Tory Burch. Doing Almost Everything Right

tory_burch_2About a dozen years ago, sitting in her blue and white David Hicks and Billy Baldwin design-inspired kitchen in her 6000-square-foot Pierre Hotel co-op overlooking Central Park, Tory Burch set about to create an affordable clothing line that she and her friends would like to wear. By this time, Tory Burch was already something of a socialite and had appeared in the pages of Vogue and on the cover of Town & Country. Not entirely to the manor born, but close enough, Tory, a graduate of the University of Pennsylvania, had worked in the fashion industry, not in design, but in advertising and public relations. Perhaps this is where she learned about marketing and branding, or perhaps she just has very good instincts.

The first Tory Burch boutique opened in 2004 on Elizabeth Street in Manhattan’s Nolita, now a fashionable retail stretch, but a somewhat more pioneering location at the time. With a $2 million dollar investment from then-husband Chris Burch and additional funds from friends and family, the store launched with multiple categories of clothing and accessories. In 2005, Oprah Winfrey discovered a Tory Burch tunic and pronounced it the next big thing. With Oprah’s endorsement, a unique fashion point of view that struck a chord with a certain crowd in Manhattan in its early days and some good exposure on Gossip Girl, fashion history was made. [Read more…]

The Past as Prologue

coswalzonI recently spent some time looking 25 years into the future of retailing. Coincidentally, I played this game almost 25 years ago, exactly. I think it was July of 1989 when I was an executive at the May Department Stores Company. We were operating 19 department store names, two discounters (Caldor and Venture), 26 shopping centers, and a couple of specialty stores, including Payless ShoeSource, 25 years ago.  As we looked at the future then, we certainly missed the rise of online sales and mobile devices. We correctly guessed that there would only be one national name in the department store space, and we even guessed that the name of that store would be Macy’s. We missed that we would not own it.

We correctly guessed that Walmart would own discounting and we divested both Caldor and Venture because of that. (Both subsequently went broke.) We also thought that the discount store was going to own the $10-a-pair shoe business even though we owned that business with Payless ShoeSource in 1989. We divested Payless in 1996. We guessed that Ralph Lauren, Jones New York and Liz Claiborne would be the biggest vendors in the department store world in 2014. But in the reverse order! Only Ralph is still a winner.

We saw the rise of the specialty store, but it was well under way by 1989 and not that hard to see. We missed the success of the off-price sector and the outlets. We thought both were a side show that would have limited success. [Read more…]

Lessons in Luxury From the Middle Eastern Souks

Gold_SoukWhy is buying fine jewelry in the Western World such an intimidating and utilitarian experience? A beautiful piece of jewelry is sensual, romantic, seductive. Why do we feel like we’re purchasing expensive light bulbs instead of a circlet of dazzling diamonds? We can learn a lot from the bazaars and the souks in the Mideast.

Two of the most magical places in luxury retail are the Gold Souk in Dubai and the jewelry section of the Grand Bazaar in Istanbul. The window displays are opulent. There is nothing restrained about the presentation, unlike the minimalist Tiffany windows or vitrines at Bulgari. These Middle Eastern bazaars are the meeting grounds of testosterone and estrogen, resulting in a unique mercantile representation of desire. There is a sheer physical smell of the power to buy here, and there is a visceral joy in being the retail host for luxury and craftsmanship. Contrary to Western stealth wealth, the souks exhibit a certain sensuality; part dress-up, part princess-complex; and an explosion of both insatiability and satisfaction. The whole experience is wrapped up in life’s emotional punctuation marks. Acquisitions from the bazaars celebrate milestones, even those as simple as adding another gold bangle to the collection for no reason at all other than the ability to do so. [Read more…]

Hindsight is Always 20/20

coachIn April 2011, I read my New Yorker cringing at Reed Krakoff’s comment on his design process at Coach:

“I bang it out,’ he said.‘I know what came before, I know what’s coming next, I know how it will work in the context of the store and the ads. It’s like a code.’…Krakoff picked up a bag from the table, a lilac nylon tote, with silver-studded black patent-leather handles a female face silk-screened on the front. ‘This fills the arty, limited kind of hole,’ he said. ‘I may cancel this bag. But it doesn’t matter. Then I just need something else to fill that hole.’”

Ouch! Such hubris from the executive creative director of the then-$4 billion global accessories brand, and in retrospect an indication that Reed’s attention was really on his eponymous line introduced in 2010. Ariel Levy’s article, Brand-New Bag, oozes Reed’s aesthetic contempt for the women who made him successful. Well, on Friday September 6th, Reed, along with a group of investors, bought the Reed Krakoff brand from Coach finalizing the separation (though Coach has a minority share in Reed Krakoff); a new chapter has already begun at Coach. [Read more…]

COTTON LEADS™ Us to the Promised Land

Robin-cotton-article_FINALAll-In for Planet Earth

As my readers know all too well, I usually write about significant strategic events that have noteworthy impact on both our industry and the larger canvas of life, so to speak. We at the Robin Report make it a point to not report “news,” but rather what the news means and why it matters.

