Liz Claiborne: The US Apparel Retailer's "Three-M's" Strategy

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Themes: Strategy
Pub Date : 2007
Countries : US
Industry : Women's Clothing

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Case Code : CSB0018
Case Length : 10 Pages
Price: Rs. 200;

Liz Claiborne: The US Apparel Retailer's Three-M's Strategy


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"Our multi-brand, multi-channel, multi-geography portfolio helps to protect shareholder value by giving usthe flexibility to address trends in distribution and changes in consumer behavior."1


- Paul R. Charron, former CEO of Liz Claiborne

"Looking ahead, we intend to focus on four important business drivers - first and foremost, consistently creating irresistible product for our brands, building buzz and brand loyalty, evolving our supply chain capability to improve our competitive advantage, and focusing on talent."2


- William L. McComb, CEO of Liz Claiborne

Liz Claiborne: The USApparel Retailer's "Three-M's" Strategy

In early 2007, Liz Claiborne, an apparel retailer in the US, was encountering problems due to the changing dynamics of the apparel industry. As consolidation among major departmental stores and the launch of private labels grew, the industry has been undergoing many changes. These evolving market dynamics forced apparel companies to re-evaluate their business strategies. As a result, companies resorted to widening distribution network across channels and expanding brand portfolios. Under these trying circumstances, Liz Claiborne has embarked on a new strategy. William L. McComb (McComb), the CEO of Liz Claiborne, initiated 'Three-M's' strategy - multibrand,multi-geography and multi-channel - to bring back its lost glory. Through this, McComb hopes to win in the fiercely competitive apparel industry.

Global Apparel Industry: The Trends

Apparel industry, a highly competitive and dynamic one, has undergone many changes over the past century. During the World War II, apparel companies followed progressive bundle system3 to produce large quantities of identical products as there wasmore demand formilitary garments and consumers preferred quality to variety.

However, this system was slow and the lead times for manufacturing and shipping ranged from 2 to 2 months. As a result, retailers had to place orders well in advance of the start of each season. These longer lead times led to a shift from domestic to offshore production as the disadvantage of slower imports were more than offset by lower costs.

Since 1950s, production in global textile and apparel industry migrated to many places around the world, notably the low cost countries. The firstmigration took place in 1950s when production was outsourced to Japan from NorthAmerica and Europe. Further, in 1970s, the sourcing shifted from Japan to otherAsian regions like Hong Kong, Taiwan and South Korea. In 1980s, due to the rise in wage rates and appreciation of the currencies in Japan, Taiwan and South Korea4 , apparel sourcingmoved toChina and later in 1990s, SouthAsian and LatinAmerican countries began to enter the apparel sourcing market. Apparel industry played a leading role in the export growth of most Asian countries.

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1]"Liz Claiborne Inc", http://media.corporate-ir.net/media_files/NYS/LIZ/reports/ar_2003.pdf
2]"Liz Claiborne Inc. Reports 4th Quarter and Full Year Sales and EPS", http://www.highbeam.com/doc/1G1-159893593.html, February 28th 2007
3]Progressive bundle system was employed in apparel production where the task of assembling the garment is broken down into small operations, and bundles of work are progressed down the production line through each operation in sequence until the assembly process is complete.
4]In 1985, after the Plaza agreement was signed, currencies in Japan, South Korea and Taiwan appreciated against dollar. Between 1985 and 1987, Japanese yen was revaluated by close to 40%, the new Taiwan dollar by 28% and from 1986 to 1988 the Korean won appreciated by 17%.