Love amidst the layoffs: Macy's parades its new fashion label

Macy's earnings were in the spotlight on Wall Street on Wednesday, when the retailer posted an $88 million first-quarter loss. But about 40 blocks uptown, at its historic 34th Street flagship, the focus was on fashion.

Macy's unveiled its fall collections in a maze of themed rooms -- one housing racks of jewel tones, another draped in leopard and zebra. And at the center of it all were the studded handbags and stretchy tunics from Rachel Rachel Roy, the retailer's latest big-name branded collection.

At least, that's what they hope it is. Ties by Donald Trump, towels by Martha Stewart, and tops by Jessica Simpson are more than top sellers at Macy's -- they've become the cornerstone of its current marketing efforts, featuring a parade of stars who peddle their wares at the store. Rachel Roy is a household name in fashion circles, and her sleek structural designs conjure images of fashion-forward 20- and 30-somethings who want to work and play in standout pieces. She's made fans out of Kate Hudson and model ingénue Chanel Iman.

Roy doesn't have the instant universal name recognition commanded by the Trumps and Marthas taking up their shares of Macy's floorspace.
What Roy does have is credibility. Rachel Roy is an actual fashion designer by trade -- and Macy's is marketing her as such. Most celebrity-retailer agreements yield a capsule collection of fewer than 30 pieces, but Roy will produce apparel, accessories, handbags, shoes, and jewelry.

The sprawl of this collaboration is just the latest and most sweeping statement of an attitude Macy's has quietly maintained throughout the economic downturn: Fashion comes first. So that even as it proceeds to lay off 7,000 workers, Macy's forges ahead with its designer incubator program, providing fledgling couturiers with free workspace and access to Macy's buyers. Chairman Terry Lundgren's pay package may have plummeted 37%, to $5.4 million, but women's fashion director Nicole Fischelis was still trolling for obscure designers to keep her roster fresh -- like the boho-fabulous Designal, a small Spanish firm Fischelis fell in love with when she happened upon its London boutique. A year later, she proudly pointed out its second collection for Macy's; a melange of rainbow-bright, heavily embroidered coats and dresses -- even as Macy's was reporting those dismal financial figures downtown.

Which brings us back to Roy, whose line for Macy's reconciles the store's two competing instincts: to give customers celebrity, and to give them style. Roy, ex-wife of rap mogul Damon Dash, has a starry enough image to be considered famous. Fashion-wise, she's a coup for Macy's, which isn't exactly known for its edgy, of-the-moment offerings. And her industry resume should help her evade the inevitable expiration of the "Having a moment? Here, have a product line!" marketing model (see: Kitson dropping Lauren Conrad's tribute to jersey last year).

Bottom line: marketing Rachel Rachel Roy gives Macy's a much-needed dose of fashion credibility at a time when the store is in a position to snap up customers who need to scale back their sprees at Nordstrom and Neiman's. But there's one major flaw in the way Macy's is positioning Roy's line. With its fuschia-leopard jeans and fake-fur vests, Roy's designs skew younger and louder than her trademark line -- I mistook one gallery of Roy clothing for a juniors' collection -- and Roy herself says the Macy's line is "the younger sister to the Rachel Roy collection."

But Macy's is positioning and pricing it as one of its contemporary brands. Pieces range from $59 to $299, prices the cash-strapped big sisters are looking to pay for clothes right now. They're unlikely to blow their budgets on items that look like they belong in a Delia's catalog -- not when they can find Matthew Williamson at H&M and Tracy Feith at Target for a lot less.

Of course, chances are that prices of $59 to $299 won't last far beyond Rachel Rachel Roy's August 1 debut. Macy's has desperately discounted women's apparel all year in hopes of clearing inventory. But it seems adamant that its new fashion heroine won't meet the same fate.

When asked if the company will wait and see how Roy's first collection goes over before commissioning another, Fischelis firmly shakes her head and says, "She's working on the second one now."
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