Can exclusive partnerships revive a brand? Depends on your partner.
After disappointing results with fashion insiders Tim Gunn and Isaac Mizrahi, Liz Claiborne has changed course and jumped to the other end of the fashion spectrum: JC Penny and QVC.
Starting in Fall 2010, the Liz Claiborne line will be sold exclusively though JC Penney. Isaac Mizrahi-helmed collection, Liz Claiborne New York, will be sold on QVC. The brand expects to return to profits in 2010, with forecast sales of $100 million on QVC and $1 billion in Penney stores.
The agreement shifts all Liz Claiborne's sourcing, marketing and distribution and their costs to JC Penney, while they retain control of design and brand management. The partnership will shelter Claiborne Inc.'s margins from department store markdowns. Instead, the company will receive a share of royalties based on profit.
The new strategy seeks to capitalize on consumers' return to thrift. The brand aims to replicate the success that sub-brands Claiborne, Concepts by Claiborne and Liz & Co experienced in their limited partnership with JC Penney. Though it's cutting ties with Macy's and Dillard's, and pulling product from those stores, Claiborne Inc. should gain traction through JC Penney's strong brand.
Claiborne CEO Bill McComb is confident that Penney's is "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."
Claiborne Inc. is confident that brand loyalty will drive consumers to Penney's stores, citing research that the Liz Claiborne woman is “more loyal to the brand than to the store where they bought it."
The QVC partnership serves as a do-over for the troubled Liz Claiborne New York line, launched at the height of the recession. Retailers' caution due to the bad economy was blamed for the line's poor performance, as industry analyst Jeff Edelman explained: "the force of the economy prevented retailers from betting big on it." Stores ran meager promotions and stocked little inventory; consumers reported difficulty locating the product.
Claiborne's partnership with Penney's is a far cry from Halston's 1970's licensing agreement with J.C. Penney, yet still holds a valuable lesson. Unheard of at the time, the Halston's deal sparked a minor outrage; overexposure and loss of quality control diluted the luxury brand, over time. In contrast, reaction from analysts is overwhelmingly positive toward the Liz Claiborne strategy, declaring it "a giant leap in the right direction for the flailing (wholesale) segment," that will free the company from financial mire, structure its exposure, reverse consumer confusion caused by the Macy's deal, and rein in the wide-spanning Liz Claiborne universe.
The agreement with Penney's allows the company to focus and invest in its most important assets: design and brand. In the words of Claiborne's creative director Tim Gunn, Claiborne Inc. must "make it work."