Fresh Brands, New Spin-Offs

New concepts have always been the lifeblood of retail. Increasingly, most new apparel formats are spin-offs from established players. But while it is getting harder and harder to launch a brand from scratch, ambitious entrepreneurs still manage to break through.

Here’s a look at several new banners that fall under both categories:

Crazy 8

Gymboree Corp. is expanding its portfolio with a new concept, Crazy 8, that takes a fresh, casual approach to children’s apparel. With price points that fall 30% below Gymboree stores, the new brand gives the company a foothold in the lower-priced end of the market. But the company sees it having across-the-board appeal.

“The Crazy 8 target customer is not necessarily from a lower-income household. It’s really any customer who values great fashion at a great price,” said Matt McCauley, CEO, Gymboree, San Francisco, which posted $791.6 million in net sales in 2006.

The first Crazy 8 opened in August, in Serramonte Shopping Center, Daly City, Calif., followed by stores in Santa Ana and National City, Calif., and Staten Island, N.Y. The company is on track to open 15 to 20 locations by yearend.

Gymboree Corp.

Headquarters: San Francisco Number of stores: 739 (Gymboree, 585; Gymboree Outlet, 70; Janie and Jack, 83; Crazy 8, one) Areas of operation: United States

“If things go well, Crazy 8 has the potential to be at least the size of Gymboree in terms of store count,” McCauley said. “I say at least because it is appealing to a larger customer base than Gymboree.”

Crazy 8 offers clothing for infants to size 14 (Gymboree stops at size 12), along with footwear and accessories. The emphasis is on coordinated pieces as opposed to Gymboree-style complete matching outfits. Also, the clothing a bit more trendy in its styling. But anyone looking for a kid-sized version of current adult fashions at Crazy 8 will be sorely disappointed.

“The clothing is trend right, but in a wholesome way for kids,” McCauley explained. “A differentiating point for us is that we will always be wholesome and age-appropriate when it comes to our fashions.”

In addition to being more fashionable, the merchandise mix at Crazy 8 has a stronger balance of boys vs. girls (the split is 40% boys, 60% girls) and kidswear vs. infants than Gymboree.

“Our boys business has been growing substantially,” McCauley said. “It’s one of our biggest growth opportunities.”

Despite its lower price points, Crazy 8 maintains Gymboree’s reputation for quality, both in terms of fabrics and how garments are made.

“We were very conscious of offering quality at this price point,” he added. “Quality is another key differentiator for us.”

So is the shopping environment. Crazy 8 stores, at 2,500-sq.-ft., are bright and attractive, with pendant lamps, wood floors and ivory-colored fixtures. The look is more upscale than discount.

“We feel that the best way to speak to customers is to give them an elevated experience and not talk down to them,” McCauley explained. “With Crazy 8, you have this juxtaposition of a beautiful store with great fashions at unbelievably low prices.”

The layout puts older children’s clothes at the front of the space and newborn and infants in the back. Also in the back is a 50-in. plasma television that helps entertain kids while their parents shop. The in-store music has a contemporary tone.

“Overall, the store feels a bit older than Gymboree,” McCauley said. “We want older kids to feel comfortable shopping at Crazy 8.”

The real estate strategy, at least for the immediate future, includes upper- and medium-tier malls, with and without Gymboree stores. The company is also looking at lifestyle centers.

“We’re trying a bit of everything in the beginning,” McCauley said. “We know there will be some degree of cannibalization with Gymboree, but we want to see how much. The customer will tell us where we need to be.”

Casanova

Fashion-obsessed trend-setters are the primary target of Casanova, a fashion-forward format that combines an eclectic merchandise assortment with a nightclub-like atmosphere. The concept is the brainchild of Sanjay Matai, 30, who said there is little mystery as to how he came up with the store name.

“Every man between the ages of 18 and 35 wants to be a Casanova, and every woman wants to be with a Casanova,” explained Matai, CEO, Matai, Inc., Raleigh, N.C., parent company of Casanova Clothing Boutique.

