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Wal-Mart’s New Style: Out With Kathie Lee, In With Trendier Looks

Wal-Mart is bidding adieu to its Kathie Lee label, marking the end of an era and the start of a new apparel department. Here are the details.

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Celia Clancy

Photo By Tom Ewart

BENTONVILLE, Ark. — Bye-bye Kathie Lee. Hello, new era.

Wal-Mart Stores Inc. is bidding adieu to the misses sportswear label Kathie Lee — once a $700 million business for the world’s largest company. Ex-talk show hostess Kathie Lee Gifford’s licensed collection — now at the end of a three-year licensing extension — will finish shipping by holiday, ending an eight-year run as turbulent as it was productive.

The label sold well — an estimated $300 million in its first 12 months — and allowed Wal-Mart to effectively compete with Kmart’s then-star brand, Jaclyn Smith. Then came sweatshop allegations, Gifford’s televised histrionics and the retailer’s worst public relations crisis to date.

Ironically, it’s been Gifford’s recent quieter years, including her disappearance from network television, that’s likely to have caused the decision not to renew. But it also signals Wal-Mart’s drive to create a whole new image in apparel.

Celia Clancy, Wal-Mart’s senior vice president and general merchandise manager for ladies’ apparel, who is spearheading many of the immediate and long-term changes set for the business, noted in an exclusive interview with WWD that, "Kathie Lee did a great job for us for years. She really did. Along the way, we improved. Now it’s a different era."

Kellwood, which holds the Kathie Lee license, will not lack for Wal-Mart business. The St. Louis-based manufacturer produces Faded Glory, White Stag and George for Wal-Mart. All three brands are doing well and have potential to grow. George will add casual items, a departure from its careerwear profile in Wal-Mart’s U.K.-based chain, ASDA, which launched the line.

The company also has acquired a single-category brand, which was announced internally last week. Clancy declined to go public, but did note: "Spring ’04 is going to be a big season for us. We have some things up our sleeve."

In fact, Wal-Mart has been quietly winding down Kathie Lee for some time, removing pictures of Gifford from store signs and hanging other goods on racks bearing her name.

In Supercenters ringing company headquarters here, White Stag linen separates hung from Kathie Lee racks — adding credibility to industry speculation that White Stag will step into Kathie Lee’s niche.
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"Brands have a life cycle just like fashion trends," said Merrill Lynch analyst Daniel Barry, pointing out that Gifford’s relevance has ebbed. "She’s no longer a public figure — at least not in the way she was when she was on a daily television show."

Also to be ushered out: Bobbie Brooks, a Kellwood-produced misses’ collection of stretch-waist pants and oversized blouses, and McKids, a licensed kids line that uses the Golden Arches on a red tag. With national attention on childhood obesity and increasing scrutiny of fast food restaurants, McKids seems an obvious choice for the chopping block.

Reducing brand count is part of Clancy’s overall effort to declutter the department and focus on brands with meaningful identity. Clancy — who peppers short, focused responses with phrases like "make it happen" and "passion for success" — is part of the team leading Wal-Mart’s charge into more trend-relevant and better quality products throughout all softline categories.

The company is already one of the biggest apparel retailers in the world, capturing between 12 and 14 cents of every dollar spent in the U.S., according to industry sources. The company does not break out apparel revenues, but sales are estimated at $25 billion for apparel and accessories in Wal-Mart stores. Add in Sam’s Club and the number surpasses $30 billion. During the back-to-school sales period alone, the company sells five million girls’ socks, according to a company spokeswoman.

Yet it’s estimated that a significant percentage — perhaps as high as 50 percent of customers — don’t buy its sportswear. That means that, despite already being one of America’s largest apparel retailers, Wal-Mart still has a mammoth opportunity for growth.

But Clancy envisions a future in which Wal-Mart’s apparel leadership hinges not just on sheer volume, but on value, quality and appeal of its merchandise, as well. And she’s building a team to accomplish that.

"The most rewarding part of this is watching my team and my buyers grasp an idea like Plus One [a quality initiative] or what George will mean to their mix," she said, sitting in her tiny office at Wal-Mart’s headquarters, a converted warehouse, surrounded by goals and charts on the wall. "They’re making it happen to serve the customer. And they have the opportunity to make it happen on a big scale at a young age."
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Under Clancy’s watch, things are clicking. A new apparel department layout for Wal-Mart stores is being tested at 11 doors in midsized markets such as Tallahassee, Fla., and Oshkosh, Wis. It will roll out in all new stores this year.

Based on a pure grid, the layout has fewer fixtures, clearer sight lines and wider aisles so moms with kids in tow can maneuver easily. The architects who designed Wal-Mart’s Neighborhood Markets — supermarket-cum-convenience stores where getting in and out quickly is the whole point —also developed the new apparel department.

