The retail behemoth remains mum about details, and perhaps for good reason. Press leaks during talks with Tommy Hilfiger in late 2005 reportedly scuttled any deal.
"We talk to people all the time. We don't have anything to say right now and we aren't announcing a deal this week, and are looking at all kinds of things we might do," said Gail Lavielle, a spokesman for the retailer.
"If it gets out who they [are negotiating with], all of a sudden that designer is the subject of ridicule," said fashion analyst Marshal Cohen of NPD Group. Until the ink is dry, "they are going to do their best to keep this under lock and key."
Landing a big-name designer could be a logical next step on Wal-Mart's journey toward elevating its brand beyond that of a purveyor of cheap, unglamorous threads. The earnest climb toward fashion respectability began over two years ago with the opening of a New York trend office and picked up traction in September 2005 with an unprecedented seven-page fashion spread in Vogue. The ambition surfaced again at New York's Fashion Week earlier this month as models strutted down the catwalks in the chain's Metro 7 spring line of cropped trench coats, camisoles and tunics all offered for less than $40.
Launched as a test last fall, Metro 7 is today stocked in 800 Wal-Mart stores and during a recent call with analysts, senior VP-Marketing Stephen Quinn touted the success of the brand. Then he hinted at bigger things to come. "I can tell you that you can look to see some very exciting news in the next few months for Wal-Mart that goes beyond the Metro 7 fashion line," he said.
Where to go next?
But Wal-Mart, despite a revamped look on the advertising front and 400-thread-count sheets in its stores, has yet to garner the kind of admiration from the design community Target has earned, which may make hammering out a designer deal difficult. "If you go to Wal-Mart, the odds are you won't be going elsewhere," said Mr. Cohen. "At Target, there's been life beyond it for designers."
Indeed, before Target, Isaac Mizrahi didn't have his own TV show on the Style Network or interview celebrities on the red carpet before the Oscars. "If you are willing to do it, you are going to give up a lot as a designer, but if you want to cash in and go commercial there's something to gain from that. A nickel a garment from Wal-Mart is going to be a nice payout," Mr. Cohen added.
Some fashion insiders, however, expect designers to jump at the chance to ride the "mass-tige" wave, a trend referring to prestige brands and designers seeking distribution in the mass market, a path most notoriously paved by Michael Graves at Target. It's a marketing formula that would undoubtedly see its biggest incarnation yet at a retailer with $300 billion in sales and an estimated $30 billion in global apparel sales alone, according to research firm A.T. Kearney.
"This new trend for name designers at mass merchants is now considered hip and cool from the designer's point of view, as well as highly lucrative," said David Wolfe, a fashion analyst at the New York-based Doneger Group.
Wal-Mart's move also comes as the $181 billion apparel market in the U.S undergoes a dramatic shift. Sales at mass merchants grew at a faster clip, 7.4% from 2004 to 2005, than overall apparel sales, which climbed just 3.6%. During the same period, apparel sales at department stores declined 0.8%, according to NPD Group.