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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American Rag marks Federated’s first exclusive denim-based collection business, and first real attempt at directly competing against specialty stores through product development, such as Abercrombie & Fitch and American Eagle. It’s also the first time Federated has stocked vintage looks, which are almost unheard of in department stores.

“Aside from the vintage, this is a very clean and simple look with nice quality,” Grove said. “It’s easy to wear, and there are a lot of different ways to put it together. It’s not overdesigned, though it has a lot of great details, such as velvet stripe piping, We are trying to go after the specialty store segment.” Bestsellers include minis, denim, tight knit T-shirts and vintage jackets, while men’s has been a little slower on the uptake.

For the second half of 2003, American Rag is a $15 million to $20 million wholesale business for Tarrant, according to Guez. He said he expects Federated to be selling American Rag at more than 200 doors by fall 2004, from 170 doors next spring. Boys’ and girls’ lines will be launched for fall 2004, he said.

With American Rag, Federated is racing ahead. The deal with Tarrant was signed in April and a collection was launched in time for back-to-school with heavy advertising. American Rag sponsored the Lollapalooza concert tour, and ads are in the August issues of Elle Girl, Teen Vogue, Jane, college newspapers and on mall kiosks. There is also an AOL microsite, as part of a strategy to push the brand’s casual sportswear, outerwear, denims and vintage looks hard right out of the gate.

Usually, Federated eases into new merchandise, but there’s pressure to raise comparable-store sales after several weak seasons, and a firm commitment to find exclusive products that appeal to younger customers. All Federated divisions sell American Rag, except Bloomingdale’s, which does not emphasize juniors’.

Five Federated flagships — Macy’s Herald Square, Macy’s Union Square in San Francisco, Rich’s-Macy’s in Lenox Mall in Atlanta, Burdines-Macy’s in Dadeland and Bon-Macy’s in the Bellevue Square mall near Seattle — have been rigged with separate 1,200- to 1,500-square-foot American Rag shops in juniors’ and young men’s, targeting ages 15 to 24. In all the other locations, the junior and young men’s shops are around 500 square feet.
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