"We strengthened the whole design core of our organization. ... These are design-school people who are operating at a higher level from the retailers of years ago who would run around the mall and copy and knock off. If you're doing that today, you're not forward enough to satisfy today's customer," McGrath said.
Federated also has a stable of private "power brands," like INC and Alfani that were "rein-vented" from the past, and new brands like Green Dog, said Joe Feczko, executive vice president for marketing for Federated's merchandising group in New York.
Building an image
Each brand is advertised in national magazines and through direct mail and given its own distinct personality by an in-house ad agency, with occasional help from outside shops, he said.
"The old image was that private label took from the current or last season," Feczko said.
"The change is a targeted offering of product that is designed for a specific demographic, and marketing each as a brand, versus as a promotional label," Feczko said
For marketers, the beauty of the private brand is that it can do battle separately from the mother store. As a department store, JC Penney is advertised as an inclusive brand with the theme "It's all inside."
But the Arizona brand had a rebirth this fall with a specific mission: Lasso the 17- to 24-year-old consumer -- the same consumer sought by retailers like Abercrombie & Fitch and the Old Navy division of Gap.
Thorough research
Through research, the ad agency, Omnicom's DDB Needham in Chicago (which is also Penney's store agency) discovered that the target audience appreciates individuality and a certain maverick quality, explained Paul Brourman, group creative director at DDB Chicago.
"The campaign is about mavericks," said Brourman. "It's designed to capture Arizona's free spirit."
But apparel is not the only example of a private store brand getting the designer-name treatment.
Home collections have proved to be a lucrative niche for department stores, too, and some consultants and industry executives expect they will pick up more business if Martha Stewart's insider-trading troubles continue to affect her company's performance.
JC Penney is in the midst of updating its advertising and packaging for the JC Penney Home Collection, and a new ad campaign is expected early next year.
"The whole market sees it as an opportunity," McGrath said.
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