A Playbook for International Expansions

Apparel brands know international expansion is a necessity. But despite its importance, it’s often mishandled as companies chase quarterly earnings targets and race for market share. Too often, apparel brands expand too quickly without a clear retail expansion strategy that aligns with their long-term objectives.

Although it’s only one piece of the overall expansion strategy, choosing the right business model may be just as important as choosing the right market for expansion.

There are two steps to determine the optimal business model for international expansion:

  • The first is to determine the optimal global business model based on the company’s long-term strategic priorities.
  • The second takes country-specific considerations into account that may override the preferred global business model.

[Read more…]

The Changing Roles of Retail CMOs and their 5 New Imperatives

iStock_000053597574_LargeThere’s a lot of buzz these days about new CMO imperatives around customer experience, and it’s often spoken in the same breath with age-old priorities such as branding. I am struck by this last-century disconnect, still all too prevalent in many companies. Since when are branding and customer experience two separate things?

I realize if we ask 20 marketers to define branding we’d likely get 20 different and not altogether incorrect answers. But for me, the definition goes something like this:

Your brand is the sum total of all experiences both positive and negative that your customers have with you, whether initiated by you or not. [Read more…]

Going Local for Memorable Experiences

You have been working hard and deserve a vacation. If you were told you would have the perfect “dream” vacation but have no memory of it afterwards, how much would you be willing to pay? Chances are, not very much. But, why? Even though the experience of the vacation would be utterly blissful, it would fail to deliver what we really want—memories. In our search for meaning, those memories help us build a personal narrative of our lives and are more valuable to us than the experience itself, and as research tells us, even more valuable than material possessions.

It is not just tourists that seek memorable experiences. Research in behavioral psychology has produced compelling evidence that experiences make people happier than acquiring material possessions. Once basic needs are met, experiences like hiking, taking cooking classes and travel bring us more happiness than buying new cars, clothes or accessories—and this holds true across generations. The relative value we place on experiences also grows along with our income. That is, the more affluent we become, the higher the value we place on memorable experiences over new possessions.

So what does this mean for the makers and purveyors of material possessions? It suggests that retailers should do more to create memorable experiences that deepen the engagement with customers and perhaps even become a part of customer’s personal story. But how? [Read more…]

Why L Brands CEO Les Wexner Needs to Spend a Day in London

Victoria's Secret Fashion Show - RunwayVictoria’s Secret, the $7 billion brand known for its sexy lingerie, scantily dressed models and world-famous intimate apparel runway show, is opening more than a hundred new stores this year in Asia, Europe and other international markets.

Shoppers heading there to buy the latest Dream Angel bra and panty will be disappointed, however, because these stores carry little or no lingerie.

Yes, you read that right. Of the approximately 130 new Victoria’s Secret stores slated to open overseas in 2015, 120 will be Victoria’s Secret Beauty and Accessories (VSBA) stores, carrying fragrance and accessories. The stores are financed and operated by franchise partners who pay L Brands (LB) a royalty based on sales volume. Early this year, several of these stores opened in China, a key future market for the company. Most of them are in airports, and bear the Victoria’s Secret nameplate, just like their fully-assorted older sisters. [Read more…]

Polo Ralph Lauren – Adventures in Brand Architecture

Polo Ralph Lauren flagship store on Fifth Avenue in New YorkA New Take on an Old Story

In 2004, Ralph Lauren launched Rugby, a new brand to appeal to a new customer. The company was serious enough about the brand to attempt to trademark the use of the name in apparel and related categories. The Rugby brand had less to do with the wide striped, white collared shirts associated with the sport than the desire to appeal to a new, younger customer who may or may not have been familiar with the Ralph Lauren brand. Or brands, because there are several in the Lauren stable. More on that later. [Read more…]

Old Power Brands Are Asleep

Old Power Brands Are AsleepSephora Leads a Wake Up Call

One thing the overly heralded tech-driven start-ups do not have is brand recognition. They do not have the indelible consumer connection that has taken the “old world” power brands years and millions of dollars to nurture, build and maintain.

Brand recognition aside, the techie entrepreneurs do have three advantages over established brands that afford them the ability to launch and quickly ramp up their businesses:

  1. Creative new way to market a product or service.
  2. Understanding how technology can facilitate the concept.
  3. Limitless funding from “casino playing” investors, allowing them to scale without making any money.

[Read more…]

J.Crew Enters Danger Zone

RR_J_Crew Enters Danger Zone A Graveyard Resting Place for The GapA Graveyard Resting Place for The Gap

It may be too late for Mickey (Millard “Mickey” Drexler, CEO, J.Crew). Ironically, I believe the J.Crew brand is going the way of the Gap. Drexler was at the Gap’s helm, lifting it up out of its initial ditch to become one of the most revered and powerful apparel brands in the world. As any good captain of the ship, he was still on deck as it was submerging, never to return. I have pointed out why Gap, in my opinion, will not ever return to its former pinnacle. In There is No Gap Déjà Vu, I reported that the decade-long attempts under two Gap CEO’s, and now a third that would be as futile as the first two, have not understood that once consumers mentally disconnect from a brand, it’s over — fini, the fat lady sang, period. Note: I said brand, not the failure of being off-trend or bad styling; not bad product, marketing, imaging or advertising … none of which alone would necessarily render a brand kaput. It’s a combination of all of those interconnected elements that complete a brand’s persona, and which over time indelibly and powerfully embed the brand in consumers’ minds. [Read more…]

