Friday, November 12, 2010

A tale of Two Retailers

The is the story of two fashion retailers. One that had it all, and the other that wants it all. A tale of how one retailer has a ride to the top, only to experience an inglorious collapse. The other, a small regional company, that has defied all odds to become bigger and bigger - even in a tough economy.

Our story begins with the manufacture and retailer "American Apparel". From the very beginning, American Apparel sought to redefine clothing basics. Their spin was to create well made, high quality T-Shirts, sweatshirts and the like. Good quality, no frills, basics you could wear outside your house without feeling embarrassed. They added to this quality by creating products that were cut specifically to fit women. A new idea, and one that was embraced wholeheartedly.

Now selling basic t's is pretty dull. So, American Apparel made their name known by creating provocative advertising, and to being one of the first to tout their clothing as being sweatshop free, ethical clothing. A differentiators from the rest of the marketplace. Spurred on by the media attention and customer enthusiasm, American Apparel went on a rapid expansion plan. Opening stores everywhere, pouring millions into marketing campaigns, and creating a pop culture star out of founder Dov Charney.

Yet now it is saddled with $120 Million in debt, the retail stores (over 200 at last count) are doing poorly and customers have lost interest in the company, finding other retailers to fill the void for basic fashion wear. Now, just over a decade from inception, American Apparel is contemplating Chapter 11. A shell of its former self.

On the other side of the fashion coin is manufacturer and retailer LuluLemon. Founded in Vancouver BC less than 10 years ago, the moderately priced yoga and fitness fashion label has grown from a few local stores to a dominate player in the fitness clothing sector. Touting fashionable, moderately priced fitness wear, LuLuLemon rode the wave of increased popularity of Yoga as the new fitness regimen.

The company has found success, and expanded rapidly throughout Canada, and now into the US marketplace. What makes their story remarkable, is this rapid and successful expansion during the recession. While other retailers pray for 1% or 2% same store sales growth, LuLuLemon is experiencing double digit growth this year - 30% to 40% over 2009. A company to be reckoned with.

A fall from grace and a Phoenix from the recessionary ashes. That's our tale of two retailers.

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