Harrington Collection Essay

MEMORANDUM

From: 200096

To: Steven Clinton

Date: January 22, 2008

Re: Harrington Collection

Recommendation: Introduce an active-wear segment into the Vigor division to increase margins and break even. The overall product development strategy along with its estimated market share is sufficient and profitable for the Vigor active-wear product line to be launched.

Problem Statement: How should Harrington Collection, a large manufacturer and retailer of high-end apparel, expand their product line in an active-wear segment?

Facts:

Regional Market: The U.S. women’s apparel market was both mature and highly competitive in 2007. The economic downturn that began in the early 2000s significantly impacted the industry. Many of the apparel being

The company focused solely on designing and manufacturing formal dresses for high-end specialty stores. By the mid 1980s, Harington has built a chain of company-owned retail stores and sold products in upscale department and specialty stores. Harrington extended by acquiring the Vigor and Christiana Cole brands, which appealed to younger, fashion-conscious customers.

Competitive Situation: The industry was moderately concentrated. Leading companies such as Jones Apparel Group and Liz Claiborne captured significant market share with their diverse portfolios. Both outsource production of apparel overseas and both are involved in designing, marketing, wholesaling, and retailing of women’s apparel.

The value chain for the women’s apparel industry consisted of seven critical activities: branding, design, buying, production, channel marketing, distribution, and retailing. The trend toward outsourcing production to low-cost labor areas was increasing. Imports dominated the U.S. women’s apparel market, accounting for 82 percent of total industry sales in

This clothing line can be worn everywhere besides just the gym. The active-wear market is separated into three classifications: “budget, “moderate, and “better”. Active-wear inventory has an inventory turnover rate almost twice the rate of current Harrington apparel.

A company’s competitiveness is also determined by its ability to adapt to market and demand changes as the business grows. The results from interviewing focus groups had also proved that a subset of loyal Harrington customers is no longer interested in what the company used to offer. They are leaning towards a more casual wear trend at a more affordable price. These are all facts that signal the company to adjust its current offerings.

Harrington currently holds 1.83% of total women’s apparel market in terms of retail dollars in 2007. This is $2,430,000,000. Harrington Limited holds 20% in market share, Sopra holds 5%, Christina Cole holds 8% in market share, and Vigor holds 7%. The U.S. retail sales of women’s apparel have been growing since 2002 and 2007 and sales have grown from $106 billion to $133 billion.

Table 2

Harrington's Revenue Market