That said, however, I came across some news that I felt was really part of a larger, important trend happening to all consumer-facing businesses.

So to get a perspective in this, let’s start at the beginning, and the genesis and driver of all things commercial: we humans. Human beings are by nature consumers. And as consumers, we’re never satisfied. We’re always trying to use our purchasing power to achieve increased levels of satisfaction, perceived or real.

Take apparel, for instance. A hundred years ago, we bought clothing principally for utilitarian reasons to cover our bodies and protect us from the elements. That pair of cotton dungarees may have been a little heavy and scratchy, and not too flattering, but it did the job.

But vanity and self-expression got the better of us. Pretty quickly, we took functionality for granted, and decided that the clothes we wore needed to be made of finer fabrics and look more attractive.

As the history of apparel evolved, the intrinsic properties of the product gradually took a back seat to the name and logo on the label. Calvin. Polo. True Religion. We didn’t buy clothing to cover our bodies anymore. In fact, as I’ve written about ad nauseum, we didn’t even really need another pair of jeans. We bought them for a zillion reasons, not the least of which was to project a certain image and lifestyle that we aspired to. We bought them to impress, “fit in” or “fit out” as outliers. I could write a whole book about why we buy clothes, but I’ll spare you for the moment.

All for One and One for All

So, in this world of abundant choice, immediate gratification, and 24/7 online shopping malls, what’s left? We have to admit that we have been living in the era of “It’s all about me.” We expect shopping experiences that just get better and better. We demand it from our retailers, online and off. We want an incredibly memorable experience co-created by ourselves and the retailer that will forever shape our perception of the store We can get that at a place like 3×1 in Soho and have a pair of bespoke jeans custom-made to fit perfectly. They’ll be made out of one of the hundreds of bolts of soft, shuttle-loom-woven selvedge denim they have in the store, and trimmed with hand-enameled buttons selected by moi. And speaking of bespoke, 3D printing today is just the tip of the iceberg.

Wow, we really have climbed a kind of Maslow’s Hierarchy of Consumption pyramid, haven’t we? We’ve moved from needing protection, to wanting quality, to aspiring to a lifestyle, to demanding an irresistible experience. What’s next, saving the planet?

How’d you guess?

The next frontier for consumers is to use their enormous purchasing power for good. Although various terms have been coined to describe the phenomenon – from conscious capitalism to cause-based shopping — the trend is real and growing. Financial services companies are offering mutual funds invested in socially conscious companies. Accessories makers like Thom’s shoes and Warby Parker eyewear are donating their products to people in developing countries, which is really resonating with consumers, judging from their meteoric sales growth. Large retailers are cutting their carbon footprint by managing energy levels, reducing product packaging, making sure their vendors use safe, responsible hiring practices, and even rewarding customers who bring their own bags. Gap gives a10% discount when you purchase their reusable bag and then use it for every visit. And to Millennials, this trend isn’t even trendy; it’s part of their ethos.

All For One Planet

And now, back to the news. Cotton – the king of raw materials – is taking the growing need for social and environmental consciousness all the way back to the farm.

Last week, our friends at Cotton Incorporated, along with their colleagues at Cotton Australia — two countries at the forefront of responsible cotton production — announced a program that will heighten awareness about responsible cotton growing practices in these two countries. Mark Messura, who leads the Global Supply Chain Marketing at Cotton Incorporated, said the initiative, called Cotton LEADS™, was developed in response to “growing downstream concern for upstream issues.”

Cotton LEADS™ is aimed at textile brands, retailers and manufacturers committed to sourcing cotton that is grown in a responsible and transparent manner. Validating the Cotton LEADS™ program will be the national-level oversight, regulatory enforcement, and transparency of practices currently underway in both countries. It will include both conventionally and organically grown cotton.

The positive change that will result from this system will be found in water and soil conservation, pesticide regulation, child protection, and workplace safety, and be continually measured and improved. It will do things like help farmers optimize irrigation and watering schedules, calculate precise fertilizer needs, detect viruses and other pests that decrease crop yields, and more.

Retailers and brands that want confidence and integrity in their supply chain and want to deliver high quality cotton products to their customers will become partners in Cotton LEADS™. It worked for the architectural and building industry with the USGBC LEED certification, so it should be a slam-dunk for apparel. Because these days, it’s not enough to be better, chicer, cheaper, and an impresario of an irresistible experience, it has to save the world, too. And that’s not cynicism talking, that’s good business practice.

