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Why Are Handbags So Important?

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The Robin Report - HandbagsFunctional, Personal Statement, Self Expression, Fashion Accessory, Status Symbol?

The correct answer I believe is: “All of the above.” I’m not a handbag person, per se, although I own several. I don’t think of status so much when I buy a purse, yet I realize that, in addition to function, which for me means not too heavy and enough room for my stuff, I am conveying something about myself when I tote around my handbag. As Nora Ephron said in her very funny essay, I Hate My Purse, “…your purse is, in some absolutely horrible way, you…”

Whether real, fake, or my new favorite, ‘luxury pre-owned,’ handbags are an expression of who we are and where we belong in social, economic and fashion terms. As our most visible fashion accessory, our handbag is both functional and symbolic, conveying to others the tribe to which we belong. A form of self-expression and signal of personal style, handbags are also an entrée to luxury and glamour. One may not be able to afford that penthouse apartment on Fifth Avenue; or, the private tented safari in Africa; but, one could, perhaps, feel a part of that world with say, a Louis Vuitton bag. [Read more...]

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Posted March 20, 2013

How Trader Joe’s Lures Shoppers With Quirky Products and Brands

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Trader Joe's Opening - 08Trader Joe’s is undoubtedly the nation’s most successful limited-assortment grocery chain; lines actually go around the block in New York City’s two outposts during the holidays.

So what’s really going on here? Trader Joe’s uses product and pricing strategies that could easily be emulated by other chains that sell quick-turn consumables. But Trader Joe’s is not just privately held, it is fiercely private, making every effort to fend off any effort to learn how it works.

We do know, however, that Trader Joe’s net sales-per-square-foot are roughly twice those of the similarly situated Whole Foods. And Trader Joe’s performs better in smaller selling spaces, with about a quarter of Whole Foods stockkeeping unit count.

That’s impressive, but the real secret formula is Trader Joe’s product lineup. More than 80% of Trader Joe’s 4,000 SKUs are private brands, most under the Trader Joe’s name, and others under offshoots such as Trader Jose’s (Mexican food) and Trader Josef’s (baked goods), and so on. [Read more...]

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Posted March 14, 2013

Hogwash

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iStock_000000315739_ExtraSmallAnd if You Believe It, I “Have a Bridge to Sell You.”

Hogwash is a great word, as I was reminded by my colleague, Judy Russell, CEO of consultancy Markethink. First used in the 15th Century, it referred to swill, slop, nonsense and balderdash. And it’s particularly appropriate when describing the findings of a recent study conducted by none other than the Boston Consulting Group, as well an earlier survey conducted by NPD in the fall of last year.

Up front and to be clear, I am not attaching the “hogwash” description to the methodology, and how the research was conducted by these two revered institutions; and not even the accuracy of the findings. I am describing as “hogwash” what the findings indicate would be consumer behavior in making a purchasing decision based on patriotism and a “made in America” label over price. [Read more...]

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Posted March 11, 2013

Nordstrom: Ghost of Vince Lombardi Lives On

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With Some 65,000 Quarterbacks

I wrote an article in 2004 in which I compared Nordstrom with the Green Bay Packers at their peak between 1958 and 1968 under coach Vince Lombardi. Guess what? Lombardi’s spirit lives on within the Nordstrom team, roughly 65,000 strong, and all of them “quarterbacks.” To revisit the past, the opening paragraph I wrote eight years ago was as follows:

Cover_02.04_FlatThe late, great Vince Lombardi, renowned coach of the Green Bay Packers from 1958 to 1968, never got confused over the concepts of “strategy” or “tactics.” And he never confused his team about them either. He viewed football as a “game of inches” and the superior execution of the “basics” of the game, such as blocking and tackling. I know the Nordstrom family hails from the city of Seattle, and I know basketball was their game. And basketball certainly is not a game of inches. However, to hear Blake Nordstrom, President of Nordstrom, talk about their recent “wins,” it’s like listening to the ghost of Vince Lombardi, albeit at a somewhat lower decibel level.While many experts at the time cited technological initiatives for Nordstrom’s huge earnings and sales gains that year, Blake Nordstrom was quoted as saying:  “I think any gains that we’ve had have less to do with technology and more to do with Retail 101.

