VF's counter strategy to retail consolidation and their private label business

Implications: 1) Due to retail consolidation, slow growth on traditional brands and strong growth in private labels, branded companies need new  strategies to compete 2) Branded apparel companies will counter department stores by purchasing high profile designer brands and open their own retail stores

Analysis: With retail consolidation and competition of the private label business, traditional branded apparel companies are having a hard time to differentiate and grow.  

Branded apparel companies will have to reinvent themselves and become specialty retailers.  This is one way to take control of their growth strategy and compete with department stores and their private label brands. 

Purchasing a strong and established brand like Seven for All Mankind is also a good move.  With their consistent fit and quality merchandise, Seven has developed a cult following and become a destination brand for the loyal premium denim customers. 

Premium denim business has declined 1.8% to $7.5 billion in sales last year, a major slide from double digit growth 2 years ago.  We do see that the trend of people paying for high price denim could be passe.  However, premium denim brands aren't going away but it will become a multilevel price point lifestyle category in order to compete. 

New denim brands like Cheap Monday from Stockholm starts at $65, G by Guess starts at $50 and C7P is an exclusive brand produced by Chip and Pepper for JC Penney with opening price point at $35 for a pair of premium looking jeans without the premium price tag of $150 and up.

Lucy is a great retail brand with tremendous energy and growth potential.  In the fragmented women's active area, branded makers are still the major players.  Lucy offers a fun and relax shopping environment with attentive customer service and products that are well designed and priced.   This is one brand and concept to watch.