Luxury Institute News

October 13, 2017

‘She just broke her brand’: Donna Karan’s defense of Weinstein is taking its toll

The Washington Post
By: Abha Bhattarai
October 12, 2017

 


(Craig Warga/Bloomberg News)

Donna Karan’s clothing lines were already struggling before the designer sparked a fury over remarks she made this week asking whether victims of sexual harassment were “asking for it.”

But retail analysts say Karan’s comments, which she made after a number of women said they had been sexually harassed and assaulted by film producer Harvey Weinstein, have further complicated turnaround efforts at her namesake brand.

“How do we present ourselves as women?” Karan was reported as saying at an awards ceremony Sunday evening in response to a question about the accusations against Weinstein. “What are we asking? Are we asking for it? By presenting all the sensuality and all the sexuality? What are we throwing out to our children today? About how to dance, how to perform and what to wear? How much should they show?”

The Daily Mail reported that Karan, who stepped down from her leadership role at the company in 2015,  later told a journalist: “It’s not Harvey Weinstein, you look at everything all over the world today, you know, and how women are dressing and what they’re asking by just presenting themselves the way they do. What are they asking for? Trouble.”

On social media and elsewhere, the reaction has been swift: TV host Megyn Kelly and actresses Mia Farrow and Rose McGowen have said they will stop buying Donna Karan products, and an online petition with more than 8,000 signatures is calling on Nordstrom to drop DKNY and other Donna Karan-branded apparel, bedding and accessories. (Beginning in February, Macy’s will be the exclusive retailer of DKNY products.)

Shares of the company that owns Donna Karan International have fallen nearly 10 percent this week. Stocks closed down more than 2 percent on Thursday to $26.03 a share.

“What she did was a terrible mistake,” Paula Rosenblum, managing partner of Retail Systems Research, wrote in an email. “General consensus is she just broke her brand.”

Karan has since apologized for her comments, which she said were taken out of context. “I believe that sexual harassment is NOT acceptable and this is an issue that MUST be addressed once and for all regardless of the individual,” she said in a statement released by her publicists. “I am truly sorry to anyone that I offended and everyone that has ever been a victim.”

Representatives for Donna Karan International and its parent company, G-III Apparel, did not respond to requests for comment.

On Thursday, a Nordstrom spokeswoman responded: “We’ve heard from some customers, and we certainly understand their concerns. We’ll continue to listen to their feedback.”

G-III Apparel purchased Donna Karen International for $650 million in December. The New York company also owns Calvin Klein and Tommy Hilfiger. And it manufactures clothing and accessories for first daughter Ivanka Trump’s brand, which has weathered its own share of boycotts and negative press.

“The acquisition of Donna Karan fits squarely into our strategy to diversify and expand our business,” the company says on its website. “We intend to focus on the expansion of the DKNY brand, while also reestablishing DKNY jeans, Donna Karan and other associated brands.”

Karan, 69, founded her eponymous fashion house in 1984 and eventually sold it to the French conglomerate LVMH Moët Hennessy Louis Vuitton in 2001. In the years since, analysts say the brand has lost much of its luster.

“DKNY is a brand that has been struggling for years — that’s why LVMH got rid of it,” said Milton Pedraza, chief executive of the Luxury Institute, a New York-based research firm. “Somewhere along the way, it’s lost identity and direction.”

G-III Apparel, however, has vowed to reinvigorate the brand. In the most recent quarter, the company said the Donna Karan and DKNY brands brought in $45 million in sales, accounting for about 8 percent of the company’s total sales. “We believe that our investment in Donna Karan was the right one for our company,” G-III chief executive Morris Goldfarb said in an earnings call with investors last month. “We continue to see Donna Karan as potentially the highest operating margin business in our portfolio. ”

But analysts said Karan’s recent comments could still introduce new challenges, even if shoppers have a short attention span when it comes to consumer boycotts.

“Was this a screw-up? Yes,” Pedraza said. “It might cause some short-term issues, but I think people will forgive it in the long term.”