I thought ‘hmmm,’ sounds like “blocking and tackling” to me.

Now, eight years later, sales are estimated by FactSet to increase by 14% to about $12 billion for 2012 (a roughly $5 billion increase over 2004 revenues of $7.1 billion). Making these numbers even more impressive are the year-in, year-out, profitability metrics: same store sales and sales per square foot, (see accompanying chart).

Also, during the past eight years, Nordstrom continued to invest heavily in technology and perfect its “omnichannel” capabilities. In fact, they are widely acknowledged as being a technology leader among their peers. But, again, Blake Nordstrom, in his humble demeanor, would say the same thing: essentially, it’s not about technology, it’s about “Retail 101.” [Read more...]

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Posted February 12, 2013

MK is no LV: It’s Not Coach Either

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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...]

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Posted February 12, 2013

Michael Kors – A Tale of Two Brands

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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...]

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Posted February 12, 2013

Shopifying: When Less is More.

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The Robin Report - Saturday'sIt may be counterintuitive and even surprising when retailers decide to skew small, but in an era of unlimited accessibility, many big-box brands are looking towards the archetypical “shop” for the next directional shift of retail. In other words, favoring a curated, specialty shop experience as an alternative to the over abundance of choice and lack of personal community a typical retail store offers today.

This new movement also addresses the emerging customer backlash of having to deal with too much stuff and too many stores that is not only fatiguing, but also in some cases, devalues choice. From the “Shops at Target,” to the shopping village model that JC Penney’s Ron Johnson has begun to implement as the store’s headline-making new direction, big brands are starting to think small, specialty, and curated.

Here’s a brief review of three independent New York shops that are catalysts in the shift towards intentional limitation. Each is an epicenter, creating an emotional connection with customers, often extending out of the shop to the beach, the general store, the boudoir and of course, online. Customers are loyal, built on the trust of a shared worldview that each shop offers and to the narrative; the storyline to the shop. Each store is worth looking at as a bellwether of a new emerging retail theme of small being big, less leading more, and experience trumping all. [Read more...]

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Posted October 23, 2012

Multichannel Breakthrough: Segmentation Powers Insights into the Empowered Shopper

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The Robin ReportAs with all new approaches, the best innovations in the digital marketplace occur not as a result of reinventing the wheel, but by integrating and retooling existing assets. Things become truly exciting for the merchant in the combination of insights derived from spending behavior with insights derived from transaction analysis—in time as well as virtual space. By including the insights from real-time transaction data, behavioral models of different segments of e-shoppers can help to extrapolate that a device that has clicked on these specific links is likely to make purchases in certain market sectors within a specified period of time. At MasterCard, we are creating a breakthrough for merchants in segmentation by bringing our own enormous anonymized data set to bear on the task of identifying shopper segment behaviors. By applying insights on spending behavior to our partners’ online populations using common geo-demographics, our partners are able to identify online shoppers with a high propensity to spend in a given industry in the next 30 days. [Read more...]

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Posted October 23, 2012

Space Bubbles, Share Wars, and Flat Tires

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The Robin ReportThe continuously inflating retail space bubble will continue to inflate forever. Occasionally, during tough times, a little air will be let out, (some stores and malls will be shuttered), but net, net it will expand into infinity, likely on the same pace as shown in chart #1 on page 3. And, that’s just brick and mortar space, because one cannot translate websites into square footage (more on this to come).

So, what’s wrong with that? It indicates retail is a growing sector does it not? Yes it does, but why do you think some economist invented the word “bubble?” A bubble means that, like a balloon, its demand for air is limited to a physically defined capacity, beyond which it will pop, immediately deflate and come crashing down.

