The brilliance of Kohl's OR What's in a name
 

CP and I had an interesting conversation over the weekend after we bought a new purse and new wallet respectively. We both got them from Kohl's and they were both by the brand "Relic". Impressed with the price to quality/style ratio, CP went online looking for more stuff by Relic. She wasn't finding anything, other than links back to Kohl's or to EBay, to which I said, "Of course not, it's one of the Kohl's brands, like Croft and Barrow or Axis."

This was a revelation for CP. I had been aware of it for a while, but it even took me many shopping trips to Kohl's to suddenly realize that 90% of the items were of these brands...and that I've never seen the brands anywhere else.

The conversation made us realize just how good Kohl's is at what they do. First off, the brand names are perfect. They sound like department store brands, the kind of name that makes you assume it's been around forever. "Croft & Barrow", "Urban Pipeline", "Relic" (is that a play on Fossil, by chance?). But, at the same time, they're unassuming names, so the focus isn't on the brand of the clothing, but on Kohl's as a brand. By stocking mostly their own brands, they're able to keep costs down for higher quality items. Unlike Target or Walmart, who keep costs down by paying other companies to do things cheeply, they do things well and keep the profits.

But here's the real interesting conclusion we came to. The real secret is to keep the demand for the individual brands out of the spotlight. Because once any sort of brand loyalty develops, then people are going to want that brand from other sources. They'll want to go online and get it from Amazon, they'll want to see it at Ross or wherever. All of a sudden, if the public gets a whiff of that kind of branding, a business model switch is necessary. It become vital to "franchise" the brand, which is a HUGE risk for Kohl's. They're small, and their business model depends on loyalty to the store. Once that bubble bursts, they would be forced to compete with the big boys, their costs would surge as they'd have to split their efforts between the branding of the store and the branding of the merchandise. And they'd likely have to start looking outside of their own infrastructure to keep up with expanding demand, thus risking the quality of the merchandise. It's sad, but it really would be the only reasonable business model at that point.

So color me impressed with their ability to walk that thin line. Lord knows they've created a loyal customer in me, simply by providing quality and style at reasonable prices.

All major stores do this. Craftsman, Amanna, Greatland, Mossimo, there are THOUSANDS of "brands" that re "exclusive" to big stores.

Wht is interesting to me, is that all these "exclusive" brands are ultimately outsourced offshore where competing brands may well be manufactured by the same company.

There was a great essay in a Granta awhile back about the evolution of various manufacturers of Toy trains and how overtime, they were all manufactured in the same Chinese plant where they were just branded and packaged differently.

Now the brand is probably associated with a design team somewhere, but I wonder to what extent that is outsourced as well. I know Target and K-mart have been trying to link their brands to well known designers (e.g. Michael Graves) as a strategy, which I think has been working in thier favor.

It's like when the Simpsons went to the knock off store looking for TVs. One of the brands was Sorny.
:D

Craftsman, Mossimo, and I believe Greatland (dunno about Amanna) can all be found in stores other than their original. Yes, they started that way, but those brands were marketed as brands and eventually franchised out. The Craftsman name, for example, was pushed...and look what happened to Sears. It almost died in the early 90s once demand for their exclusive brands outpaced demand for the store. Now they're back, but have slid in terms of brand loyalty. I believe that's what Kohl's is trying to avoid.

With Kohl's I think it's more than just the design team. Certainly they've got some oversees deals with independent manufacturers to do the assembly work, but from the research I've done, the brands are wholly Kohl's-owned. Unlike Target that has to pen a licensing deal to sell those designer names, as well as share in profits, Kohl's owns the whole shebang, lowering overhead and keeping a larger chunk of the sale. Thus, more control over quality and price.

I love Kohls.

That is all.

Oh and Mossimo almost died out until Target started selling it. I remember Mossimo being the brand to have in 7th grade. That, Esprit an Guess.

There's a Kohl's near us. I should check it out. (The only problem is that it's in a really, really sketchy mall.)

Then I suggest waiting until late at night on a Wednesday. Be sure to wear your Yankees jersey and slap that "W for Emperor" bumper sticker on.

I guess I wonder what the "whole shebang" really is. It's one thing to own the brand and yet another to own the stuff that makes the brand valuable. Are their designers in house? or is Kohl's genius really in their procurement strategy (ability to purchase quality good cheeply)?

And that is what happened with Craftsmen et. al. These are older, more mature names. The same thing will (probably) happen with Kohl's over time as well.

And that same slide is what Sear's tried to avoid themselves. They just came to realize (as will Kohl's at some point) that their developed name matured to the point where they can make more money by cross-selling it through other venues.