That's exactly the sort of cachet Gap is looking for, as it tries to turn its four-year-old 1969 line into a premium brand. And Gap has plenty of company. Everyone from Express and Macy's is rolling out high-end, exclusive lines. For those who succeed, the payoff could be fatter margins in an increasingly competitive market. But getting shoppers to pay up for a midmarket brand is notoriously difficult. "It's nearly impossible to retrain customers," says Lew Frankfort, CEO of Coach Inc., the leather-goods maker.
Then again, clothing sellers are pretty desperate. The rapid inroads into the market by such discounters as Wal-Mart Stores Inc. (WMT
) and Target Corp., along with the industry's wholesale shift to low-cost Chinese factories, have sent apparel prices plummeting 1.8% a year for the past decade, says the Bureau of Labor Statistics. And the casual clothing trend left many stores selling nearly the same khakis, polo shirts, and, yes, jeans.
As a result, many retailers figure the only way to grab top dollar is to move up -- into clothes with better fabric, handworked details, eye-catching designs, or simply a trendier image. Gap execs hope the 1969 line will attract the folks now plunking down $100-plus for jeans from Lucky Brand Dungarees or Diesel USA Inc. Gap's women's line features foreign denim, embroidery, even oil spots -- for $168. Express, the Limited Brands division, is taking a similar tack with its Seven7 jeans, which max out near $98.
It's not just specialty stores trying the tactic. Macy's and other department stores aim to set themselves apart from Kohl's Corp. and the discounters. That means using successful private-label brands to fill the gap between low-end and designer apparel. For example, Macy's $350 Tasso Elba suits use high-quality Italian wool, feature hand stitching, and cost 25% more than Macy's current private-label suits such as Alfani.
It's too soon to say how most middle-market retailers will fare. Their record of attracting upscale customers isn't good: In the 1990s, J. Crew Group Inc.'s J Line men's suits and dressy women's Collection fizzled. And with greater markups comes the risk of greater markdowns: At the Chicago Gap, a pair of 1969 jeans was recently slashed from $108 to $69. Trading up today could well mean more clearance sales tomorrow. By Robert Berner in Chicago