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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: Cogito Ergo Sum who wrote (9879)	3/24/2002 8:20:10 PM
From: Frank Pembleton	Respond to of 36161

North America's shopping maul By Deirdre McMurdy Steve Debus has a problem. Modrobes, his line of rave kid clothing, has been hugely successful. He's gone from hawking baggy pants from makeshift tables at snowboarding events and university campuses to a chain of four stores in Toronto and Vancouver. His designs, which now include a full range of shirts, pullovers, pants and hats, is also carried at Jean Machine and Athlete's World stores in shopping malls across the country. In the next couple of months he plans to open a store in Boston as a launch pad for a push into the U.S. market. The problem, now that his retail business generates over $7 million a year, is growth. How do you stay cool and keep your buzz , while broadening your mass market appeal and expanding your reach? One tack Debus has taken is to divide and conquer. He sells only a limited range of basic Modrobes items to mall-based distibutors. To get the full line of clothes and special items, you have to shop at one of his downtown "lounges," which feature weekend deejays and lime green walls. Another strategy has been to incorporate features in his clothing, that appeals to several different demographic groups. The trademark buckle and expandable waistband on the pants, for example, allows them to be as baggy or tailored as the consumer might want. But Debus is by no means alone in his efforts to grapple with growth. Tommy Hilfiger lost his cool quickly by becoming too mainstream, too fast. Club Monaco moved from clothing into home furnishings and "lifestyle accessories," until the new bosses at Ralph Lauren reined in the operations and whacked management. The Roots boys may be brilliant at selling leather jackets and Olympic sweatshirts, but their airline never got off the ground. And it's unlikely that their furniture business is anything more than a vanity project that will have to be dumped when they finally take the company public. The GAP lost touch with its core consumers with several seasons of ill-fated diversification. And it's financial results have been splotched with red ink ever since. Mammoth multinational companies like Adidas, Nike and Reebok are valiantly trying to capitalize on the prevailing taste for cool, individual products. They've all tried to launch underground product lines that don't carry their logos. And they spend a fortune on so-called "cool hunters," who are paid to keep them in touch with pop culture and street trends. But whatever their blunders, savvy niche marketers who know how to expand strategically are much better positioned than, say, department stores - which are pretty much on their last legs. After a lame attempt at resurrection by Sears Canada, it was announced several weeks back that Eaton's will finally fold again. Some of the expensively-renovated stores will close, others will be transformed into full-fledged Sears outlets. There's not much question that, in the end, Canada's oldest retailer, The Bay, will also bite the dust. It's been struggling for years and seems to be steadily losing ground in an intensely competitive sector. Even the venerable Sears-Roebuck department store chain in the United States recently announced to investment analysts that it is re-positioning itself and that it no longer wants to be considered a department store. Whatever. The problem with department stores is that their appeal used to be based on their ability to tailor their merchandise and services to a specific, local community. But as they expanded, merged and acquired in a bid to cut costs and achieve operating efficiencies, they compromised those roots and became increasingly generic. Rampant homogenization led to their loss of appeal. Of course the niche approach to marketing is no panacea. Just consider the way that traditional music stores are being ravaged by technology. It's become pretty much common practice to just download the music you want and burn your own CDs. Last year, for the first time in a long while, the music industry posted a sharp drop in revenues because of lower sales. And the entire industry will have to re-position itself to accommodate the changes thrust upon it by the external force of technology. The economic lull of the past several months, which has been characterized by soft retail sales for everyone except that juggernaut, Wal-Mart, will probably be the catalyst for the next round of rationalization. Retail action has been sustained by historically low interest rates, but as they creep up, the cost of doing business will rise - and consumer appetites are likely to be dulled, even if the economy strengthens. Talk about a shopping maul. money.msn.ca