Berns Communications Group Unveils 2005 Retail Strategies Noted by Leading Industry Experts.

NEW YORK -- Retail news is in fashion. It's kept the industry buzzing all year. And the flurry of activity is expected to continue in 2005, according to industry leaders who spoke at a recent panel discussion, "Building Your Bottom Line: Retail/Branding Strategies for 2005," hosted by Berns Communications Group, LLC, a business communications firm specializing in retail and fashion, and moderated by Women's Wear Daily.

End of trade quotas, untapped brand opportunities and new strategic partnerships have changed the landscape. And Berns Communications Group is pleased to unveil the most interesting business trends and strategies to watch for in 2005.

Maximizing the Supply Chain - End of Trade quotas next month has been one of the most talked about events in 2004 but the lifting of quota in China is not the only concern. "The real issue is the value that is unlocked when you start to look at the best place to make a particular product," stated Rick Darling, President of Li & Fung USA. He added that the change centers on improvements to the entire supply chain from product development and sourcing to information technology and social responsibility and compliance. "We are entering the efficiency phase which will become an important bottom line strategy in 2005," Darling stated.

Diversifying the Brand -- Jones Apparel's $400 million purchase of Barneys surprised many industry observers, but clearly demonstrated the company's plan to diversify its portfolio of brands. Diversifying the brand has become an important growth vehicle for retail and fashion companies, according to Susan Sokol, the President of Vera Wang. Ms. Sokol, who joined as president to expand the Vera Wang Brand, advises fashion and retail companies to look for natural extensions that are intelligent to the "heart" of the brand. "You have to first understand the essence of what your brand is about. And clearly segment new opportunities from the core business," Sokol advised.

Reaching New Channels - Fashion companies Carolina Herrera, Oscar de la Renta, Elie Tahari and Juicy Couture have all gone into retail to grow and control their brands, according to Laura Pomerantz of PBS Realty. "When you're vertical, retail becomes extremely profitable. This is also true for public companies that are forced to show growth. They want to grow intelligently while controlling their brand," Pomerantz stated.

Each of the experts referred to the fact that we are in a no-growth or nominal-growth apparel business, with year-over-year apparel industry sales barely breaking one percent. So for big companies, reaching new channels through acquisition is the way to go. "To drive top-line growth, we need to make acquisitions," said Bob Skinner, President and COO of Kellwood Company.

And branching out, the buying of a company for different reasons such as expanding into other channels or reaching other consumer segments is an important strategy. "Certainly Liz Claiborne buying Monet to get into jewelry and Kellwood buying Phat Fashions to reach the urban consumer is the branching out acquisition strategy," Skinner explained.

Identifying new Strategic Partnerships - Jimmy Choo, Fortunoff, Andrew Marc, Tumi and Loehmann's all found new strategic growth partners outside of the industry - the private equity market. Private equity players will continue to fuel consolidation in 2005 as they compete to acquire merchandising companies looking for new strategic growth partners, predicted Gilbert W. Harrison, Chairman of Financo. "They are competing with all of the strategic buyers," Harrison said. "And in some cases, they may even pay more for a company than a strategic buyer." Harrison said the private equity funds have about $100 billion to invest, and "are pressured to invest the money they've been given, while the public companies go after acquisitions because they need to show growth."

Leveraging Real Estate - Three words have been used to explain the $11 billion Sears/Kmart merger - Location. Location. Location. Real estate strategies have become much more important to the life of a brand as the merchandising world looks to untapped and alternative channels for growth," explained Pomerantz. Pomerantz said that retailers are favoring locations at lifestyle centers like Bal Harbour and alternative urban locations that best reflect the image of the brand. This trend is likely to continue in 2005, as shoppers prefer the specialty store shopping experience or department store shopping with a specialty store mentality. Think Bloomingdale's in Soho," stated Pomerantz.

At the same time, divesting of unprofitable and under performing locations will continue to be an important growth strategy in 2005, according to Scott Bernstein of SB Capital Group, a Schottenstein affiliate. Bernstein advises retailers to constantly evaluate their real estate portfolio, pointing to Kmart, Stein Mart and Lord & Taylor who have all "unlocked" value in their real estate portfolios. "And that is something that could not have been achieved through sales growth," Bernstein added.

About Berns Communications Group, LLC (BCG)

Berns Communications Group is a New York-based business communications firm. The company provides corporate/financial public relations expertise that helps raise the visibility and stature of its clients by articulating and promoting a well-defined market position. For more information, please visit the company's website at www.bcg-pr.com.