Liz Claiborne: The US Apparel Retailer's "Three-M's" Strategy
Details
Themes: Strategy
Pub Date : 2007
Countries : US
Industry : Women's Clothing
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Case Code : CSB0018
Case Length : 10 Pages
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Liz Claiborne: McComb's "Three-M's" Strategy Cont..
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Liz Claiborne was slow in investing in marketing and technology unlike its competitors like Tommy Hilfiger and
Jones Apparel. As a result, Liz Claiborne's products were unable to attract the department stores, which meant less
floor space from the retailers. Further, Liz Claiborne was unable to shift its product portfolio according to the changing
trends of the consumers. Changing preference of consumers to shop at specialty stores and department stores preferring
their own brands further added to its troubles. Liz Claiborne's sourcing strategy was also futile, as it did not allow the
company to adapt to the changing market trends. JonesApparel sourced 55%of its products domestically, as compared
to 14%for Liz Claiborne, making it difficult for the company to adapt to the changing market trends.21 The company's
lead times were about 3 months longer than its competitors as most of its suppliers are located in Asian countries and
who were smaller in size to invest in information technology to reduce the lead times.22 |
In 1995, Paul Charron (Charron), former executive vice president of VF Corporation, was appointed as the
CEO of the company. He initiated strategies to improve product portfolio and restructured its production and
distribution set-up. In 1995, Charron created 'LizEdge' a new in-store marketing department to improve the
presentation of its apparel. It started LizView, in-store fixtures in department stores. Charron commissioned a study
to understand the shopping behavior of its customers. With the insights from the study, Liz Claiborne modified its
display units and strengthened its efforts to allow mix-and-match across divisions.
Charron widened the company's brand portfolio to cater all consumer segments at all price points. He also initiated
a national brand advertising campaign to increase its brand awareness. In 1995, Charron announced a comprehensive
programme, LizFirst, to improve the efficiency of the company. As a part of this programme, Liz Claiborne reduced the
number of suppliers and shifted its production to Mexico and other Latin American countries. It was able to reduce the
cycle times by moving its production closer to the US and by improving its relationship with larger suppliers, who could
afford and were willing to invest in information and production technology. As a result, by 2000, Liz Claiborne's net
sales reached $3 billion.23 In 2003, the company's profits increased by 21.5% over 2002.24
21]Siggelkow Nicholaj, "Change In The Presence Of Fit: The Rise, The Fall, And The Renascence Of Liz Claiborne", http://knowledge.wharton.upenn.edu/paper.cfm?paperid=872,January 1st 1999
22]Ibid.
23]"Liz Claiborne China", op.cit.
24]Capriccioso Robert, "Liz Claiborne posts record profits despite 'Crazy Horse' protests", http://www.highbeam.com/doc/1P1-88187650.html, October 20th 2003