Selling Luxury: Going Beyond In-Store Experiences to Inner Experience

brooksbrothersLuxury Retailers Alert: The Aspirant Shopper Is Back, and Ready for School.

Five years ago, the luxury sector took a nasty hit.The prevailing message at the onset of the Great Recession to high-net-worth consumers was, “just because you can flaunt it doesn’t mean you should.” And the message to the aspirant luxury buyer was, “you shouldn’t have been buying this in the first place.” So we tightened our belts, made do with less, and witnessed unprecedented levels of discounting – up to 70% – which became the luxury retailer’s main tactic for getting customers back into the store.

The post-crash disappearance of aspiring luxury shoppers has been well documented, but now there’s evidence that this segment of consumers is back – both because of increasing demand and because of what retailers are doing to attract them. The most attuned marketers are discovering there’s a new, younger face to the aspirant shopper – Millennials (those born in the 1980s and ’90s) who love high-end goods. And one of the most effective ways to reach this capricious audience is by schooling them on how to live the luxurious life. [Read more…]

JC Brigadoon

Michael-Graves-Design-at-jcp3-photo-credit-jcp1Run, do not walk, to the nearest JC Penney store and go see the new home store. It is perhaps the best merchandised, most beautifully displayed and freshest home furnishings department retailing has seen since the first Macy’s Cellar in San Francisco more than 30 years ago.

And like the mythical Scottish town Brigadoon that appears suddenly and then disappeared not to be seen again for decades, the lifespan of this Penney home department will be short…very short. You see, Ron Johnson delivered exactly what he promised. The home area is breathtaking and unlike virtually anything else in any other store in the country.

Unfortunately, he also delivered exactly what his critics promised. The home re-do will likely be a financial disaster, with shockingly horrible sales and profitability, even in the context of the store’s performance over the past 18 months. [Read more…]

MK is no LV: It’s Not Coach Either

Is this any way to manage a Jet Set brand? Maybe, if you’re looking for a quick exit.

Listening to Michael Kors CFO Joe Parsons speak at ICR on January 16, 2013 on the Kors Jet Set aesthetic—spanning wings, wheels and water—I was reminded of the brand Louis Vuitton, also rooted in luxury travel.

iStock_000019271426MediumI make the comparison to Louis Vuitton for several reasons, beginning with its origins as a provider of luggage in the 1850s. In October 2010, I visited Paris (not just because I love to travel… and I especially love Paris) to see the installation of a Coach shop-in-shop at the Printemps flagship on Boulevard Haussmann, and do a store tour of Ralph Lauren’s new Left Bank flagship on Boulevard Saint-Germain. While I was there, I visited the Musée Carnavalet (the museum of the history of Paris). I never quite understood the fascination and demand for Louis Vuitton until I walked through the museum’s exhibit, Voyage en Capitale, Louis Vuitton & Paris.

On exhibit were the tailor-made trunks for nobility, celebrity and the wealthy. The exhibit told the brand story rooted in travel, a phenomenon that excites the imagination with the romance of new places and people, and different cultures and experiences. What holds more allure than travel? At the show, I discovered the basis of the brand’s aspirational DNA, which combines best-of-class quality and aesthetic with fashion’s excitement and superior execution at every touch point.

Is Michael Kors brand association with Jet Set travel designed to be the LV of the 21st Century? [Read more…]

Michael Kors – A Tale of Two Brands

MK_Charm-01I’ve long been a Michael Kors fan, buying gorgeous double-faced wool dresses on sale at Bergdorf Goodman or in the Michael Kors store on Madison Avenue—only at 70% or more off, after Christmas and in the early summer.

These dresses, and some pants, skirts, jackets and wonderful cashmere sweaters, are lined up like so many soldiers in my closet ready for almost any outing. The styles remain basically the same year-in and year-out. Beautiful fabrics such as the double-faced wool, along with heavier wools and tweeds, matte jersey, raw silk, satin, and cotton twill for summer. All styled classically and elegantly. Feminine. Flattering. Simple sleeveless sheaths and separates with some accessories, handbags and shoes to round out the collection. Wearable, luxurious, classic American style.

But now, since Michael Kors has gone public, the positioning of a lower tiered line, Michael by Michael Kors, into a global lifestyle brand seems a distinctly different brand proposition and one that is, perhaps, at odds with the couture line. Of additional concern is the thought that the couture line has suffered as a result of the greater attention to, and investment in, the lifestyle brand.

