Sep 14, 2007

Wheel of Retailing Turns at Ann Taylor

A perennial strategic phenomenon is the decision by growth-challenged retailers to spin the "wheel of retailing" by abandoning their core and "moving upscale". Ann Taylor is only the most recent to annoucne the moves ( Wal-Mart's collasal upscale apparel blunder being the most reported)

As reported in the WSJ today: "...Even as chains offering more expensive goods are thriving, Ann Taylor and other midlevel women's apparel retailers have been struggling. To grab more affluent working women who aren't feeling pinched in the pocketbook, the company is introducing a line in its Ann Taylor stores that's a big step up -- 40% more expensive than its usual merchandise...'we know there's a client there who has an appetite for more upscale, expensive product' says Adrienne Lazarus, president of the Ann Taylor brand...."

But here's the catch, as the same article points out in passing later in the story: " obstacle midlevel retailers face in moving up is that their stores don't have the cachet of designer labels' shops..."

Diversifying into higher-end goods from a poisition of strength is one thing. But when a retialer is struggling to provide its core consumer base with a satidfying experience, what is the logic for thinking it can extend the flawed model upscale?

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