(c) 2009 
Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.Single-brand specialty shops such as Nine West and Gap are looking beyond their own labels.
When Jones Apparel Group Inc.'s Nine West stores wanted to deepen its athletic-shoe offerings, it sought help from a sneaker pro. In the spring, with athletic-shoe brand New Balance, Nine West introduced New Balance for Nine West footwear. The footwear line, carried at 50 Nine West stores, is selling strongly, according to Rick Paterno, head of Jones's wholesale-footwear division.
The recession and rising job losses have created an extra sense of urgency among retailers to offer merchandise that will strike shoppers' fancy as well as set their stores apart from the competition. For companies including Gap Inc. that typically design, source and sell their own products (instead of relying on wholesalers) under their own brands, that urgency has rewritten the rules as chains solicit the help of third parties, albeit on a small scale, to spur traffic, add a spark to their merchandise or fill a void in product assortment, analysts say.
Based on its initial success, Nine West plans to at least double the number of stores that carry the New Balance line this fall. The company also is planning to meet with New Balance to discuss extending the original one-year test program and expand distribution selectively to maintain "certain exclusivity," Mr. Paterno said in an interview.
"Single-branded concepts have been challenged," he added. "Innovation and new ideas are what's going to separate you from everybody else. We have to keep our minds open, because that's what's going to drive new businesses for the future."
Wall Street typically has welcomed such moves, which allow specialty stores to experiment with minimal risk. Still, analysts say it is crucial that these efforts don't become a distraction to management or draw too much attention from retailers' own brands.
The addition of extraneous labels among single-branded stores coincides with department stores and general-merchandise retailers -- from Wal-Mart Stores Inc. to J.C. Penney Co. -- to feature more in-store shops or exclusive merchandise, where sections of stores are given more of a specialty-shop feel in a quest to seek that perfect mix and make consumers spend.
Gap, the largest U.S. clothing chain, said this month that it is teaming up with celebrity designer Stella McCartney to create a line of children's clothing this year. Gap's other third-party collaborations include Los Angeles-based vintage T-shirt design label Junk Food Clothing; Havaianas flip-flops; and Nike Inc.'s Converse sneakers.
"We are willing to cooperate and work with third parties that we think can be complementary to our brands," said Gap Chief Executive Glenn Murphy at a Piper Jaffray consumer conference on June 10.
Other specialty retailers including Ann Taylor Stores Corp.; Club Monaco, which is owned by Polo Ralph Lauren Corp.; and J. Crew Group Inc. also have tried to mix third-party merchandise -- with Club Monaco selling Royal Gazelle bicycles from Holland, for example -- to pique shoppers' interest, or better yet, ring up extra sales.
Holding on to customers or halting any slide in market share is critical at a time when the recession has led to bankruptcies of retailers from Mervyn's to Filene's Basement. Sales of apparel and other nonessential items have fallen victim to consumer cutbacks.
"Retailers are learning not to put all their eggs in one basket," says Marshal Cohen of market research firm NPD Group. "The risk [of adding an outside brand] is minimum. If it doesn't work, you just get rid of it."
The Nine West partnership, which marries the bells and whistles of a technologically oriented brand in New Balance with the style and fashion of Nine West, has attracted the attention of rivals. Gap's online site for shoes, Piperlime.com, has contacted Nine West about selling the collection, Mr. Paterno commented. The shoes also have been tested in Macy's Inc. for a possible rollout.
Nine West is Jones's largest brand, projected to represent about 24% of the company's estimated $3.3 billion to $3.5 billion in sales this year.
At J. Crew, $800 Mackintosh coats, $275 Baracuta jackets, $250 Selima sunglasses and Hunter rain boots were offered alongside J. Crew's eponymous collection of apparel and accessories.
"You can expose your brand to a different market so a fashion shopper becomes aware of your brand," said Standard & Poor's retail analyst Marie Driscoll. "It adds depth to the story of a brand. When J. Crew brings these other brands, that says something about the J. Crew brand. Those are luxury brands that appeal to cognoscenti. It says, 'We know quality and we know you are looking for good merchandise.'"
The third-party experiment doesn't work for everyone. Cache Inc., known for its party and prom dresses, decided for the "first time in a long time" last fall that it would add some third-party labels such as the Black Orchid line of jeans under $100, Chief Executive Thomas Reinckens said in an interview. To lure budget-conscious shoppers, Cache sought to complement its traditionally higher-priced lines in the $150 range with a lower-priced label. By this fall, though, those outside brands will be replaced with a newly introduced, cheaper namesake line, according to Reinckens.
"We felt, 'Let's give this a try and see what happens.' We were happy with it, but not great," he said in an interview. "Our experience reinforced to us that our label is the strongest, as our own premium line performed the best."
Credit: By Andria Cheng
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