A case from Basic sports wears to High Fashion

While entrepreneurs around the world in every industry thrive by taking the consumer by surprise and turning dreams into realities, one company has held its own by dong the opposite. Liz Claiborne the largest women’s apparel manufacturer in world, brings women in touch with themselves not their dreams. According to the program for a Liz Claiborne spring 1992 fashion show, Claiborne designs are simple, straight forward fashion that’s designed for women who have more important things to think about than what to wear. No gimmicks. No surprises.

Although Chairman Jerome Chazen understands the ingredients in Claiborne’s success, he cannot help bust consider whether the strategy will continue to remain effective. Panicky competitors have become entrenched in pattern of discounting merchandise. Consumers are becoming increasingly averse to paying full price for anything. But Liz Claiborne takes pride in being able to sell more than 55 percent of its clothes at full price. In addition although Liz Claiborne still holds the lion’s share of the market, companies like the Gap and the Limited still present strong competition. Can the company adhere to its traditional conservatism and customers driven planning and survive?

Liz Claiborne, founded in the 1980s grew from a basic sportswear business to become a multifaceted fashion house. In 1986, it became one of only two companies started by a woman to be named a member of the Fortune 500. During the past decade, sales have grown at a rate of about 36 percent annually to nearly $2 billion almost twice that of the nearest competitor. In addition, profits have increased 42 percent annually to an impressive $205 million. This has all taken place in spite of the deepest retailing slump since the Depression. Liz Claiborne has become not only the fashion industry leader but also one of the most successful companies in the United States today.

Integral to the company’s success is its customer-driven planning. A sophisticated computer system, known as System Updated Retail Feedback (SURF), keeps the company in touch with what is selling and what is not, around the country around the clock. A $10 million system of IBM computers is used to crunch information and produce bound volumes at the end of each week. Division heads then determine both short and long term planning needs according to customers’ reactions to particular sales, styles sizes and colors.

SURF also enables Liz Claiborne to reach the customer in her favorite store. The same store in different geographic locations often serves different niches. For example career clothes may move quickly at Bloomingdales in Tyson’s Corner, Virginia whereas casual clothes may sell more easily at Bloomingdales at White Flint Mall in Bethesda. Maryland. Similarly, Macy’s at Tyson’s Corner might sell more sportswear. SURF allows Liz Claiborne to adjust the merchandise sold in particular outlets according to the niche being served.

Technology can supplement but does not replace personal endeavors. Thus Liz Claiborne also monitors customer perceptions through personal interactions with customers and retailers. About 150 specialists around the country have responsibility for talking to customers as they shop to solicit feedback. The company also has about 18 stand alone stores that serve as testing grounds for new ideas.

Liz Claiborne keeps in close contact with retailers, both to make sure they are handling merchandise properly and to field questions and concerns. The company maintains consistency in the presentation of its merchandise through a group of about 21 consultants who are responsible who are responsible for visiting department stores to ensure that clothes and displays are arranged uniformly according to “Lizmap” diagrams. The company also has about 95 customer service telephone operators most of whom are assigned to respond to retailer questions ad concerns.

In effect, the customer does the planning for Liz Claiborne. This company truly believes it was built by the customers. Now every company in America has decided that’s what they need to take care of customers. We have been doing it since the day we started. Jay Margolis, vice chairman of the board and president of the women’s sportswear division, echoes the sentiment. Remember who we listen to our customer, he noted. She votes on us every day of the week.