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Can Department Stores Knock Off Fast-Fashion Strategy?

Department stores are getting ready to try "fast fashion" on for size, but can they be nimble enough to pull off the new look?

In a bid to capture younger shoppers and recoup market share lost to stores like Hennes & Mauritz's H&M, Forever 21 and Inditex's Zara—which churn out runway-inspired looks at bargain prices—JCPenney bowed in-store shops from Spanish chain Mango; Macy's rolled out the Material Girl line from Madonna; and Sears unveiled “Now+Here,” a fast-fashion junior and apparel department.

Source: Business Wire

Enter “fast-fashion” lines at department stores, an effort that hopes to put an end to the encroachment of the fast-fashion chains, which are now ramping up mall expansion and outperforming much of the retail sector by interpreting high-end lines for less, and delivering fresh product on an almost daily basis.

The global economy has sped up the fashion cycle, transporting trends from Europe and around the world to the masses at a breakneck pace, said Amy Noblin, a senior analyst with Weeden & Co. The specialty chains have tapped into that democratization of fashion, and the public has been eating it up.

“It’s clearly what the customer is voting for,” Noblin said.

Now, the department stores want a piece of the action.

“It’s a huge, $30 billion business,” said Elizabeth Sweeney, senior general merchandise manager of apparel for JCPenney, who called Mango a “game changer” for the retailer.

But department stores must adjust to meet the demands of fast-fashion retailing, a quick-paced product design and sourcing model alien to the sector.

“There is definitely a learning curve for the department stores,” Noblin said. “Their business has not been run that way.”

For a department store that opts to source these lines in-house, the risks are higher, but so are the potential profit margins, Noblin said.

JCPenney is leaving that expertise to Mango, a Barcelona-based brand with 1,300 stores worldwide, Sweeney said.

Still, JCPenney will need to adjust. New career and casual sportswear under the "MNG by Mango" labelwill reach JCPenney’s stores every 10 days, versus the monthly shipments the retailer receives for its other goods.

With this line, JCPenney hopes to woo shoppers between 18 and 35 years old, who want affordable looks “from the runway to the realway,” she said.

But unlike some fast-fashion lines, the collection is not “disposable” fashion, but reflects JCPenney’s high-quality standards, Sweeney said.

The retailer has big plans for Mango, which is featured in dedicated in-store shops in 77 JCPenney stores, will expand to 225 by February, then to 600 stores by Fall 2011.

"Retailers are waking up to the fact that this is a slow recovery, and...it’s not going to be enough to compete on price." -Weedon & Co., Amy Noblin

Meanwhile, Macy’s has turned to a pop icon to headline its fast-fashion debut.

The retailer launched the juniors apparel "Material Girl" line, designed by Madonna and her 14-year-old daughter Lourdes, for the back-to-school season in 200 doors.

Material Girl draws inspiration from Madonna’s iconic '80s looks and updates them. The collection is priced low for a department store—from $12.00 to $40.00—but on par with a fast-fashion merchant, and targets 14-to-25-year-old fashionistas.

The line includes apparel, footwear, handbags and jewelry, and items like striped cropped tops, sequined leggings and pricier limited-edition pieces, such as $68 studded skirts.

The launch comes none-too-soon, said Jeffrey Gennette, chief merchandising officer for Macy’s. Fast-fashion merchants “have been so successful,” he said. “We have some catching up to do.”

Merchandise on the floor will be replenished daily as opposed to weekly, Gennette said said.

Material Girl beauty products will launch next year as the overall line rolls out to additional Macy's stores.

Sears’ fast-fashion push is one salvo to resuscitate its ailing apparel business and build some style credibility.

To that end, "Now+Here" debuted during the back-to-school season, a fast-fashion destination for juniors and young men in a bid to offer “must-have,” trendy apparel for younger shoppers, with lines such as Girly Grunge and Biker Chic, at an “amazing value,” the company said.

Source: Sears

Sears also signed a long-term lease with hot fast-fashion chain Forever 21, which will take up 43,000 square feet of its retail store at the South Coast Plaza mall in Costa Mesa, Calif.

The company is considering expanding the concept to other stores.

The department stores are not the only retailers taking a cue from the fast-fashion merchants: teen chains such as American Eagle and Abercrombie & Fitch alsohave been adopting elements of their formula, Noblin said.

“Retailers are waking up to the fact that this is a slow recovery, and the country is over-stored,” so it’s about finding differentiated product to gain market share, she said.

“It’s not going to be enough to compete on price.”

Questions? Comments? Email us at consumernation@cnbc.com

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