoting Jovovich Hawk clothing, with Milla Jovovich starring in the commercials. One of the designers who really got shafted was Dana Buchman. Liz Claiborne is shutting down her main stores, yanking her high end clothing from Saks and Neiman's and is sending it off to Kohl's. Buchman doesn't think her high end customers will follow her there, but she is putting a brave face on it. There are a lot of businesswomen who buy Dana Buchman, and they certainly aren't heading over to Kohl's.

But possibly the weirdest designer/retailing pairing is Ralph Lauren's new American Living brand for J.C. Penney. J.C. Penney has been notorious for years for having the cheapest fabric and worst construction of any of the lower-end department stores. Target always trumped J.C. Penney in the quality department. Will American Living change all that? It's too soon to tell.