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Parigi EVP Talks Brand Value in a Consumer-Driven Children’s Market

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Since acquiring Phat Farm Boys and Baby Phat Girlz brands in the late 90s, Parigi Group has kept a pulse on the brands and trends that have transformed the children’s apparel market from staid and traditional to today’s fashion-forward, brand-driven industry. In doing so, the New York City-based manufacturer has become a resource for lifestyle brands ready to break into the children’s category.

Today, with a brand roster that includes Puma Kids, DKNY Kids, Lucky Brand, Nicole Miller, Baby Phat Girlz, LRG Boys, Paul Frank Kids and soon many more, Parigi executive vice president of licensing and marketing Sion Betesh has the challenging task of identifying up-and-coming brands in the kids world, while maintaining strong relationships with its current partners. Sourcing Journal spoke to Betesh about the market’s evolving customer, brand value and how Parigi’s recent entry into retail with its Hartstrings brand has impacted its wholesale trade.

SJ: Do you feel the children’s business is based on commodity and price, or is it driven by brands?
SB: Brands are important. They give you two valuable things: instant awareness when speaking to retailers and to consumers. Retailers want to carry products that catch the shopper’s eye. They are all scrambling to make their store a point of destination and a good brand can guarantee, at least a little, that the consumer might be interested in buying something. That is very valuable, but at the end of the day you still have to be price right because this consumer is so much savvier and smarter than those in the past. It has become a consumer driven market and their engagement with a brand is really driving the reactions and actions of businesses.

SJ: Has how you reached consumers changed?
SB: Well, they have so many choices how and where to shop. We’re dealing with a 360 degree consumer now. They shop online, in stores, online in stores. They shop for clothing in Costco. They want confirmation from their online community on whether they are making the right purchase. There are so many competing platforms and as a brand you have to make yourself available across many of those channels.

The key is to look at your strengths. Some companies excel at baby fashion, others are outerwear or are a source for bottoms or swimwear. We’re built for the department store and mid-tier markets. Our strengths are in lifestyle and activewear and our expertise is our ability to think across the board, from babies to kids aged 14 and we can speak to many different categories.

SJ: What qualities do you look for in a brand?
SB: We like to be challenged, especially with the fashion part of it. At least 99 percent of our brands are lifestyle brands, meaning children’s is just one component of a much bigger pie. There’s a full footprint in retail that already exists and resonates with consumers. Our responsibility is to cultivate that next generation of consumers, so we look for brands that parents are loyal to when they shop for themselves. Puma, DKNY and Lucky do such a great job at keeping up their awareness. It’s our job to translate the brand’s defining qualities into children’s wear, and if we do it right parents will continue to dress their kids in these brands until they grow out of our sizing.

SJ: Is Parigi expanding its portfolio?
SB: There’s a lot of interesting things on the horizon. We’re launching Roxy Girl at the end of November and Elie Tahari for girls at the end of November or early December. On the boys’ end of business, we’re shipping Ferrari apparel for January delivery and we also have Penguin coming up. These brands reinforce a lot of our current brands and they make our portfolio stronger when we sit down and talk to retailers.

SJ: Do your brands compete with one another?
SB: If you’re really looking, you can always find similarities, but I think it makes you look sharper as a wholesaler and more of a resource to a retailer. When you give a retailer something that is an island onto itself, they may not understand it. They can’t put it in context. We have DKNY and Lucky, both denim lifestyle brands, but one has an East Coast edge, while the other is more rooted in Californian fashion–two different points of view. And if we show a retailer, say Bloomingdale’s, both Nicole Miller and Elie Tahari, you might think they are both women’s designers, but they do have distinct design differences. However, showing both brands can help get the retailer to believe in the clean, contemporary look the brands share.

SJ: And inform them on what to buy.
SB: You can lessen the risk. The brands have distinct design differentiation, but they complement one another and they’ll make a statement on the sales floor. Retailers can envision how it would look in the store.

SJ: Today are brands looking to license their children’s divisions out, or bring them in house?
SB: When a brand is evolving and growing the most important thing for that company is to control their brand message. They feel more comfortable with things under their own roof to ensure the brand essence is seamless. In other instances brands are concerned about their growth and want to keep it controlled.

Then they get to a tipping point when they want to take the next step and begin designing kids. That’s when they have to ask themselves if they want to invest internally by hiring experienced personal to help them successfully grow into a children’s brand.

Or you can find a partner with that skill set. That is always our argument. We are kids’ experts, not necessarily the best or the greatest, but we’re very good at children’s wear and getting it positioned before retailers and at the value consumers want. That assurance, I think, causes many brands to stop and think, sure we can design it, but wouldn’t it be better to have a leader to in the market to partner with and know that they are going to give 110 percent to make it happen.

SJ: Is it every brand’s dream to become a lifestyle brand these days?
SB: I’ve seen some companies just out of the gate and want everything to be licensed immediately. And then there are brands that are brilliant in men’s and women’s fashion, and they might even do great in handbags and home accessories, but children’s fashion is just not on their agenda.

SJ: Could Michael Kors be an example of that type of brand?
SB: It is funny that you’d suggest Michael Kors because I would love to take a look at that brand, as would many companies. They have some business with boys’ suiting [and children’s footwear], but I’d really like to see how a company like ours could take their brand into other areas and I think it would complement the rest of our portfolio. But children’s wear just isn’t on their radar. Trust me, I’ve looked into it.

Michael Kors, however, is the next Ralph Lauren, I believe–just as how Under Armour is stealing market share from Nike and Adidas now. Anyone who has been born in the last ten year knows the Under Armour brand. It will be the next generation’s Nike and Adidas. Their CEO Kevin Plank is inspiring and knowledgeable. He has a good roadmap and the company has something to say in that market.

SJ: China has always been the go to place for children’s wear, is this changing at all?
SB: I’d still say 40 to 50 percent of our product is produced in China. You just can’t find other countries that can replicate the speed, needle and price. Costs have been going up–it’s certainly not how it was 30 years ago–but China has an infrastructure that you cannot find anywhere else. And at the end of the day we’re not soliciting Dollar General stores. Our brands are moderate to better retailers and we have to keep consistent quality, durability and design that those retailers have come to expect. We have a responsibility to find that right countries that we can depend on.

SJ: How are the increased compliance requirements impacted business?
SB: On top of the national mandated requirements, many of our licensors have their own standards that we have to follow, so those have been instituted in our company for a while now. For us compliance is a good investment and makes our company stronger. We might have people all over the world, but we’re still a family-run business so it is important for us to know that what we’re producing is a fair practice.

SJ: Parigi has recently got into the retail business with Hartstrings. Are you looking to venture into more retail ventures?
SB: In the four years since we acquired Hartstrings, we’ve grown from 23 stores to 48 by the end of this year. Overall it makes us a well-rounded, sharper company.

SJ: Was retail an easy transition?
SB: Wholesale today, compared to 30 years ago is much more involved. We have more responsibility, from assisting in the merchandising and the buy for the retailer to working with them on a markdown calendar and promotions. Wholesalers now take care of a culmination of things. We joke that we’re doing everything but shutting off the lights at the end of the day.

SJ: Has the experiences gleaned as a retailer impacted the company’s wholesale business?
SB: There’s information that a retailer or a third party partner isn’t in the position to share with you, but here with your own stores, you have your own consumer footprint. You create a history of what drives your business, what products sell, what price points hit the target and what holiday weekends perform the best. Going forward, we can use that historical footprint to capitalize on the positives and avoid the negatives.

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