American Rag Marks Latest Arrival in Stores’ Pursuit of Exclusivity

Federated Department Stores’ latest effort in private brands, American Rag, was rolled out to 120 doors this month, and more are on the way.

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NEW YORK — In the growing emphasis on private brands, Federated Department Stores stays one step ahead.

Its latest effort, American Rag, was rolled out in juniors’ and young men’s departments at 120 doors this month, another 30 to 40 doors might be added next spring and additional categories and products are on the drawing boards for that label and others in Federated’s private brand stable.

“American Rag will be a very big brand for us, not just in young men’s and juniors’,” stated Janet Grove, chairman and chief executive officer of Federated Merchandising Group and vice chairman of Federated Department Stores. “We will be expanding to other categories next year. Kids’ is a natural extension and that’s getting close to being a definite.”

Men’s and women’s accessories, including handbags and jewelry, also are being planned, boxer shorts will be added later this fall and home products and direct mail are possibilities cited by executives. Once there’s an array of categories in place, the label could account for $100 million in sales, according to officials working on the program.

American Rag is part of Federated’s goal to raise the percentage of private brands to 23 to 25 percent of its total volume, from the current 17 to 18 percent. Even now, Federated’s percentage of private brand merchandise is twice that of most of its competitors. The company also sells roughly $200 million worth of products bought in the market and sold exclusively at its stores.

But Federated will have to keep working hard to maintain its lead, because in the world of big-box department, discount and chain stores, there’s a growing hunger for exclusive products so stores can differentiate assortments, obtain better margins and increase sales productivity. Stores see how far Federated has come, and they want to share in some of that success. So they’re also buying small brands with a cachet that could be converted to mass appeal, and shopping for products from designers, celebrities and manufacturers who will agree to give exclusives.

There seems to be no shortage of opportunities. In the past year, J.C. Penney launched exclusive Bisou Bisou and Parallel collections to build a contemporary business, Kmart launched Thalía to cater to the Latino market, Wal-Mart continues to roll out its George apparel collection from the U.K., and Target added Isaac Mizrahi merchandise. May Co. basically overhauled its private label business, attempting to be more youthful and trend right and introduced two labels, Ideology [formerly called be] and i.e.
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