In the Wings

A new, start-up teen retailing concept, Love Culture, is set to premier in September, at Plaza Bonita, National City, Calif., followed by a store in Houston, in October. Founded by Jai Rhee, a former executive of teen fave Forever 21, Love Culture is setting its sights on teen girls who aspire to high-end, edgy hipster brands but can’t afford them. It will offer brands new to the U.S. market and made in the Far East, as well as private labels.

At presstime, much of Love Culture was still under wraps. But according to the store designer, Graham Downes Architecture, San Diego, the 7,000-sq.-ft. prototype will have a fresh, crisp and modern design, with an all-glass exterior and an all-white interior accented by red and cherry-floral graphics. A super-sized lounging bed piled high with pillows will be located in front of the dressing rooms.

Love Culture expects to open 10 locations during its first year of operation. The company’s plans reportedly include 200 to 300 U.S. stores within a decade.

A number of new start-ups are coming from wholesale giants. Coming this fall is the first of what could ultimately evolve into a 100-plus store chain focused exclusively on the Calvin Klein White Label collection. Parent company Phillips-Van Heusen will test the concept by opening five Calvin Klein specialty stores by yearend, and another five in 2008. Announced locations include The Beverly Center, Los Angeles; Lenox Square, Atlanta; and Cherry Creek, Denver.

The stores will average 10,000 sq. ft. and and feature men’s and women’s apparel, fragrances, eyewear and other accessories. About 75% of the goods will be unique, avoiding cannibalization of product found in department stores.

Other well-known brands going direct to consumers include the premium denim company Seven for All Mankind, set to open its first freestanding store in November, in Los Angeles. The 3,000-sq.-ft. space will feature Seven’s expanded collection of men’s and women’s clothing and accessories. Industry experts expect Seven to grow its retail base going forward under the aegis of its new owner, apparel giant VF Corp.

Another brand taking the plunge is sports-apparel maker Under Armour, making its full-priced retail debut at Westfield Annapolis Mall, Annapolis, Md., in November.

Matai launched Casanova in April 2006, in Raleigh, N.C., but his retail career started years earlier, back when he was a teenager growing up in New York City.

“I started selling clothing, watches and accessories that I got on consignment after school and on weekends,” he said.

Matai eventually saved enough money to open his own boutique, which he called House of Style after the MTV show. In 1998, he left Manhattan and moved his business south— to Raleigh, N.C., where the overhead was lower and the competition less intense.

Within a year, three House of Style locations were successfully operating under the umbrella corporation of Matai, Inc. But the young retailer was ready to start something new. He came up with the idea for Casanova through brainstorming with two of his fashion contacts, Tommy and Andy Hilfiger.

Matai, Inc.

Headquarters: Raleigh, N.C. Number of stores: Seven (Casanova Clothing Boutique, two; Privilege by Casanova, two; House of Style, three) Area of operation: North Carolina

Currently, there are two Casanova locations, with a third in development. The stores are designed to resemble lounges, with a bouncer/greeter positioned at the entrance, in front of velvet ropes.

“When you walk into Casanova,” said Matai, “fashion consultants make you into who you want to be, whether it’s a hip-hop star or a Hollywood celebrity.”

Casanova features regular celebrity meet-and-greets, parties and autograph-signing sessions. Although the ambience is a draw, ultimately it is the merchandise that makes the concept so unique.

“We carry only rare, hard-to-find, limited-edition items and brands. And we never restock the same goods,” Matai said.

Men’s and women’s apparel from Europe, plus urban, skate, retro and club-wear brands dominate Casanova’s inventory. Denims range from $50 to more than $1,000 a pair. The mix also includes a large variety of limited-edition sneakers.

Casanova is positioned at young, mostly male professionals (the merchandise mix is roughly 70% male, 30% female), specifically, consumers who, as Matai put it, “create a lifestyle out of fashion.”

Casanova opened its first flag-ship in June, in Triangle Town Center, Raleigh, N.C. It features a sleek, upscale environment, plasma televisions, in-store online-shopping channel, and a photography studio.

In March 2007, Matai launched a spin-off concept, Privilege by Casanova, with locations at two malls in North Carolina. An even more upscale and sophisticated version of the core brand, it features such upper-tier labels as Prada, Roberto Cavali and Antik Denim.

