Discount Clothing Retailers See Promise in Designer Lines, Business and Industry Trends Analysis

The most successful discount stores that offer apparel focus on fashion as well as low prices.  Among the key players in this business are Wal-Mart, followed by T.J. Maxx/Marshall’s, Target, Old Navy, Kmart and Kohl’s.  In terms of apparel, discount stores such as Target, Wal-Mart and Kmart have typically been the places where consumers shop for inexpensive clothing basics such as socks, hosiery, underwear and sweatpants.  But all of these retailers have tried, at times, to gain a firmer hold on casual and career wear as well, by offering trendier, more upscale lines of clothing.

Wal-Mart acquired Asda, a UK-based retailer specializing in “cheap chic.”  Asda operates several stand-alone stores called “George,” which sell its upscale but inexpensive apparel goods under a label bearing the same name.  Designed in the UK, the clothes feature sumptuous fabrics such as leather and cashmere at competitive prices.  In the U.S., slightly more conservative versions of these clothes are available for men, women and children at Wal-Mart stores.

Meanwhile, Target paved the way in offering designer-name products.  In recent years, Target has entered agreements with a number of hip designers, such as Michael Graves (for housewares) and Isaac Mizrahi, Mossimo, Lily Pulitzer and Victoria Beckham (for apparel and accessories) to develop products for its stores.  Typically, these highly advertised promotions for designers attract long lines of shoppers and sell out in a matter of hours.

Target has been known to spend millions of dollars to advertise its fashion-forward apparel in upscale media including Vogue.  The chain has found notable success with major designers and continues to advertise heavily while pushing its positioning as a trendy place for fashion-conscious/cost-conscious consumers. 

Designer Vera Wang, who is famous for her couture bridal gowns, offers a line of dresses and handbags at Kohl’s discount department stores.  The Simply Very Vera Wang line features dresses for around $69 and handbags for about $89.  H&M has partnered with a number of couture fashion houses for limited collections in recent years, including Balmain, Karl Lagerfeld, Stella McCartney, Erdem and Moschino.  Merchandise in stores generally sell out within hours (and in some stores, within minutes) on the first day, and web site traffic can be so intense as to cause temporary shutdowns.

While these developments point to the increasing competition among discount retailers, they also reflect the general public’s great interest in shopping for discount apparel.  Wal-Mart claims that 93% of all U.S. households include at least one shopper who buys at its stores.