The names on the garment labels conjure up visions of croquet in the English countryside: Jennifer Moore, Christopher Hayes, Morgan Taylor, Charter Club by Jane Justin. The names seem perfectly suited to each designer's personal style as well. Moore proffers the pastel colors of the English garden in her pale pink skirts and sweaters. Taylor is known for undergarments, ranging from emerald green chemises to fuchsia-toned satin slips, which are sold in a boutique filled with Victorian-inspired lace and linen. What shoppers might be surprised to find out, though, is that these designers do not exist. Macy's has concocted these tony names for its own house brands. Private labels, as they are called in the industry, are manufactured by retailers and sold exclusively in their own department stores or specialty shops.
The fantasy is effective: private-label clothes have become a dominant and highly lucrative segment of the retailing industry. While department stores have long produced some house brands, many of them offered little more than staple merchandise like cotton-blend men's shirts in a few colors. Now the styles are proliferating so fast that they are pushing well-known designers off the racks. Major retailers today sell 600 different lines of private-label clothing, up from 250 five years ago, according to Kurt Salmon Associates, a consulting firm. House brands accounted for up to 20% of the $125 billion in men's and women's apparel sold last year. Shoppers are sold on the basics: the clothes are typically well made, up-to-date and often priced about 20% less than brand-name counterparts.
Private labels have helped department stores create a more distinctive identity. Says Ellin Saltzman, fashion director for Saks Fifth Avenue: "It grew out of a need for individuality among stores. For years we have all been selling the same designers in the same malls to the same customers." Moreover, designer goods have become prone to discounting wars. Says Marshall Beere, director of women's-apparel merchandising for J.C. Penney: "If the competition runs a sale, you have to respond. With your own labels, you don't have to do that."
Stores can tailor private collections to their particular types of customers, from trend-happy adolescents to conservative executives. The fastest-growing brand of sportswear in the U.S. is The Limited chain's Outback Red, which sold more than $400 million last year. It began as a collection of Australian-inspired bush-country wear, and now features tamer English staples like jodhpurs and cable-knit sweaters. At Macy's, which sells an estimated 50 house brands, the Aeropostale line evokes the garb of 1920s French mail-plane pilots. The collection includes white silk scarves and rugged corduroy trousers. Macy's also offers a line of casual wear whose name makes a bald appeal to yuppie taste in real estate: Loft & Brownstone. At J.C. Penney, house brands range from the Silk Avenue collection of imported dresses to the Mixed Blues line of jeans.