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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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Tarrant is relaunching No Jeans, a brand from the Eighties, with Wet Seal as an exclusive beginning this holiday. Tarrant also produces Seven7 for Express. “In two to three years, we want to have eight to 10 brand-exclusive relationships with retailers. That is our model,” said Gerard Guez, chief executive of Tarrant, who had supplied Federated previously and introduced the American Rag concept to Federated. Only the most fashion-savvy consumers would have been aware of the brand, which has just two stores in the U.S., in Los Angeles and San Francisco, and others in Japan. It’s owned by Mark Werts, along with Tarrant.

Other Federated-owned brands are ramping up, too. INC, for example, will launch men’s wear in spring 2004. The company launched Hotel towels in spring 2002 and Hotel bedding and tabletop were launched last fall, marking what officials described as FMG’s entry into the luxury arena. This month, gourmet cookware under the Tools of the Trade brand was launched.

There are more possibilities. Tarrant Apparel Group, which co-owns American Rag and manufactures the collection for Federated, will introduce Alain Weiz large sizes for spring or fall 2004. It will be offered to Federated, though no arrangement has been set and other retailers will be approached to determine who gets the exclusive, according to Guez.

It’s a trend placing more and more pressure on national brands, as retailers focus increasing energy on developing their own programs. At the same time, national brands are becoming ever more promotionally driven, providing stores with less and less margin.

Still, Federated’s private brand program, which accounts for $2.4 billion of the retailer’s $15.4 billion in annual sales, does have some product voids, mainly in kids’ and home. That’s where Federated, Grove said, is “aggressively seeking partnerships with name brands.”

As Grove said during an interview at FMG headquarters here: “We have been increasing our penetration of private brand and private label, as well as exclusive products from the market, pretty consistently over the last couple of years. There seems to be a greater interest from the market. I get a lot of calls, but it has to be the right niche for our customers; we don’t want to duplicate something we’ve got.”
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