Exclusive Assortment

Key Takeaways

• Exclusive assortments showcase a single manufacturer's products in a retailer's store.
• These deals often come from contracts between retailers and manufacturers.
• Benefits include increased sales, exposure, and consumer interest.
• The risk of violating antitrust laws exists if competition is restricted.
• Common in department stores and with mass-market retailers.
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What Is an Exclusive Assortment?

Exclusive assortment is a retail strategy where a store carries products from only one manufacturer or designer, often through a contract. It can help a retailer stand out while giving the brand concentrated exposure, which is common in department stores, furniture retailers, and specialty shops. The exclusivity can reduce competition and shape financial performance, but does it build loyalty or limit flexibility?

How Exclusive Assortments Work

Exclusive assortments, which are also called exclusive arrangements or partner exclusives, are fairly common in many parts of the manufacturing and retail industries. They are prominent in the department store arena, where major players try to differentiate themselves from the competition by partnering with a specific designer. They are also commonly found among furniture retailers, drug stores, and specialty food shops.1

Retailers and vendors often use exclusive assortments to build awareness or buzz about a new fashion designer or manufacturer. They tend to create a sense of urgency among consumers who fear they may be unable to find certain items anywhere else.2 Promotion of exclusive assortments through advertising, store windows, and media appearances, as well as through social media and other online channels can turn specific items into must-haves for shoppers.3

Both the manufacturer and retailer come together through a contractual agreement for exclusivity. The terms and conditions may include factors like pricing and the timeframe for the relationship.4 Both parties should come to a consensus on tracking and measuring their progress. Setting up a management system with explicit goals ensures financial success and also lays out the expectations of everyone involved. It allows vendors and manufacturers to terminate the agreement if these targets aren't met.5

Exclusive assortments provide numerous benefits for both the manufacturer/supplier and the retailer/vendor, including:

Exposure, especially to new designers and manufacturers

Renewed interest for vendors who may be struggling because of stiff competition

Increased sales

Warning

Exclusive arrangements generally improve and encourage competition. However, they may be considered in violation of anti-trust laws and, therefore, illegal if the manufacturer doesn't allow the retailer to sell its competitors' products.6

Important Factors to Consider

This exclusive type of assortment strategy can result in a retailer having both a narrow variety and a shallow assortment of products. The depth of assortment is limited because only one manufacturer's products for a particular line are carried, and the breadth or variety is potentially narrowed if the manufacturer does not make many different products.7

Department store chains have partnered exclusively with specialty brands to create limited-edition shopping experiences, including the rollout of pop-up shops featuring a single or select group of brands. Merchandisers at luxury department stores have also offered localized assortments for years, such as developing exclusive cruise collections in their resort or warm weather locations.

With intensifying competition for shoppers’ wallets, mass-market retailers are putting similar strategies into action, including online retailers. Growing competition from e-commerce merchants, such as Amazon, which also offers its own exclusive assortments, has led some retailers to focus on localized assortments. This merchandising strategy requires developing distinct and unique assortments specifically targeting each local market and customer base.3

Fast Fact

Partnerships between designers and department stores often use exclusive assortments in a limited number of stores for a limited time.

Real-World Example of Exclusive Assortments

General merchandisers are more likely to offer exclusive assortments than specialty retailers: Such stores as Gap, Zara, and H&M tend to market and sell their own brands exclusively. The exception would be a guest designer doing a few unique designs, often called a capsule collection, specifically for that retailer.

Karl Lagerfeld was among the first major designers to work exclusively with H&M, for example. The first collection, which was launched in 2004, sold out immediately. The retailer also announced collaborations with other top designers, including Stella McCartney in 2005, Alexander Wang in 2014, and more recently, Giambattista Valli in 2019 and Yasuko Furuta of Japanese fashion house Toga in 2021.89

Are Exclusive Agreements Anti-Competitive?

Generally not. However, exclusive agreements "may violate the antitrust laws if they prevent newcomers from competing for sales," according to the Federal Trade Commission. "he antitrust laws condemn certain actions of a monopolist that keep rivals out of the market or prevent new products from reaching consumers. The potential for harm to competition from exclusive contracts increases with: (1) the length of the contract term; (2) the more outlets or sources covered; and (3) the fewer alternative outlets or sources not covered."6

What Is Exclusive Supply Agreement?

An exclusive supply agreement includes an agreement that restricts the purchaser from acquiring any goods or services from anyone other than the seller or any other person who may be nominated.10 If one buyer has a monopoly position and obtains exclusive supply contracts, it could be considered a violation of anti-trust laws.

What Is Retailer Exclusive?

The term "retail exclusive" can refer to a retailer having a special or unique product or line of products—or a particular design or model that it alone provides to consumers. Something no competitor can offer, in other words. It can also mean an exclusive window of time in which to sell or offer a product. For the retailer, exclusivity can increase sales and differentiate the store. For the manufacturer, it can mean increased marketing and promotional support—though it can also limit exposure to (and by extension, sales of) the brand or product.11