Tuesday, May 27, 2025
When Halston made a deal with J.C. Penney in 1983, the designer wanted to expand his “brand diffusion” experiment to a broader audience.
Halston would launch “Halston III,” a diffusion line priced at $24-$200 that he said was style “for the American people.”
From the luxury point view, people hated this move. It was seen as brand dilution and Bergdorf Goodman plus other upscale retailers promptly dropped his main collection—and early sell-through at Penney’s fell short of expectations.
This backlash cost Halston control of his brand and the ability to design under his name.
Fast forward to today and, go figure, designer cameos in places like Target are not so uncommon anymore.
However, that isn’t stopping many from raising an eyebrow at the news that Saks may find its way onto the shop floor at your local Costco.
Word on the street is that the Saks Fifth Avenue has been licensed to Centric Brands for men’s apparel. And within a few months, such apparel could appear alongside your favorite (insert any Kirkland brand product here). We could be seeing women’s merchandise too, but not as quickly as the men’s.
If we peel back the layers further, this might be emanating from whatever decisions are being made with the Saks Global/Authentic Brands Group joint venture known as Authentic Luxury Group. Other brands in the ALG portfolio include Barneys New York, Herve Legere and others.
This leaves longtime Saks vendors to say: “Where is luxury going?”
I have no doubt someone said the same thing when they read about Halston III in the local paper.
To be fair, this is conjecture for the moment and the nothing has been confirmed.
But, the Saks/Costco pairing a useful situation for the application of our Wholesale Conditions Test.
We advise any brand that is looking for wholesale partners to ask the following questions as part of the test.
1. Which retailers are your target customers shopping at?
2. What retailers are your competitors in?
3. What retailers align with your brand DNA?
Let’s apply this test to the Saks/Costco pairing:
1. The Saks customer is shopping across luxury retailers and brands.
Affluent customers are also increasingly shopping more at retailers like Walmart. There is a good chance they also shop at Costco. Note: Costco’s member base already skews towards more affluent shoppers. We’re talking an annual income of around $100K as an average. 36% of the member base earns north of $125K annually. Executives see this affluent segment, along with a growing bifurcation among customers between cheaper or more expensive items, as a growth lever.
2. Saks private label menswear competitors are contemporary menswear brands at a similar price point and aesthetic. Many of these are assorted in Saks stores, Neiman Marcus, or Nordstrom.
3. Luxury retailers like Neiman Marcus, Harry Rosen, or Mr. Porter align with the same brand DNA as Saks. Luxury specialty stores or high-end golf club stores would also fit the bill.
The Saks customer may shop at Costco, but it’s clear that the brand’s competitors do not. Additionally, the warehouse’s DNA doesn’t align with the luxury brand, even if they do sell gold bars.
The test results indicate that Saks should proceed with caution.
Vendors are already frustrated with Saks to begin with. Brand dilution won’t help. Neither will banking on the name to generate short-term cash, if that ends up being one of the driving forces here.
Remember Halston? Well, in a write up in the New York Times, friends were quoted as saying his deal with J.C. Penney was less about a desire to dress America and more about cash in hand.
It tanked his career. If only the Wholesale Conditions Test was available at that time. I could have saved Halston from this mistake!
…then again, I was eight years old in 1983.
About Retail Strategy Group
Founded in 2020, Retail Strategy Group works with market-leading brands to help them improve profitability and increase organizational effectiveness. The firm produces a weekly newsletter, The Merchant Life, where retail executives find the best retail insights and new, provocative ideas. For more information, visit www.retailstrategygroup.com.