Discount apparel

Think of the protypical apparel executive at Kmart before its bankruptcy, and John Goodman would probably not come to mind. His hip attire and fast-paced demeanor are more akin to specialty retailing like Abercrombie & Fitch or Limited Brands than a Midwestern discounter. It comes as little surprise, then, to learn that Goodman hails from Gap Inc. Hired at the end of 2003 as chief apparel officer, the highest-ranking position ever to manage the category at Kmart, Goodman has implemented some of the biggest changes in the retailer's apparel strategy in company history.

"I grew up in the Gap organization and have seen the highs and lows of what works and what doesn't work, and I think [I've] brought that to the table into a culture that's open to change, that's been through a lot," said Goodman during an interview with DSN Retailing Today at the company's new Manhattan apparel offices.

Back to school 2004 is the first critical selling season under Goodman's supervision, and the first major test of his accomplishments thus far. From the merchandise to the merchandising, from sourcing to selling techniques, Goodman has changed everything about the way Kmart sells clothing.

"We really don't consider it mass as much as taking the great aspects of the specialty store business and successful aspects of department store businesses and really integrating them into this model," he said.

The biggest sea change involving apparel at Kmart is that its production is now vertical. Goodman opened the aforementioned apparel design studio in Manhattan, near the city's Garment District, to ensure that its product is trend-right and that top design talent is close at hand.

More than a decade of prior experience at Gap gave him the know-how in terms of vertical retail to take on successfully the task of restructuring Kmart's apparel assortment. He was previously senior vp of Gap Inc.'s outlets, merchandise planning, production and distribution. His associate, Lisa Schultz, also from Gap Inc., is more intimately involved with the design details and is based in the New York City office, while Goodman oversees big-picture corporate goings-on.

There are a number of reasons that Kmart has taken product development in house, but Goodman points out that the most important reason is profitability. By sourcing its apparel directly overseas, Kmart can maximize profits from an already high-margin merchandise category--one with a serious impact on its all-important topline results.

Because direct sourcing involves Kmart's private labels, the company is emphasizing them in assortments this fall, including Gear 7, a new young men's urbanwear offering. Thalia, a juniors/young missy offering over appeal with Hispanic and non-Hispanic consumers, has expanded to all stores this fall. Route 66 continues to be a staple of Kmart's casual basics offering in men's, women's and children's.

To highlight five of its key brands-Thalia--Gear 7, Athletech, Joe Boxer and Route 66--Kmart teamed up with the WB network, advertising these teen-oriented brands in conjunction with popular young actors from its television programs. The very logical strategy, according to Goodman, is to highlight these apparel brands as students head back to school. Later this fall, the company will partner with E! to target its core customer: mom.

"We don't have to give you a huge assortment to give [our customer] something, to buy; we want her to be able to get her stroller around the racks and have a good shopping experience," added Goodman. Besides lifestyle signage on the walls that ties into the campaign, the floor itself is almost spartan, with widely spaced, clearly marked racks. The goal is to make it simple for shoppers to find and purchase what they came for.

"We need to have shoppers say, 'I bought my clothes at Kmart, and that isn't a bad thing,'" stated Goodman.

The next few months will be critical for Goodman, as he translates the improvements he has made in terms of production, product and merchandise into improved sales for Kmart. Goodman seems confident he will earn his stripes this season, as proprietary brands build a brighter future for Kmart.