The lifestyle brand is designed and merchandised for a different and younger customer who likely has never seen, heard of, or cared about the Michael Kors collection or its understated, classic American positioning and style. These customers know Michael Kors from his successful appearance on Project Runway; from Michael Kors advertising; and from Michael Kors licensed watches, handbags and small leather goods featuring a prominently displayed MK logo in shiny brassy, brass. The new Michael Kors brand is described by management as a “global luxury lifestyle brand with a multi-channel strategy, unique design and strong infrastructure…a compelling assortment of luxury merchandise and exceptional service in a Jet Set store environment.”

The term “Jet Set” appears often in company communications. As a child of the 60’s when ‘Jet Set’actually meant something—picture Princess Margaret flying off to Mustique, Bianca Jagger going anywhere. And before international travel became so much more like getting on a bus at the Port Authority than departing in style at the Eero Saarinen designed TWA terminal at Kennedy— “Jet Set” was defined as: “An international social set made up of wealthy people who travel from one fashionable place to another.” [Read more…]

lululemon: A Cult, a Phenomenon or Just a Great Brand

The Robin Report - lululemon

Click to See Chart Full-Sized

A few years ago, I noticed a woman in Central Park with what I thought was a tag or store sticker on the outside of her pants. “You still have the tag on your pants,” I told her as I passed her on the track. “That is the label, it belongs there!” she explained. This was the first time I noticed the Lululemon brand icon. The logo is featured on pant legs in a way that looks like it was stuck there. An rounded A shape that appears like an upside down U, it is inconspicuous, but, for those in the know, it is the sign of membership in what is one of today’s most powerful brands.

Lululemon was founded in 1998 in Vancouver, British Columbia by Chip Wilson, a 20-year veteran of the surf, skate and snowboard business, who noted a need for a more technical and performance-based product after he took, and loved, his first yoga class. Wilson, now a Forbes ranked ‘Yoga Billionaire,’ stepped down from his role as CEO and passed the reins to Christine Day, a former Starbucks executive. Wilson remains Chairman. Together Wilson and Day hold approximately 32% of the company’s outstanding shares. “We like that management has skin in the game,” a Morningstar report noted recently.

Lululemon opened its first store in 2000. The company now has 147 stores in North America. Lululemon is one of the fastest growing companies in the retail and apparel space and is outperforming the industry on almost every level. Lululemon management is projecting FY 2012 growth of 25% with same store sales growth at 25% and direct to consumer growth, which accounts for 14% of sales of 179%. Last year the company reached a billion dollars in sales; this year the company is projecting revenue in the range of $1.3 billion. And it holds no debt. [Read more…]

Wake Up Consumer Electronics…You’re Ignoring Women

One fact that should continually resonate in the minds of brands and retailers every minute of every day is that women are responsible for roughly 70% of all purchasing in the retail and consumer products industries.  And, since about 70% of our GDP is driven by consumption, women should indeed, be the number-one shopping target.

The Robin ReportAnd, in one category, consumer electronics, I was made aware of the findings of a research project conducted by Cisco called “Retail Orchestration,” that not only are retailers missing a huge opportunity for women’s business, they could simultaneously beat the online sellers in the “showrooming” game, simply by shifting their focus from tech-savvy young college guys (who are into devices), to women (who are into content, and who want attention and education).
Steve Jobs and his team at Apple always understood this.  Today, you can observe moms and their kids in an Apple store, and you’ll notice a tiny table full of the kids banging away on iPads while their moms are taking their time shopping with sales associates. Apple gets that you have to keep the kids entertained so mom can look around, (and seek education).

Conversely, if you walk into a Best Buy, everything is geared towards the college and younger segment tech-savvy males, who, by the way, are also the biggest “showroomers.” [Read more…]

Why Home Furnishings Can Save Sears & Kmart… And Why It Will Never Happen

The Robin Report - KmartDisclaimer: This is not another opinion piece trashing Fast Eddie – aka Eddie Money, Edward Moneyhands, Edward S. Lampert. Unlike a whole lot of other people, I get what he’s doing at Sears Holdings, which is making a lot of money for Fast Eddie – aka Eddie Money, Edward Moneyhands… well, you get the idea.

The plan is not to run a great retail institution, it’s to make a great deal of money. And by that measure, they are perhaps the most successful company in American business today. If someone were able to analyze all of the SEC filings, reports and data coming out of ESL Holdings in Greenwich, Connecticut, it would no doubt show Fast Eddie has done quite well… for Fast Eddie.

No, we’ve come not to trash Fast Eddie, but to present a tale of what-if… what if Sears Holding really wanted to be in the retail business and operate not just one, but two strong, competitive and profitable stores?

Not only is that eminently doable, it’s quite frankly not all that hard and wouldn’t take a whole lot of capital investment. Even more amazing, what it would take are some of the very things Fast Eddie has tried, particularly in the earlier days of his ownership – back when it seemed there might have been even a glimmer of a plan to create successful retailers. [Read more…]