Federated sets big private-label push

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Federated Department Stores' private-label unit, which spends $160 million annually on marketing, is seeking an ad agency to do creative for its first national broadcast effort.

The $15.6 billion retailer, with 400 stores nationwide, sells $1.6 billion annually in private-label merchandise under such brand names as Charter Club, I.N.C. International Concepts and Tools of the Trade.

Two years ago, Federated established the marketing unit to compete with designer labels such as Ralph Lauren and Nautica or specialty stores such as The Gap. Currently, about 15% of Federated stores' merchandise is store brands, with the remaining 85% from traditional outside suppliers.

"It's a big leap for us," said Joe Feczko, senior VP-marketing, Federated Merchandising Group, who said he was looking for an agency to act as a strategic partner and "to jump-start us."


The new branding effort could be launched as early as this fall, he said.

Federated has stores in 36 states under the names Bloomingdale's, the Bon Marche, Burdines, Goldsmith's, Lazarus, Macy's, Rich's and Stern's.

"Our customers come for a variety of brands," said Mr. Feczko. "If it's not available at the competition, that's great."


Mr. Feczko would not disclose anticipated spending, but for comparison, Calvin Klein Inc. spent $12.7 million and Tommy Hilfiger Corp. $20.6 million in 1997 on measured media, according to Competitive Media Reporting data.

However, Mr. Feczko said his in-house shop spends about 40% of its budget on packaging and other marketing projects beyond mass communication.

The unit has a study on TV advertising effectiveness underway, and would want its agency to help determine its media mix as well as broadcast message. Media buying will remain at Gugel Advertising, Dallas, Mr. Feczko said.

In its latest print effort, Federated's private-label unit launched a print campaign for its Tools of the Trade line of cookware, cutlery and flatware with comedian Dom DeLuise. Keyes Martin, East Han~over, N.J., handled.


The review is the latest in a marketing shakeup in the apparel and retail industries. Last year, Nordstrom's for the first time began a search for an agency for a branding effort, and Levi Strauss & Co. parted with its agency of 67 years.

Subsequently, jeans brands such as Fruit of the Loom's Gitano Jeans, and retailer AX Armani Exchange, have talked with agencies, while Tommy Hilfiger is conducting a review for a $30 million creative assignment.

"Everybody has this desire to be a superbrand," said Ellis Verdi, president of DeVito Verdi, New York, whose agency handles advertising for a number of retailers, including Circuit City. "The superbrand marketing status is the ultimate status in terms of the consumer and Wall Street."

Federated backs its Tools of the Trade cookware, cutlery and flatware line with a print campaign this spring and fall featuring comedian Dom DeLuise. The ads, from Keith Martin & Associates, East Hanover, N.J., will run in March and April issues of Bride's, Food & Wine and Martha Stewart Living. Spending wasn't disclosed, but is said to be more than $2 million.

Copyright February 1998, Crain Communications Inc.

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