On May 30, 200 CK files complaint against Warnaco Group Inc for breaching its Jeanswear licensing

The suit went on to specify several operational practices at Warnaco that negatively affected the brand, including unauthorized adaptations of designs, failure to follow designer guidelines, and use of cheaper materials in production

CKI further requested that goods already distributed to such stores be recalled

Asked court to terminate Warnaco’s license and award CKI unspecified monetary damages as compensation for lost equity in the brand

Warnaco issues statement questioning CKI’s motives

The claimed that CK had breached the Jeanswear license, eroded the brand by practices including missed design deadlines, submission of substandard designs for manufacture, etc

The counterclaim also charged that Klein had defamed and libelled Warnaco through statements made on the Larry King Live show and sought reparations of $200 million for orders allegedly lost in response

Warnaco mentioned this behaviour intended to help regain Klein control of trademarks and attract a buyer for CKI

News pundits got fascinated by a licensed manufacturer/distributor being charged with brand equity dilution and a designer held for ineffective brand advertising

Distribution Practices and Fashion Retailing

• Each offered variant combination of 4 basic positioning vehicles of retailing– Product assortment

depth/breadth– Price(quality)– Convenience– Service

• High degree of cross shopping across outlets was observed in the apparel category, blurring consumer segmentation along channel lines

Mass Discounters

Department Stores

CHANNELSFashion

distributed via 5 primary channels

Specialty stores

Warehouse clubs

Off price retailers

Department stores in 1980s

– Largely carried limited distribution– High quality branded merchandise– Various departments housed conveniently

under one roof– Superior product displays– Ambiance– Broad assortment– Excellence in customer service– A value proposition that commanded a premium

price

In early 1990s bankruptcies and consolidations plagued retail industry and began a market share decline throughout 1990s

In 1990s also, emerged the concept of shop in shop featuring merchandise of a particular designer

Branded concept shops too were immediately successful

Concept shops also helped heighten brand awareness for fashion labels nationwide while offering superior control over shop design and merchandising

cK had about 400 shop in shops in departments stores in 1997 and planned to open another 650-700 shops in 1998

Enemy of shop in shops is saturation, sameness breeds discounts- Bud Konheim CEO of Nicole Miller explained

Key suppliers were concerned with difficulty of maintaining or growing their business with department stores. Eg for mid-tier stores like Target

Walmart, Kmart and Target emerged as a strong players in apparel space for offering well known brands at cheaper prices

Target recruited designer Mossimo to create a clothing and accessories line for the store while Kmart built an in-house apparel brand with actress/model Jaclyn Smith to differentiate itself

By 2001, 85% of consumers shopped at discount stores and 70%reported that they obtained apparel at these stores

Specialty stores were able to deliver trend right merchandise for targeted segment of customers

Off price retailers sold brand name merchandise at lower prices, acquired out of season branded fashions and split lines sold one brand’s excess inventory at discounted prices