Source: https://www.washingtonpost.com/news/business/wp/2017/10/12/she-just-broke-her-brand-donna-karans-defense-of-weinstein-is-taking-its-toll/?utm_term=.191183479af3

 

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October 10, 2017

DSW steps into shoe rental

Retail Dive
By: Daphne Howland
October 9, 2017

Dive Brief:

  • Among the initiatives in DSW’s overhauled business strategy unveiled last month are plans to test shoe rental and shoe repair services, according to a company press release.
  • Rentals would focus on high-end shoes, according to a report from The Washington Post, a departure from the retailer’s traditional sales of new shoes. The move follows in the footsteps of Rent the Runway, which offers some 65,000 items and reportedly loaned its customers an estimated $1.35 billion worth of high-end items in 2015.
  • Milton Pedraza, chief executive of the retail consultancy The Luxury Institute, told the Post the move takes the sharing economy too far. “Shoes are such a personal item — you’ve got to worry about fit, style, so many things — that I don’t think it’s necessarily something people want to share with strangers.”

Dive Insight:

Shoe rental is par for the course at the bowling alley, and in that context consumers have a high tolerance for the years’ worth of scuff marks and the odd sensation of wearing shoes that have been worn by many others. But it’s not so easy to picture how that would work for shoes that would be worn for more than bowling night.

Even a short-term event like a wedding involves walking in unpredictable weather and activities like dancing, not to mention the everyday way shoes stretch and bend to their wearers’ size and stride. Still, both rentals and repairs are on DSW’s lists of things to try in a new era of retail, where consumers aren’t prioritizing apparel sales and are interested in cutting down on waste.

Beyond access to apparel otherwise outside the financial limitations of many younger shoppers, Rent the Runway’s business model also complements consumers’ growing environmental concerns, breathing new life into merchandise customers would otherwise likely wear only once, at weddings and other milestone social events. Two thirds of consumers in 2015 were willing to pay more for a product if it came from a company that’s committed to making a positive environmental impact, up from 50% in 2013, according to a Nielsen study.

DSW also last month announced a redesign of its storeswith a new warehouse-like look that will allow 70% more merchandise to be showcased, along with new proprietary technology to allow store associates to spend more time with customers. Several electronic devices that store staff now juggle will be reduced to one simple, streamlined tablet. The footwear retailer is also revamping its loyalty program next year, leveraging its 25 million-customer database.

Source: http://www.retaildive.com/news/dsw-steps-into-shoe-rental/506823/

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October 9, 2017

‘A new extreme’ for the sharing economy: Shoe rentals

The Washington Post
By: Abha Bhattarai
October 5, 2017


You may soon be able to rent a pair of designer heels at a nearby shoe store. (Caroline Blumberg/European Pressphoto Agency/EFE/REX/Shutterstock)

The discount shoe purveyor DSW says it wants to give its customers what they want, which is how the chain has arrived at this: shoe rentals.

The retailer announced last week that it is considering adding a rental service, as well as shoe repair and storage facilities, to some of its 511 shoe-and-accessories stores. The experiments are part of a broader effort by DSW, which stands for Designer Shoe Warehouse, to get more customers into its stores.

“Today’s customer craves more than just a transaction, they want an experience,” Michele Love, the company’s chief operating office, said in a statement.

Retailers across the country are racing to add services that might keep customers coming back to their physical locations, where people are more likely to make impulse purchases — and spend more — than online. Nordstrom this week opened its first merchandise-free store, staffed with stylists, tailors, manicurists and bartenders. Apple, meanwhile, is outfitting its stores with outdoor plazas and indoor boardrooms in hopes that shoppers will linger.

At DSW, executives say the idea is to create a one-stop shop where customers can buy everyday footwear, stash items that are out of season — and yes, rent shoes.

“This is something we’ve had a lot of customers ask us for, particularly with special-occasion shoes,” said Christina Cheng, a spokeswoman for DSW. “When it comes to prom or a wedding or a special event, people are usually looking for a very specific shoe in a particular color, that matches a particular dress, that they probably won’t ever wear it again.”

But, Cheng added, shoe rental — which the company will begin testing in coming months — also raises a number of logistical questions: How will stores know which styles and sizes to keep on hand? How will they clean them between uses? And how do you determine the cost-per-wear of a bedazzled stiletto?

Industry experts also raised concerns about the program. Sure, it may be commonplace to rent shoes at the bowling alley or skating rink, but are people willing to wear someone else’s open-toed, high heels to a wedding? Some are unconvinced.

“It’s good to think outside the shoe box, but this is taking the shared economy to a new extreme,” said Milton Pedraza, chief executive of the Luxury Institute, a New York-based retail consultancy. “Shoes are such a personal item — you’ve got to worry about fit, style, so many things — that I don’t think it’s necessarily something people want to share with strangers.”

