The Story of Liz Claiborne

The Story of Liz Claiborne

Are women really just another market niche? It's time to redefine your customer, women know an awful lot more about electric saws or car motors than you think.

As for their consumer power in the United States, women control 80% of household spending. They purchase 75% of all over-the-counter drugs and they influence 90% of all car purchases. Moreover women even own 53% of all stocks in the United States and the list goes on. This reminds me of the Woody Allen movie Mighty Aphrodite when Woody's son asks him who the boss is at home, you or Mommy? Woody's now-famous, very telling answer is I am the boss; your mom is just the decision maker.

Nonetheless, a recent American Express ad clearly did not recognize the increasing importance of women in today's economy. The ad shows a woman in her fifties traveling in a foreign country. She has just left her wallet with $1,000 in cash all her cash in a cab. She appears hysterical and helpless. The solution would have been, of course, to have purchased American Express Traveler's Checks, but it is regrettably too late. I ask myself, why do they not show a woman relieved having a cup of coffee after having lost her wallet because she was intelligent and organized enough to have bought American Express Traveler's Checks?

A most recent Michelin ad was savvier by far; it showed women presenting tires to a friend at her baby shower, emphasizing the main concerns of women safety for the kids and the family. It also underscores the fact that women are buying more and more of these items. Home Depot is built on the premise of making a friendly and attractive, non-macho hardware store that is appealing to women, and it works, Ford's 1999 Windstar minivan was designed by fifty women Ford employees, these women, the majority mothers, used their firsthand experience for the implementation of a myriad of special features. Have you looked for the new source of yours business design innovation?

Buddhists and Muslims, Chinese and Italians, this generation and the last one, white and blue collar workers, and people with varying lifestyle are, at times, profoundly different, We must recognize and consider these obvious facts when trying to sell our merchandize. A dysfunctional client interface, changing variability among customers, new stratifications of wealth, new priorities and shifting preferences are powerful levers for wealth creation if recognized early and ahead of competitors. Liz Claiborne recognized a dysfunctional situation in the fashion industry and implemented a new profit pattern early creating astronomical value as a result.

Born in Belgium to American parents and moving a lot from country to country in her childhood and adolescence, she never finished high school. However, Liz learned to sew from her mother and studied painting in Paris and Brussels. While working as a designer for a fashion producer, she recognized that more and more women were entering the white-collar and professional labor force, which generated a dysfunctional situation. Many women wore suites knockoffs of the traditional male uniform and clothes that felt uncomfortable, unfashionable, and just were not appropriate for the self-esteem and identity of professional women entering the corporate work force.

Liz tried to persuade her boss to go after this emerging market, but he had other priorities. For many, the lenses of the traditionally male industrial world, which is void of emotions, depersonalized, and geared towards mass-consumption, are hard to change. Therefore, it should be no surprise that the numbers of women in business are revealing their determination to create their own world, a female one.

A study by the consulting company BrainReserve lead by Faith Popcorn reveals that women-owned businesses employ more than the Fortune 500 combined: 18.5 million workers and earn $2.3 trillion in annual sales. Women own 8 million businesses in the U.S., which is 1/3 of all U.S. firms. This figure has risen 78% since 1987, and a woman opens a new business every 60 seconds. Finally, women are leaving corporate America at twice the rate of men, and so did Liz when she and her husband pooled $50,000 of their own savings with $200,000 from friends and opened Liz Claiborne, Inc. in 1976.

The company's goal was to clothe the working American woman. Following her own sense of fashion, she only did some informal market survey, Liz believed in fit, comfort, and color, while always listening intently to her customers. She listened to what women said on the selling floor and in the fitting room, learning constantly what they liked and did not like. Of course, things have changed dramatically since then. Today, Liz Claiborne, Inc. spends $1.5 million a year to study consumers and identify what fashion trends will be most popular.

Back then in the 1970s, Liz was a paradigm shift pioneer that was only able to do little market research and still be highly successful through the development of a distinctive style grounded in the classics but executed in bold colors or with unexpected accents. Like Phil Knight at Nike, Claiborne also outsourced actual production to Asia. New value creation is all about recognizing new profit patterns, which means that when new paradigms emerge, you must recognize them early and become a pioneer. That is the key ingredient to success. Liz redefined the customer in the fashion industry, and like Phil Knight at Nike, she focused only on certain parts of the value chain, the ones she was good at, which happened to be also the most profitable ones, design and marketing.

Soon, millions of American women's wardrobes came straight from the heart and soul of Liz Claiborne herself. Customers came to trust the Claiborne label, which allowed the company to expand into adjacent markets, jeans, children's clothing and even men's wear. With such powerful and mutually reinforcing profit models in place, sales at Liz Claiborne, Inc. hit $ 48 million in 1979. After the Initial Public Offering (IPO), sales grew rapidly to more than $1.2 billion in 1988, and profitability was even more impressive, 10 percent on sales and 40 percent on equity.

Liz was a genius in terms of identifying a dysfunctional situation in the fashion industry early and ahead of her competitors. Astronomic value creation happens in the early stages of a new paradigm shift, when more and more women entered the workforce, they needed clothes that made them feel comfortable, and fashionable; clothes whose label could be trusted and gave women the self-confidence to act and feel as professionals in corporate America. Liz's initial investment of $50,000 soon turned into $200 million.

Successful re-inventors of today's businesses acknowledge that women are intelligent and informed. They recognize their diversity and resist any and all temptation to stereotype. Furthermore, they offer solutions, or at least understanding, of the tensions that prey on women daily. They know that women do not like to read list of numbers, specs, and stats, and that they rather want to know what the product will do for them, personally. Ultimately, these re-inventors know that women do not want transactions only, they want a relationship with the business.

If you own a car service station, maybe you want to make sure that your people know the concerns of women for safety when driving with the kids or maybe you will have to train your personnel in order to assure that they treat women with respect, leaving all stereotypes at the door when working. If you have planned a new ad campaign and you think its savvier than the last one, think how you could differentiate yourself from your competitors by just appealing to the emotions of women, trying to establish a relationship, and telling the other half of the consumer world what your brand stands for and that it is something more than just a transaction. It is a new paradigm, and believe me, there is a lot of money to be made Start now while you still can be a pioneer.

Bibliography:

Bedbury, Scott. A New Brand World: Eight Principles for Achieving Brand Leadership in the 21st Century, Viking Press, 2002. Brands, H. W., Masters of Enterprise, The Free Press, 1992, pp. 265-273.

Gobe, Marc: Emotional Branding: The New Paradigm for Connecting Brands to People Allworth Press, 2001.

Popcorn, Faith, and Marigold, Lys: EVEolution: The Eight Truths of Marketing to Women

Hyperion, 2000.

Josef Schinwald is consultant in Performance Measurement and professor in Business Strategy at the University of Belgrano, Buenos Aires, Argentina. He also runs several online stores in America, one of them sells Wedding Favors, Invitations and Bridal Shower Games. His didactic material must not be replicated without the given permission to do so. Copyright © 2003-2005 Business Design Innovation.