A Parking Lot Story

A Parking Lot Story_2Joni Mitchell wrote the line “They paved Paradise and put up a parking lot.” How much of our lives are defined by parking. Call it a tangible ramification of the invention of the wheel or perhaps an odd cultural addiction to smooth hard surfaces.  For global retail it is the apron, in whatever form it takes. Visit a new urban shopping mall in Tokyo: the model is a conceptual Ferris wheel, an elevated spinning parking lot where each car has its own compartment. Drive your car into the cube, it gets lifted and stored away in the sky.  In Seoul, many shopping malls have cameras focused on each space and a software package that reads license plate numbers; through an interactive screen in an elevator bank or a phone app, you are guided you through a dimly-lit maze to your vehicle. For all the innovation across the world, parking is still mostly flat asphalt and concrete, accessorized with a little paint.

Parking lots are the historic starting and ending point for retail. They are often barren and windswept, especially on a winter weekday inside a garage at Mall of America. They are sometimes scary; who ever loved a parking lot? No one ambles; everyone rushes to unlock their cars. More accidents happen in parking lots than on the highway. They are laid out by engineering teams trying to fit in as many spaces as they can. Outside of Seoul and Tokyo, parking lots have not conceptually changed since the invention of automobiles. Until now. [Read more…]

While P&G and Coty Shuffle the Deck, Unilever Does Some Stealth Scooping of Its Own

RR_While-P&G-and-Coty-Shuffle-the-Deck_2“Portfolio reshaping.”

Apparently that’s now beauty-biz code for: “Let us take whatever wasn’t working for you – including some stuff that really and truly wasn’t working for you – and see what we can do with it.”

Presumably that wasn’t the way the talks around Coty’s jaw-dropping, $12.5 billion purchase of 43 P&G brands went down in early July. But to the average armchair industry-watcher, it’s easy to think it might have.

Why? Because along with semi-gems like Wella and CoverGirl (and let’s be frank – if they were genuine growth-potential gems P&G would have hung onto them, as it did with Pantene, Olay and SK-II), Coty, come mid-2016, will be tasked with absorbing not only dozens of tiny underperformers, but also the thousands of employees attached to those brands. [Read more…]

At Your Service: Two Case Studies

TOP Shop John Lewis combo FinalIn the developed world, retailing remains under siege. As we know, a steady flow of new Internet competitors vie for consumer dollars, frequently undercutting prices of the brick-and-mortar stores. Meanwhile, amidst a sea of sameness with parity products, traditional retailers too frequently compete merely on price. In-store service levels have evaporated in all but the most high-end luxury houses or new entrepreneurial and tech brands, further propelling the “race to the bottom,” an industry trend Robin Lewis coined back in 2012. [Read more…]

There Is No Gap Déjà Vu

gap_RL_RR_7-15-2015More Like A Slow, Sears-Like Descent To The Bottom?

Glenn Murphy exits.  Art Peck takes over.  It matters not who the players are because there has been a revolving door full of them for the past 15 years, all declaring how they would return Gap to its once dominant position as the cool apparel brand for America’s youth.  All of them failed to do so, and there is no reason to believe Art Peck will have any better luck.  Actually, even luck would not be enough to reverse the ultimate fate of this storied brand.

I say this because the brand was driven into ubiquity (the anti-cool for young consumers, and therefore, the beginning of its end) in the late ‘90s and first two years of the Millennium under the watch of then CEO, Millard “Mickey” Drexler.  With a Gap on every corner, so to speak, cool turned to cold and its descent began. Ironically, Drexler would leave the helm of the brand that he guided through two decades of meteoric growth from $480 million in revenues upon his arrival in 1983 as president, to almost $14 billion in 2000, an amazing 2,400 percent increase when he left.  Indeed, his success earned him the moniker of the “prince of all merchant princes.” Unable to right the ship when it started to sink, Drexler retired in 2002. Comp store sales dropped 5 percent in 2000, their first decline since 1989, and then a whopping 13 percent in 2001, with the overall Gap brand down 12 percent. [Read more…]

Staying Hot (AKA The Other Kind of Sustainability): Can Frédéric Fekkai Get His Mojo Back?

lead_frederic_bioIf you’re older than a minute, and in the beauty biz in any way, shape or form, you will remember the epic hotness of one Frédéric Fekkai.

There was another guy named Oribe who was equally epically hot at the same time, circa 1995, and we’ll circle back to him later. But in the spirit of serving short Internet attention spans, our task today will be to focus on Monsieur Fekkai, and how his once ground-breaking product and salon business has changed hands more times than a blackjack whale on a bender in Vegas.

While much has been made of Fekkai’s swarthy good looks and devastating French accent over the years – and there is zero question that both factored mightily into his early success – the fact of the matter is that the guy is really smart and incredibly driven. You don’t get from Aix en Provence with a pair of scissors in your hand to acquisition by P&G for north of $400 million simply by trading on your own charm and pulchritude. The beauty industry isn’t Hollywood. (But then again, judging by all the A-list actresses launching lifestyle brands, Hollywood isn’t even Hollywood anymore…) [Read more…]