And, he added, what happens if a suede shoe gets caught in the rain? Or a glittered heel pops off into a ditch? Or a particularly large foot stretches out a loafer?

“I don’t think shoe-sharing is going to be either in high demand or highly profitable,” Pedraza said.

There are, however, a number of other apparel and accessories rental models that have worked: Rent the Runway has created a $100-million-a-year business offering dresses, gowns and jewelry for short-term wear. Bag, Borrow and Steal has found similar success — and millions in venture capital funding — by renting out designer handbags. Other start-ups allow you to rent watches, earrings, necklaces, even custom wigs.

The larger challenge for DSW, analysts said, is getting customers to buy and returns items at its stores. Online shopping has become a particular problem for shoe retailers, which often struggle with high return rates. It’s become commonplace, analysts said, for some people to order eight pairs of shoes in different styles and sizes, and keep just one. Fulfilling those large orders, then processing returns and covering shipping costs can add up to an expensive problem.

“Getting traffic to their stores is really the most critical component,” said Steven L. Marotta, a footwear analyst for CL King & Associates. “And having a very large footprint around the country, which DSW does, has been a real advantage.”

The more reasons a customer has to walk into a DSW store, the more likely they’ll walk out with a pair of new shoes. And that, executives said, is ultimately why they’re experimenting with shoe rental, repairs and storage.

“An example would be, you come in today, it’s raining and you want to pull your rain boots out of storage,” Roger L. Rawlins, chief executive of DSW, said at a retail conference last month. “When you pull them out of storage, we also offer you an opportunity to buy rain boots that just arrived so that you aren’t using necessarily the ones you’ve had in storage for two or three years.”

DSW is also looking for new ways to turn its existing stores into mini-warehouses. It is often cheaper and easier, Cheng said, to ship a shoe from a nearby store than from the company’s fulfillment center in Columbus, Ohio. The company is also reconfiguring its shops to add taller, deeper shelves that can store up to 30 percent more inventory, and it recently merged computer systems so that online orders, store purchases and inventory catalogues are in one place.

“Today’s retailer needs to be able to do it all,” Marotta said. “Ship to store, ship from store, ship store to store. Anybody who can’t offer that is at a disadvantage.”

Source: https://www.washingtonpost.com/news/business/wp/2017/10/05/a-new-extreme-for-the-sharing-economy-shoe-rentals/?utm_term=.56e2987f39f0

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September 14, 2017

Nordstrom’s plan to attract shoppers: Wine, manicures — but no merchandise

The Washington Post
September 12, 2017
By: Abha Bhattarai

 


The first Nordstrom Local is scheduled to open next month in Los Angeles. (Courtesy of Nordstrom)

Nordstrom’s newest store will have personal stylists, manicurists, a tailor and plenty of wine.

But there won’t be any merchandise for sale. No clothing, no shoes, no accessories.

Instead, Nordstrom Local will serve as a gathering ground for customers to chat with employees, pick up online orders and drop off returns. Stylists will be available to put together personalized recommendations — outfits for a Caribbean vacation, say, or a job interview — that customers can view on their mobile phones and buy directly from Nordstrom.com.

The experiment, which begins with a 3,000-square-foot store in Los Angeles next month, comes as retailers around the country look for ways to blur the line between shopping online and in stores. Analysts say it is also a way for Nordstrom to open smaller locations in more urban areas to keep up with changing customer preferences. (A typical Nordstrom store is about 140,000-square-feet — or nearly 50 times the size of the new concept.)

“As retail continues to transform at an unprecedented pace, the one thing we know is that customers value great service, speed and convenience,” Shea Jensen, senior vice president of customer experience for Nordstrom, said in a statement. “Finding new ways to engage with customers on their terms is more important to us now than ever.”

It’s a model others are trying, too. Apple executives on Tuesday said the company’s newest stores have outdoor plazas, boardrooms, forums and workshops, all with one goal in mind: getting people to linger.

“We don’t call them stores anymore, we call them Town Squares,” Angela Ahrendts, head of Apple Retail, said at a company event Tuesday. “They are gathering places.”

It’s a similar idea at Nordstrom, which in 2014 spent $350 million on Trunk Club, the online personal styling service. The company was also an early investor in Bonobos, the men’s e-commerce company that was acquired by Walmart for $310 million earlier this year.