The buzzword is "shopability," an industry trend not just for Neighborhood Markets and Wal-Mart apparel, but also for J.C. Penney and Sears, which widened their aisles and installed centralized cash registers in remodeled stores in a move aimed at following the pattern set by Kohl’s.

Merrill Lynch’s Barry estimated that roomier aisles — with their inviting feel and promise of a quicker, more effective visit — could generate more business than adding additional racks. A less congested appearance may also lure in higher-income customers who shop Wal-Mart for food and sundries but are generally not apparel customers.

Other changes in the works as part of the new design include wood-grain tile in the departments instead of charcoal gray carpet, which absorbs light and dulls product.

"What we have to sell is color," Clancy said. "Wood tile floors are lighter, airier, more fun — and they let light reflect off the goods, so I think the product looks better."

Curved corner fixtures used for more trendy merchandise will be removed, Clancy said. Uniform Wal-Mart fixtures with either a black or bronze finish will replace vendor racks. Signs have been simplified so that brand credit and price will be the main statement, á la Target. Lifestyle shots will be moved to hangtags and the sides of fixtures, instead of the current billboard-style use.

Brands will be whittled down to those with the clearest identity. Clancy cites Kohl’s as having a well-edited mix.

Within Wal-Mart, she credited trend-driven junior label No Boundaries as first in "delivering real quality to a brand profile for the last eight to 10 seasons." Faded Glory’s denim-friendly family offering and misses’ casualwear from White Stag ranked second and third, respectively, in her estimation of their customer coherence. Both lines are designed outside Bentonville: White Stag and active-casual brand Catalina are directed by a 10-person team in Los Angeles, while Faded Glory has 75 staffers in New York. Debunking the perception that Wal-Mart is preoccupied with its Bentonville navel, the company posted its trend director for all its apparel collections in Manhattan.
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Clancy is not just looking at the near-term prospects of brands or layout, but at the bigger picture of Wal-Mart as an organism needing good people to stay healthy. An important function of a good leader is "replenishing the bench" with talent, she said.

Right now, Wal-Mart is knee-deep in top-ranking talent. Ceo Lee Scott, 54, and executive vice president and vice chairman Tom Coughlin, 53, have many years left to run the empire. Former ceo David Glass and former vice chairman Don Soderquist are both still active in the company — and revered by employees who holler and cheer when they speak at Wal-Mart gatherings.

In such company, it’s clear Clancy, a native Bostonian who spent 15 years at the faltering Bradlees chain, feels like she’s joined the Yankees of retail. She was recruited five years ago by another big slugger, Vanessa Castagna, now chairman and ceo of J.C. Penney stores, catalog and internet.

"The leadership and the culture are just awesome," Clancy said. "Part of the reason I was so taken with the leadership is that at Bradlees, I worked under seven different ceos. We traded up, we traded down, we went mass, we changed direction. Wal-Mart doesn’t change direction. We know who we are."

Communication is paramount. Even barring the security cameras speckling the lobby and battleship gray-painted hallways, there are no secrets at Wal-Mart. Data is plentiful and readily available; there is no tolerance for hoarding one’s best instincts and ideas for personal advancement. When the company gathers in the auditorium for meetings, they file in under an enormous painted quotation about ordinary people doing extraordinary things.

Meetings (starting at 7:15 a.m. and "don’t be late," says Clancy) are attended religiously. On Mondays, general merchants — about 100 people — convene to share insights on trends, technology and sourcing. This week’s edition discussed Kim Possible, Disney’s cartoon butt-kicking, villain-apprehending heroine. Wal-Mart will ship plus-size Kim Possible merchandise for b-t-s.

On Fridays, Scott gathers top management to review sales and talk about weekend projections. By the time he’s clearing his throat to start the meeting, company planes full of buyers have already roared off to the stores. They are in and out of Wal-Mart and the competitions’ stores all day Friday checking stock levels and comparing prices in preparation for the weekend.
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"You get all the support you need at Wal-Mart. The resources are world-class," observed Clancy. "But energy is required."

In fact, Wal-Mart gears up for each and every weekend as if it were the Super Bowl. And when management comes in Monday morning, they pounce on the data pouring off the Retail Link internal database. Buyers spend most of the day combing over data, checking in with replenishment managers and grilling store department heads about customer traffic, said girls’ activewear buyer Dee Dee Cole.

Saturday meetings — a Sam Walton tradition that also begins early and gets rowdy with enthusiasm — are renowned for bringing in celebrities in the retail, financial, literary and sports worlds. Clancy has seen Warren Buffett and Crate & Barrel founder Gordon Segal speak, but took most personal counsel from the musings of Richard Carlson, author of "Don’t Sweat the Small Stuff."

"That was a lesson for me on personal balance," she said, smiling.
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