On May 30, 200 CK files complaint against Warnaco Group Inc for

breaching its Jeanswear licensing

The suit went on to specify several operational practices at
Warnaco that negatively affected the brand, including
unauthorized adaptations of designs, failure to follow designer
guidelines, and use of cheaper materials in production
CKI further requested that goods already distributed to such
stores be recalled
Asked court to terminate Warnacos license and award CKI
unspecified monetary damages as compensation for lost equity
in the brand
Warnaco issues statement questioning CKIs motives

The claimed that CK had breached the Jeanswear license,

eroded the brand by practices including missed design
deadlines,
submission
of
substandard
designs
for
manufacture, etc
The counterclaim also charged that Klein had defamed and
libelled Warnaco through statements made on the Larry King
Live show and sought reparations of $200 million for orders
allegedly lost in response
Warnaco mentioned this behaviour intended to help regain
Klein control of trademarks and attract a buyer for CKI

News
pundits
got
fascinated
by
a
licensed
manufacturer/distributor being charged with brand equity
dilution and a designer held for ineffective brand advertising

Distribution Practices and Fashion

Retailing
Dep
art
me
nt
Stor
es
Fashion
distributed via 5
primary channels

Off
pric
e
reta
ilers

CHA
NNE
LS

Ma
ss
Di
sc
ou
nt
er Spe
s cialt
y
stor
Wa es
re
ho
us
e
clu
bs

Each offered variant

combination of 4 basic
positioning vehicles of
retailing
Product assortment
depth/breadth
Price(quality)
Convenience
Service

High degree of cross shopping

across outlets was observed in
the apparel category, blurring
consumer segmentation along
channel lines

Department stores in 1980s

Largely carried limited distribution

High quality branded merchandise
Various departments housed conveniently under
one roof
Superior product displays
Ambiance
Broad assortment
Excellence in customer service
A value proposition that commanded a premium
price

In 1990s also, emerged the

concept of shop in shop
featuring merchandise of a
particular designer

In
early
1990s
bankruptcies
and
consolidations
plagued
retail
industry and began
a market share
decline throughout
1990s

Branded concept shops too were immediately successful

Concept shops also helped heighten brand awareness for

fashion labels nationwide while offering superior control over
shop design and merchandising
cK had about 400 shop in shops in departments stores in
1997 and planned to open another 650-700 shops in 1998

Enemy of shop in shops is saturation, sameness breeds

discounts- Bud Konheim CEO of Nicole Miller explained
Key suppliers were concerned with difficulty of maintaining or
growing their business with department stores. Eg for mid-tier
stores like Target

Walmart, Kmart and Target emerged as a strong players in

apparel space for offering well known brands at cheaper
prices
Target recruited designer Mossimo to create a clothing and
accessories line for the store while Kmart built an in-house
apparel brand with actress/model Jaclyn Smith to differentiate
itself
By 2001, 85% of consumers shopped at discount stores and
70%reported that they obtained apparel at these stores

Specialty stores were able to deliver trend right merchandise

for targeted segment of customers
Off price retailers sold brand name merchandise at lower
prices, acquired out of season branded fashions and split lines
sold one brands excess inventory at discounted prices