“Nordstrom has never been afraid to try new things, and that’s become especially important in an environment where bricks and mortar is becoming obsolete,” said Ivan Feinseth, an analyst for Tigress Financial Partners. “Most retailers are struggling because they have no identity and can’t connect with customers. Nordstrom is the opposite: It has always been known for a high level of customer service, and now they’re moving further in that direction.”

But some said it’s not immediately clear whether Nordstrom’s new concept will be successful. Among the challenges the company could face: higher shipping costs as it mails more items to customers’ homes, and difficulty winning over shoppers who have become accustomed to shopping from home.

“It’s a mixed bag,” said Milton Pedraza, chief executive of the Luxury Institute, a market research firm. “There are people who like the instant gratification of going to a store, and there are others who like the convenience of ordering from home. This model — well, it kind of gives them neither.”

Nordstrom has been a rare bright spot in the retail industry, as longtime department stores chains like Macy’s, Kohl’s, Sears and J.C. Penney report declining sales and profits, and announce plans to close hundreds of stores. Seattle-based Nordstrom, however, reported that both revenue and same-store sales — a measure of sales at locations open more than a year — were up during the most recent quarter, as more people shopped online and in its stores.

But the company is also facing competition from Amazon.com, which this year is expected to surpass Macy’s as the country’s largest seller of apparel. Amazon has been aggressively building up its clothing and shoes businesses with its own private-label brands and last month completed its $13.7 billion purchase of Whole Foods Market, giving it a network of nearly 500 stores around the country. (Jeffrey P. Bezos, the chief executive and founder of Amazon, owns The Washington Post.)

“That’s the big question on everybody’s minds: How do you create a hybrid between shopping online and in store?” Pedraza said. “Nobody has figured it out just yet, so the stakes are very high.”

“It’s not a slam dunk — it’s not like anybody is saying, ‘Oh my God, what a great idea.’ They should’ve done this years ago,’” Pedraza said. “But it’s an interesting idea. And who knows? Maybe it will work.”

Source: https://www.washingtonpost.com/news/business/wp/2017/09/12/nordstroms-plan-to-attract-shoppers-wine-manicures-but-no-merchandise/?utm_term=.18b4f737fdb9 

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August 9, 2017

Luxury camping, complete with lobster dinner delivery

CBS Money Watch
By: Irina Ivanova
August 9, 2017

Come August, many families leave the house for camping in the woods or on a beach. But those leery of leaving behind the air conditioning need not forego the natural experience. A newly opened campground in Maine might have just the thing.

Sandy Pines Campground in Kennebunkport has been open less than two months, but its 12 professionally decorated, luxury tents are pretty solidly booked through mid-October, according to a spokeswoman. Those come in addition to the campground’s 320 acres of campsites, lodges and RV hookups.

Each tent measures 450 square feet and comes with heating, air conditioning and a mini-fridge. Travelers also can choose from individualized quirky amenities, like mid-century furniture in one tent and a painting set in another. Rates start at $149 a night before taxes.

Would-be campers should note that dogs are not allowed in the luxury tents, although pets are welcome elsewhere in the park. The glam tents also don’t permit individual barbecuing, but they do offer delivery of a fully cooked lobster dinner right to your tent flap.

sandypines-blixensoasis-bynicolashome.jpg

Blixen’s Oasis, a safari-themed tent designed by Nicola’s Home.

 SANDY PINES CAMPGROUND

 

Glamorous camping, or glamping, has taken off in recent years as the travel industry tries to come up with novel attractions for well-heeled travelers who prefer experiences to things.

“When you have the money, you want to splurge,” said Milton Pedraza, CEO of the Luxury Institute. “Yes, you’ll go out and hike, but you’re going to want to have those luxuries when you come back and when you wake up.”

The Oxford English Dictionary, which added “glamping” in December, defines it as an activity with “accommodation and facilities more luxurious than those associated with traditional camping.”

But the experiences range widely between having a slightly more comfortable sleeping floor and ordering lobster delivered to the tent. Pedraza predicts the less-than-rugged segment of glamping, rather than full-on luxury, will grow the fastest in the coming year. Young families in particular might appreciate camping facilities that are set up with basic amenities, he said.

“They’re pretty spectacular,” camper Katie Latulip told CBS affiliate WGME. “The fact that they’re all equipped with all the amenities that a camper would need to essentially just show up and you know, have a great weekend, is pretty phenomenal.”

sandypines-nauticalnights-ext-bychatfielddesign.jpg

Nautical Nights, a tent by Chattfield Designs, at Sandy Pines.

