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Low-budget Retailers Find Repeated Success With Designer Collaborations

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An emerging trend of mutually beneficial collaborations between high-end designers and low-budget retailers is sweeping retail. Target, H&M, Walmart, Kohl’s and The Gap have all capitalized on this consumer obsession – bringing high fashion to the mass-market though limited collections sold at affordable prices. This attempt to bolster retail profiles and expand the reach of runway styling yields big benefits for firms that are able to sustain the initial momentum.

Minneapolis-based Target Corp. has launched lines with high street notables Alexander McQueen, Rodarte, Jean Paul Gaultier and Missoni among others. The retailer’s first designer line hit sales floors in 2008 with Richard Chai for Target. The most recent collaboration–with designer Jason Wu–launched February 5, 2012 and saw hoards of fashion-hungry shoppers storming Target storefronts and overloading the company’s online servers.

For retailers, designer collaborations not only raise their brand’s prestige but also create an affordable outlet for high fashion brands. The mass frenzy over designer lines moves hundreds of thousands of dollars in stock quickly – creating a sense of urgency in which shoppers feel the pressure to buy limited stock. Mere hours after Target released Wu’s limited-edition collection in-store and online, the fashion line was sold out.

While designer partnerships are most successful in terms of short-term buzz building, the results are also seen long-term. Big box consumers remain eager to buy designer lines year after year after witnessing the frenzy of each consecutive sell-out. Retailers can rely on limited collections for sales increases, with hopes of generating higher profits long-term. Target saw a positive increase of 7% in comparable-store sales for that February– the most in 10 months. The company saw a rise of only 1.8% in the prior-year period.

For fashion designers, one-off lines allow them to actively market their brand to an entirely new group of consumers whose shopping experience is most often defined by national retailers. Target worked hard to create buzz surrounding the Wu collection, targeting social media sites like Twitter and launching both television and print advertising campaigns. Although the designer’s clients include First Lady Michelle Obama, for young designers especially, revenue gained from design fees for limited collections with national retailers is invaluable.

These limited partnerships have become popular in recent years because of their appeal to cost-conscious consumers. Although the economy has seen a positive increase in recent months, post-recession American shoppers are still watching the dollar. The high-end designer and low-budget retailer collaboration strategy is inherently successful– boosting consumerism at the core of American retail.

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