Jerome Chazen, a founder and former chairman of Liz Claiborne, Inc., recently wrote a book titled, My Life at Liz Claiborne: How We Broke the Rules and Built the Largest Fashion Company in the World. Indeed, Liz Claiborne -- now known as Fifth & Pacific Cos. -- grew from revenues of $7 million in 1977 to more than $2 billion during Chazen's tenure.


Below is an edited transcript of the conversation.



The department stores at that time -- in 1976 -- did not have any [way] to handle coordinated separates. As a matter of fact, there were no coordinated separates in the market. We initiated that type of clothing.... The department stores didn't have a place to put our merchandise. They were set up so that they had a separate blouse department and they had a skirt department and they had a sweater department and so on, none of which were coordinated, all of which were bought by separate buyers.

Aside from not having a space on the floor for coordinated separates, they didn't have a buyer who was capable of buying them. We had to get them over that. We had to break that rule of, "This is the way we do business in our store." We said, "Well, this is the way we do business, and I think you're going to have to accommodate us." We did get a few [takers]. It sounds a little arrogant; it wasn't. It was a lot of begging and pleading that went along with it. But we did get some stores to agree to at least test the concept. It was extremely successful. The consumers loved it.



Chazen: I think it was my idea. I was always very interested in the consumer.... Virtually my entire career was in the fashion business. And I just felt this very strongly. It was an idea taking place at a time when Liz and her husband, but especially Liz, were looking for something else to do. Liz had just been told that the company where she had worked for 15 years was closing. She had been a dress designer, and she just didn't want to keep doing what she had been doing. So we discussed this idea, she liked it and we discussed the consumer who fit the mold of that [idea]. Liz's comment was, "You know, I think I am that woman."



One of the things we were trying to do was position ourselves as a designer company at affordable prices. In those years, it was only designer companies that had a true designer at the head of their company, like Oscar de la Renta or Calvin Klein or Anne Klein and so on. There were no companies at lower price levels that did that. One of our competitors at the time was a company called Ellen Tracy. There was no Ellen Tracy; it was just a name. That's the way most of these companies were. They sometimes had a woman's name, but it wasn't a real woman.


Knowledge@Wharton: The company was officially launched in 1976. Today's economic and retailing climates are clearly much different from what they were 35 years ago. What are the one or two main differences? And do they make it harder or easier to launch a fashion business?

Chazen: It's much harder, I think.

Knowledge@Wharton: Why?

Chazen: If, like us, you decide you would like to sell department stores, you have a really tough problem because the 800-pound gorilla is Macy's, which has 900 stores. How is a newcomer going to go into Macy's and expect to do business with them? I mean you couldn't make enough goods, if, in fact, Macy's wanted to buy them. And Macy's, you know, you're not going to move the needle from Macy's. Why would Macy's want to get involved with somebody new?

It would have to be the case where a particular company or designers made their reputation somewhere else, either by selling specialty stores or maybe they are a celebrity company, that kind of thing. But for a normal person to try to get into department stores is virtually impossible. So now you're left with the independent specialty stores. That's a small market. The largest specialty stores are the chains. All the chains do their own manufacturing. They just don't buy goods in the market. Whether it's Abercrombie or the Gap or Limited or any of those companies, they all do their own manufacturing today. So you can't sell those people.

As far as the independent specialty stores, there are many of them. They're mostly small, and there are probably hundreds, maybe even thousands, of companies out there that manage to make a living selling small, independent specialty stores.

This post originally appeared at Knowledge@Wharton.