Booming With the Baby-Boom Generation
Da-Rue of California, the Los Angeles company whose sportswear line and retail outlets cater to the grandmother crowd, is flirting with a younger generation to grow its business.
Da-Rue has launched a new label called DRLA, a line of item-driven sportswear geared to women age 40 and older who want more fashion hanging in their closets.
This is a major departure for the manufacturer, whose Los Angeles–made Da-Rue of California line has always targeted the 60-plus woman who wants a generous cut in a quality garment that retails for $70–$500. For years now, Da-Rue has sold its older-generation label made in Southern California at its five retail stores, called Neil’s Apparel, as well as to other specialty-store chains catering to the “mature” customer.
But Da-Rue, like many companies, sees promise in the younger side of the baby-boom generation, which includes more than 39 million women born between 1946 and 1964.
Da-Rue is testing the new domestically made line in its recently acquired Ames stores, a small California retail chain that has always marketed its clothing to the 40-ish crowd of mothers and career women searching for trendy wear from such labels as Sue Wong, Isabella Fiore, A.B.S. by Allen Schwartz and Alberto Makali. DRLA is made of natural fabrics and uses embellishments and trims to set it apart. A size 8 woman is the fit model.
“Our future is the baby-boom customer,” said Mark McElrath, vice president of manufacturing for the family-owned company. Da-Rue took over Ames in early 2005 after the chain, which has nine stores in affluent areas of California including Calabasas, Pasadena and Santa Monica, filed for Chapter 11 bankruptcy protection in 2003. Da-Rue acquired Ames for about $650,000 after approval by the U.S. Bankruptcy Court.
Ames President David Oliver said his company was unable to recover after the downturn in the economy following the Sept. 11 terrorist attacks. At the time, the company had just opened a store at the newly opened Hollywood & Highland shopping center, which saw retail traffic drop dramatically in the last months of 2001.
But Oliver, who was Ames’ president before the acquisition and remains in the position at Da-Rue’s Ames subsidiary, said the company’s core customer has never been the problem.
“We cater to a customer from the baby-boomer generation who wants to dress 20 years younger than she is,” Oliver said. “But the clothes that would fit that bill are too small. They are cut for a different body. We buy missy fit, and we really work hard at trying to find more-contemporary styling.”
Joining forces
After acquiring Ames early this year, Da-Rue executives got busy devising ways to create lucrative synergies between the two specialty-store chains. The result is that in early November, Neil’s Apparel and Ames opened side-by-side stores at The Borgata of Scottsdale, a high-end shopping center in the suburb of Phoenix. The two stores have cathedral ceilings, slate floors, handcrafted iron fixtures and decorative wall niches to display merchandise.
This is the first time Ames has ventured outside of California. Neil’s had a store in Scottsdale 10 years ago, pulling out when it started selling merchandise to the Draper’s & Damon’s stores in the Phoenix area.
But with a partner like Ames, all that changed. “Our strategy in our retail stores is to sell beautiful merchandise that is segmented by demographics, based on age and income,” McElrath said. “In certain markets, we can serve both clients.”
With that in mind, Neil’s in December carved out a store within Ames’ Paseo Colorado store in Pasadena to serve both demographics. It is also where some of the DRLA merchandise is being tested before a nationwide rollout in late 2006 or early 2007.
Neil’s is also planning to convert its outlet in Montecito, Calif., into an Ames store soon. Other Neil’s stores are located in Long Beach, Calif., Palm Desert, Calif., and San Antonio.
Minding the middle
In wooing the baby boomer, Da-Rue joins such retailers as Chico’s FAS Inc., the Ft. Myers, Fla., retail chain that stocks its 700-plus stores with brightly colored apparel made in natural fabrics for the middle-aged customer. In 2005, Chico’s saw a 41 percent jump in its net income, which totaled $141.2 million on revenue of a little more than $1 billion.
Chico’s success inspired San Francisco–based Gap Inc., which already has Gap, Banana Republic and Old Navy stores aimed at about every age group, to launch a new concept store for the Mom crowd, women 35 years and older.
In August, Gap opened its first Forth & Towne store in West Nyack, N.Y. A week later, it opened four more stores in the Chicago area. “We looked at this market and felt this woman wasn’t being served as well as she could be,” said Kimberly Terry, a Gap spokeswoman.
Gap uses a size 10 fit model to develop its four labels: Allegory, which includes suitings with a feminine touch; Vocabulary, a collection of knits and pants accented with prints and jewelry; Prize, a fun and wearable label; and Gap Edition, which offers Gap essentials.
Next year, Forth & Towne is planning to open five stores, Terry said. In 2007, the company will expand to 20 more locations.
It has taken retailers a while to pay attention to the middle-aged female customer. But providing clothing to this woman can be profitable.
Consumers between the ages of 45 and 54 have the highest annual household income, $70,434 on average, according to a 2004 survey by the U.S. Bureau of Labor Statistics. They are followed by consumers 35 to 44 years old, whose household income averages $65,515.
“The aging population is clearly going to have a significant impact on retail in the near term and long term,” said Aubie Goldenberg, a retail analyst with Ernst & Young in Los Angeles. “They spend differently, looking for value and quality from a more practical perspective. It is a group that is spending beyond their means because they feel wealthy. The economy is stable and unemployment has been low, and people feel very comfortable.”
Da-Rue of California is already scouting new locations in the Sunbelt states.
