BOCA RATON, Fla. — As consumers increasingly demand what they perceive to be good value whether shopping brands or private label, innovation is an important part of product appeal as well.
This was the message analyst Josephine Esquivel, a Lehman Bros. senior vice president, brought to the AAMA annual meeting here.
“Innovation does not necessarily mean revolutionary or avant-garde; it could be as simple as new styling, different fabrics or specialized yarns,” she said.
She cited Haggar’s wrinkle-free cotton trousers as an example of listening to consumer complaints and responding to them.
“We believe survivors in the 1990s will include companies that are low-cost producers, that have a strong brand name and/or fill a proprietary special niche,” Esquivel said, asserting the men’s wear maker Tommy Hilfiger is a prime example of a company succeeding in this climate.
The Lehman Bros. executive noted that her firm helped Hilfiger go public in 1989 but disclaimed bias in lauding the company, citing data indicating it tied for second with Liz Claiborne in 1992 for having the industry’s top profit margins, right behind Fruit of the Loom, at 10.2 percent.
Although Hilfiger is sometimes derided as a copycat of older American styles, she asserted “the innovation is in Tommy’s…focus on detailing. The lines are basic Americana, but with a twist.”
She cited such treatments as green-stitched buttonholes and contrasting fabric collars.
“Price/value is critical to the Tommy Hilfiger story. The products sell at about one-fourth of what the best-known American classic designer sell at, without sacrificing the all-important quality,” she added.
The analyst also emphasized that the Uruguay Round’s phaseout of the protective Multi-Fiber Arrangement, coupled with the North American Free Trade Agreement, likely will increase competition for domestic apparel manufacturers. Esquivel said she believes U.S. apparel firms can remain competitive, though, averring “astute domestic producers who look beyond their borders will not necessarily be left behind.”