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HARRINGTON

COLLECTION:
SIZING UP THE
ACTIVE-WEAR
MARKET
Submitted by:
Group C:
Overview of the Case:
The case basically focuses on the need of some fresh ideas to cope with the disappointing
2007 results. Harrington posted lackluster sales for the past three years. With continued
pressure on prots! Harrington needed some new ideas like a new product launch but this
might lead to signicant drain of resources due to which attaining break e"en could pose a
challenge.
Women Apparel Industry
#ature and highly competiti"e
$onsumers had become "ery price sensiti"e
%n 2007! the women&s apparel industry was estimated at '()) billion in retail
industry
*reatest $hallenge: #anaging short+li"ed fashion product life cycle
#a,or -actors that di.erentiated apparel products: (/ -abrication! 2/ Silhouette! )/
0uality of construction! 1/ 2rand! 3/ 4rice
-ierce competition for market share and shelf space 5eg: 6ones 7pparel *roup and
8i9 $laiborne/
The "alue chain consisted of se"en critical acti"ities: 2randing! :esign! 2uying!
4roduction! $hannel #arketing! :istribution and ;etailing.
%mports accounted for <2= of total industry sales in 2003
2arriers to entry were low
7nother trend in the industry was for retail outlets to integrate backwards in the
"alue chain by contracting directly with manufacturers to produce pri"ate label
brands
Company Background and strategy
Harrington $ollection was established in (>?0 by @lla and Ste"en Harrington as a
manufacturer and marketer of designer women&s clothing
2y the mid (><0s! Harrington had built a chain of company+owned retail stores and
sold products in upscale department and specialty stores as well
Harrington $ollection separated nancial results into two reportable segments: The
#anufacturing *roup and The ;etail *roup
Harrington&s manufacturing group supplied apparel for company+owned stores and
also sold products to upscale department and specialty stores and its retail group
operated (20 company stores: 70 stores sold a combination of Harrington 8imited
and $hristina $ole merchandise! and 30 of the stores were dedicated solely to the
Aigor di"ision
Target #arket: Trend+setters age 23+30! 7cti"e! professional women seeking edgy!
yet comfortable! fashions
Bb,ecti"es: 2oost sales with addition of new acti"e+wear line! Tap into new acti"e+
wear market
B"erall Strategy: 4roduct+de"elopment strategy! introducing new product line to
eCisting market
4age 2
Active Wear Opportunity and its cost:
The trend toward more contemporary! athletic fashions resulted in rapid
growth for rms that o.ered these lines
Harrington $ollection estimated that o"er se"en and a half million acti"e+
wear units had been sold in 2007. This number was eCpected to double by
200>
2oth Huey and 7llen felt the company could not outsource the production of
this line to a third party because it does not pro"ide for adeDuate control o"er
Duality or turnaround times
Budget: The new budget to add the new Aigor acti"e+wear line will feature
annual depreciated start+up and launch costs of '2.31 million per year!
ongoing Ced annual operating costs of '((.3 million! and "ariable costs of
'(7.31 million 5with )?0!000 units/
4age )

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