Invasion of The Cachet Snatchers

By Barbara Rudolph

The names on the garment labels conjure up visions of croquet in the English countryside: Jennifer Moore, Christopher Hayes, Morgan Taylor, Charter Club by Jane Justin. The names seem perfectly suited to each designer's personal style as well. Moore proffers the pastel colors of the English garden in her pale pink skirts and sweaters. Taylor is known for undergarments, ranging from emerald green chemises to fuchsia-toned satin slips, which are sold in a boutique filled with Victorian-inspired lace and linen. What shoppers might be surprised to find out, though, is that these designers do not exist. Macy's has concocted these tony names for its own house brands. Private labels, as they are called in the industry, are manufactured by retailers and sold exclusively in their own department stores or specialty shops.

The fantasy is effective: private-label clothes have become a dominant and highly lucrative segment of the retailing industry. While department stores have long produced some house brands, many of them offered little more than staple merchandise like cotton-blend men's shirts in a few colors. Now the styles are proliferating so fast that they are pushing well-known designers off the racks. Major retailers today sell 600 different lines of private-label clothing, up from 250 five years ago, according to Kurt Salmon Associates, a consulting firm. House brands accounted for up to 20% of the $125 billion in men's and women's apparel sold last year. Shoppers are sold on the basics: the clothes are typically well made, up-to-date and often priced about 20% less than brand-name counterparts.

Private labels have helped department stores create a more distinctive identity. Says Ellin Saltzman, fashion director for Saks Fifth Avenue: "It grew out of a need for individuality among stores. For years we have all been selling the same designers in the same malls to the same customers." Moreover, designer goods have become prone to discounting wars. Says Marshall Beere, director of women's-apparel merchandising for J.C. Penney: "If the competition runs a sale, you have to respond. With your own labels, you don't have to do that."

Stores can tailor private collections to their particular types of customers, from trend-happy adolescents to conservative executives. The fastest-growing brand of sportswear in the U.S. is The Limited chain's Outback Red, which sold more than $400 million last year. It began as a collection of Australian-inspired bush-country wear, and now features tamer English staples like jodhpurs and cable-knit sweaters. At Macy's, which sells an estimated 50 house brands, the Aeropostale line evokes the garb of 1920s French mail-plane pilots. The collection includes white silk scarves and rugged corduroy trousers. Macy's also offers a line of casual wear whose name makes a bald appeal to yuppie taste in real estate: Loft & Brownstone. At J.C. Penney, house brands range from the Silk Avenue collection of imported dresses to the Mixed Blues line of jeans.

In designing house brands, originality is a luxury, not a necessity. Some of Macy's Charter Club has been cut from virtually the same cloth as Ralph Lauren's signature lines. Among Charter Club's recent best sellers: handmade sweaters emblazoned with horses and wine-colored skirts printed with flying birds. While Lauren's hand-knit sweaters can cost $345, a Charter Club counterpart sells for $124. Designers shrug off such imitation as a cost of doing business. Says Louis Dell'Olio, designer for the Anne Klein label: "There isn't a designer on Seventh Avenue whose clothes haven't been knocked off by every store."

As they learn how to mass-produce clothes, retailers assemble teams of designers and product-development experts who travel from Milan to Tokyo looking for ideas and materials. Most retailers opt for manufacturing in Asia ! to take advantage of low wages. The Limited can probably claim the industry's most streamlined distribution network. Within ten weeks, 700,000 garments for a new line can be woven, cut, sewn, flown from Hong Kong and placed on racks in the chain's 751 stores across the U.S.

As house brands take up more space on store shelves, some traditional name brands have been pushed aside. Some companies, like Spitalnick, a longtime manufacturer of expensive women's apparel, have responded by giving up manufacturing their own line of clothes to make private labels instead.

Many designers are competing by opening their own chains of stores. Ralph Lauren opened a Manhattan Polo emporium in 1986; he now operates 68 stores across the country. Liz Claiborne this year launched a new store chain known as First Issue. The designer plans to have 13 outlets in business by January.

For department stores, developing private-label garments has its risks. If poorly executed, they can fail just as severely as the most misguided high- fashion trend. But by gaining control over design and manufacturing, department-store merchants think they can stay in closer touch with the tastes of their customers. Case in point: when working women turned up their noses last year at the miniskirts offered by designers, many retailers rushed to offer house brands with hemlines more suited to the office environment. As such thread-to-thread competition intensifies, consumers are likely to be the real winners -- even if their favorite designer turns out to be an imaginary character.

With reporting by Mary Cronin/New York