So, theoretically, there is a demand limit among consumers for retail stores and the stuff in them. And, if such stores and stuff expand beyond that limit, they should (theoretically) go “pop” and deflate (hopefully not crash) back to some equivalent level of consumer demand.

Forget about it. The theories coming out of “Economics 101” and Shumpeter’s Creative Destruction are now over a century old and no longer apply to the real world of the 21st Century. So too, the theory about how “free market capitalism” is supposed to work, doesn’t come close to describing reality today. If it did, General Motors would not be called “Government Motors” today, along with numerous other examples. Get it? [Read more...]

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Posted June 5, 2012

From Profit Center to Competitive Mandate: Shifting Your Shipping Strategy

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Although the rush of consumers shopping online shows no signs of slowing, with an increase of 15% during the 2011 holiday season alone, many retailers’ shipping strategies haven’t kept pace.

A December survey of 8,000 U.S. consumers revealed that 86% thought free shipping was important or very important when shopping online. And retailers responded — 93% of retailers said they offered free shipping at some point during the 2011 holiday season, according to the National Retail Federation.
No longer just impacting a standalone profit center, shipping pricing and policies have become potent and competitive tools to drive revenue and market basket size. Leading online retailers like Zappos and Amazon have stretched the use of shipping and returns policies well beyond the seasonal promotional spur to become a core component of their brand’s value proposition.

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Consider the implications. The question is no longer “How much  does this policy or promotion cost?” but rather “How does it support the brand and drive sales?” Given that consumer and competitive pressures to offer discounted or free shipping will only increase, how should a retailer think about profitability related to shipping?

Since shipping is now a marketing strategy, we should evaluate it on its ability to support the brand and improve sales. An effective modern shipping strategy may not stand alone as a profitable offering, but should increase revenues and profitability by driving changes in customer behavior. Similar to other marketing initiatives, a successful shipping strategy should increase basket size, conversion rate and purchase frequency, among other metrics.

Consider taking a page from the book of Tony Hsieh, CEO of Zappos. In a recent article in Harvard Business Review, he laid out his view that while shipping alone may not always be profitable, it should spur long-term sales and customer loyalty. [Read more...]

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Posted June 5, 2012

The Battle for the Bottom of Home

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The Robin ReportBottom feeders. It’s not a very pretty description for anybody, much less any company. It does not have a particularly admirable image. But let me ask you: Have you ever seen a thin catfish?

Feeding on the bottom of a market segment like home furnishings turns out to be a very  admirable strategy indeed if one considers the retailers who are trolling around on the underside of the business.

We all know about the luxury market and how retailers like Bloomingdales and Neiman’s online are doing quite nicely catering to the well-to-do. We know the guys in the middle who are slugging it out for the sweet spot of the American consumer, stores like Macy’s and Kohl’s and Bed Bath & Beyond. And we’re quite familiar with the discounters who go for the serious volume in the land of Walmart and Target.

But there’s a level several fathoms deeper in the retail biosphere where the lights don’t shine as brightly and the merchandising isn’t quite as slick. [Read more...]

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Posted June 5, 2012

Q&A With Mindy Grossman, CEO HSN

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I recently toured the headquarters, broadcast studios and operating heart of HSN Inc. (Home Shopping Network) in St. Petersburg, Florida. There’s HSN across all platforms – television, online, mobile, interactive TV, gaming, all of that. Then there are 8 e-commerce and catalog brands: Frontgate, Ballard Designs, The Territory Ahead, Garnet Hill, Travelsmith, Improvements, Smith + Noble, and Grandinroad.

I was truly awestruck with what one might call their “store,” a gargantuan building that actually houses all of the mini-theatres where the television, online, and catalogue sets get changed hundreds of times a day. If more traditional brick and mortar stores viewed their businesses as “theatre” they too would be creating exciting new “sets” on a continuous basis.

The high point of the visit was the hour I spent with CEO Mindy Grossman, who shared some of her views on the five years she’s been at HSN’s helm, and what’s ahead for this unique retailer. Here are excerpts of what she had to say: [Read more...]

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Posted May 15, 2012