California Apparel News

For many retailers, one of the traditional rules of success is to be the exclusive outlet for a hot fashion brand. But with the growing number of boutiques and the global reach of the Internet, asking for exclusivity might as well be asking for the impossible, according to many shop owners.

Faced with a crowded marketplace, retailers have learned to rely on alternative ways to differentiate themselves in the eye of the consumer, whether it is selling a successful brand’s secondary line or creating a store environment as inviting to influential labels as it is to desirable customers.

However, the struggle to be the exclusive dealer of a brand remains a topic that can border on obsession, said Fred Levine, who co-owns the M. Fredric chain of more than 22 stores in the Los Angeles area.

“This type of discussion is probably the most common dialogue between vendor and retailer at trade shows today. It sometimes seems as though there is more talk about who is going to be able to carry the line in a particular neighborhood than there is talk about the line itself,” said Levine, who maintains that retailers should demand an exclusive in the neighborhoods where they operate to help guarantee sales.

Exclusivity agreements can be crucial, according to retail analyst Jeffrey Van Sinderen, because the retailer must possess a guaranteed, protected supply of brands that he knows has a good chance of selling.

“You can have a degree of exclusivity,” said Van Sinderen, who works for Los Angeles–based B. Riley & Co. “But unless you’re developing a private label, it’s becoming increasingly challenging.”

In the past decade, department stores and mass retailers such as Target and Wal-Mart have sought to sell more of their own private-label brands, in part to maintain an exclusive edge. Many manufacturers of popular fashion labels have made exclusivity more complex by jumping into the retail game by opening their own stores.

However, maintaining an exclusive on a brand may not produce a noticeable competitive edge, according to a recent “Luxury Tracker” survey by market consulting firm Unity Marketing. The Stevens, Pa.–based firm interviewed 1,000 luxury shoppers on the specific reasons that influenced them to make a fashion purchase.

Only 20 percent of the survey’s respondents said that a store’s exclusive offering of a brand would influence them to make a purchase. The majority of the respondents, 61 percent, said the top reason they bought a garment was because they liked the style or the design of a specific fashion.

Getting good value for a price was important to 54 percent of respondents. Fifty percent of Unity’s luxury shoppers said they were influenced to buy a garment because it was sold at a store they knew and trusted. Only 9 percent said that an advertisement influenced them to purchase a fashion.

Organizations such as the National Retail Federation and the International Council of Shopping Centers said they retain anecdotal information on the importance of exclusivity.

Yet exclusivity remains crucial, said Alan Au, vice president of Beverly Hills, Calif.–based retailer Jimmy Au’s for Men 5'8quot; and Under. It’s one way to build trust with the customer. “They don’t shop with exclusivity in mind,” he said. “But if you’re known for exclusive items, they will remember it. And they’ll return.”

But it is getting harder to do in high-profile retail districts, said Shane Wallace, president of Active, a Chino, Calif.–based retailer of surf, skate and fashion wear. On Aug. 25, he is scheduled to open a flagship for Active in the well-traveled contemporary zone of Santa Monica, Calif.

Although his store in the 1400 block of Fourth Street sells fashionable brands such as Vans, it’s hard for him to claim an exclusive. Stores with strong clout sell similar brands nearby his boutique. A Vans flagship store does business across the street. Conveyor, Fred Segal Santa Monica’s sneaker store, also deals in Vans.

“There’s nothing that’s exclusive that you’ll find in Santa Monica,” Wallace said. “Exclusivity is the experience we provide. It’s the culture, the realness that you don’t find in the market.” He said he hoped to give his store an edge by creating a special environment with art, such as murals by Shepard Fairey, co-founder of streetwear label Obey Clothing.

It’s a strategy employed by other retailers that also have put the emphasis on building unique store environments, said retail analyst Van Sinderen. The greater attention to retail architecture has been reflected in the increased revenue earned by architecture firms.

According to the trade journal Display and Design Ideas, the top 100 retail architecture firms reported revenues that increased 27 percent to $744 million in 2005, compared with the $585 million in 2004.

The increase in the number of retailers and the continuing struggle for exclusivity have been a boon to labels, said Aaron Levant, president of Los Angeles–based sales office and trade show producer Agenda.

Fashion labels often use larger demands for exclusivity as an opportunity to develop more lines of their product and sell new styles to different retailers. “A lot of cards are held in the [label’s] sales manager’s hands,” Levant said. “This situation gives them a chance to open up more dollars for a company without upsetting distribution streams.”

Levant’s client Fresh Jive helped to settle an exclusivity issue between e-commerce retailers Digital Gravel and Karmaloop by distributing the main Fresh Jive line through Karmaloop. But the Los Angeles–based streetwear label satisfied Digital Gravel’s needs by selling a series of limited-edition Tshirts exclusively to the e-retailer. It debuts the Fresh Jive “Wildlife” series on Aug. 11.

Although e-commerce has been around for only the past decade, exclusivity is just as important to e-commerce as it is to the most traditional retailers, said Lauren Freedman, president of Chicago-based market consultants E-tailing Group. In a January 2006 survey, her company found that 45 percent of e-commerce sites claimed to be selling exclusives.

“It’s just another retail channel,” she said. Although it is a channel with a potential worldwide reach, Freedman said it was governed by the same basic issues that have always shaped issues of exclusivity. “It boils down to how much volume they can sell, how much clout the retailer has and who the vendor wants to be associated with.”