“Privilege caters to the young, professional elite for whom money is not an issue,” Matai said. “It offers the rarest European and Asian brands all under one roof, and in very, very limited quantities.”

Matai plans to expand Casanova and its higher-end offshoot. Immediate plans include stores in Raleigh and Charlotte, N.C., and Atlanta.

“Future locations will include New York City, Washington, D.C., Atlanta, Miami, even Dubai,” Matai said. “We are looking toward large, high-profile markets that will give our concept global recognition.”

As to performance, Matai said the privately held company racked up approximately $4 million in sales in 2006. But with the added locations, he expects that figure to grow significantly in 2007.

GBy Guess

Young and sexy, stylish but affordable, G by Guess is the newest property in the expanding multibrand empire of high-flying Guess? Inc., which posted $1.19 billion in revenue in 2006. The concept debuted in April 2007, and has since expanded to approximately 37 locations nationwide.

In both its looks and appeal, G by Guess is not as cutting-edge as traditional Guess stores. It targets a younger consumer, with an on-trend merchandise assortment that includes clothing and accessories for men and women. The look is fashion-forward, but accessible.

Prices fall between Guess’ regular stores and its factory-outlet units. Denims and dresses top out around $49.50, and women’s shoes are in the $50 to $60 range.

With an average of 4,500 sq. ft., G By Guess stores are designed as a modern take on vintage California cool.

Guess? Inc.

Headquarters: Los Angeles Number of stores: 336 Areas of operation: United States and Canada

While Guess says that its new concept is still in a test mode, it is hopeful about the long-term potential. The company said that sales are in line with expectations.

“We think that if this concept does what we think it should do, this could be a multi-hundred store opportunity,” Carlos Alberini, president and COO, Guess? Inc., Los Angeles, said during a presentation at the CIBC World Markets 7th Annual Consumer Growth Conference in July.

BLUE & CREAM

Blue & Cream, which sells funky, high-end men’s and women’s apparel and accessories, opened in the tiny resort town of East Hampton, N.Y., in May 2004. The 1,250-sq.-ft. store specializes in the type of hip, alternative designers and brands that are hard to find outside of downtown Manhattan or Los Angeles.

“Blue & Cream puts together under one roof a super-funky offering for those men and women who can’t get out of their offices all week long to shop downtown,” said founder and entertainment-marketer-turned-merchant Jeffrey Goldstein.

A second store opened in May 2006, in the equally upscale Southampton, N.Y. Both stores have a beachy feel, and the price points, while high, are a step down from the typical Hamptons’ luxury boutique. Women’s tops and dresses carry a $200 to $500 price tag, and men’s wear ranges from $100 to $400.

With the two Hamptons locations under his belt, Goldstein is now ready to expand. A third store, in the new Avalon Bowery Place mixed-use community on Manhattan’s Lower East Side, will open this fall. It will be vastly different from its Hamptons sister stores.

“The Bowery space is unique because it’s part of an urban redevelopment,” he said. “We’re trying to identify with the redevelopment of the area and associate with the burgeoning art scene.”

Blue & Cream in the Bowery will showcase a revolving collection of street-and graffiti-art by different artists alongside fashions from the leading wave of hip designers. Goldstein and his team have made a dedicated effort to find unique product.

Blue & Cream

Headquarters: East Hampton, N.Y. Number of stores: Two Area of operation: New York

“I knew I had to do something different in Manhattan than I did in the Hamptons,” Goldstein said. “In the Hamptons, there was a need for these young designers from L.A. and New York. But in Manhattan, you can find them easily. So, to make Blue & Cream unique, I’m creating this new scene with the merging of fashion and art.”

In addition to the Bowery store, a second Manhattan location is due within the year. Goldstein also wants to expand to seasonal and resort locations nationwide.

“On the 18-month horizon, we’ll open two additional stores, with the first in Snowmass, Colo.,” he said. Other likely locations include Las Vegas; Malibu, Calif.; and Palm Beach, Fla.

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