 DOUGLAS MERRIAM FOR SANDY PINES CAMPGROUND

 

Sandy Pines originally intended to rent two of the tents and sell the other 10, but after “overwhelming interest in the glamping experience,” it’s renting all 12 of them, a co-founder of of the site told Boston.com. For those interested in a more permanent camping experience, the campground also offers mini-cabins for sale, which measure about 650 square feet and sell from $71,000 to $98,000.

The concept of traveling in luxury, of course, is nearly as old as luxury itself. A famous example from medieval Europe is the Field of the Cloth of Gold, a summit in Northern France in 1520 between Henry VIII of England and Francis I of France and their respective retinues. They gathered, ostensibly, to celebrate peace between the two countries, but in reality to see which monarch could throw the more impressive party.

An actual wrestling contest during the summit ended with King Henry as the winner, according to Vice, but the question of who was the more successful glamper remains shrouded in the mists of history. © 2017 CBS Interactive Inc.. All Rights Reserved.

Source: http://www.cbsnews.com/news/glamping-kennebunkport-maine-luxury-camping/

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July 28, 2017

THE ROLLS-ROYCE PHANTOM PERSONALIZES OPULENCE

Wired
By: Brett Berk
July 27, 2017

 

 

ROLLS-ROYCE

 

FOR MORE THAN 90 years, the rich, famous, and beautiful have been ferried to their special occasions inside Rolls-Royce Phantoms. The car epitomizes imposing elegance, a status symbol that signals, “I’m loaded, but I’m also very classy.” On Thursday, Rolls-Royce unveiled its newest version of the Phantom, a four-door, $500,000-dollar sedan. The car’s design illustrates the balance Rolls-Royce must strike to make the vehicle feel new, innovative, and personalized—worthy of its half-million-dollar price tag—while also maintaining connection to its storied eight-generation lineage.

The general state of the luxury goods market further complicates things. “Wealthy buyers are placing a strong premium on more emotional and personal priorities: travel, food, adventure, and family,” says Milton Pedraza, CEO of the Luxury Institute, which tracks high-end spenders. The challenge for Rolls is to incorporate those spending behaviors into the car’s design.

Making the vehicle stand out is a matter of throwing wide the suicide doors. “If you said to me, ‘What finally defines this Phantom?’ I’d say, ‘Please step inside,’” says Giles Taylor, Rolls-Royce design director.

The feel is “slightly edgy of its time, but not beholden to its time,” says Taylor. That rules out a Tesla-style giant touchscreen. And the Rolls interior has to feel exclusive, so no replicating the health and wellness monitors that respond to drivers’ moods, which Mercedes installs in top-end models.

Rather, Rolls’ approach is to install something called the “Gallery.” That the feature’s term borrows from museum nomenclature is no accident. The Gallery covers the entire central expanse of the upper dashboard with toughened glass, and carves out a three-dimensional display shelf behind it—72-inches wide and 6-inches in tall. The perfect place to install, well, anything you want. You can’t get much more personalized than that.

The Rolls Royce design team and craftspeople at the company’s British headquarters are standing by with some posh ideas for buyers, should they need them—or they’re happy to create installations from scratch. For instance, the company’s most dignified customers might choose to festoon their Gallery with a family crest laser-etched in platinum; a miniature landscape of an ancestral manse fashioned from Austrian porcelain; an abstract wing rendered in feathers and laser light; or a burst of precious gemstones refracting the aurora borealis.

Automakers love this level of personalization because—surprise!—they command hefty price tags. Rolls expects each new Phantom owner to spend almost $100,000 on individual details alone. The company offers Rolls-Royce staples like book-matched burl walnut veneers and preternaturally smooth animal hides, but also novel options like black pear and grey oak woods, outrageous carpet color palettes, even satin and silk seats. The company sees its Gallery as a new way to enhance its up-sell.

THE INSIDE THAT COUNTS

  • The Real Auto Revolution Is Already Happening—Inside the Car

  • Tomorrow’s Cars Won’t Just Drive Themselves. They’ll Feel Different

  • Prepare Yourself for the Sweet, Sweet Luxury of Riding in a Robocar

Now, personalization isn’t a new concept for cars. Pre-war Rolls-Royces were delivered as a rolling chassis to a coach builder, to fit a custom body. The intro of assembly lines standardized things, but now technology means cars can be given bespoke touches with relative ease. “With the digital production we have now, we can make it very individual, but produced in a high industrial quality,” says Thorsten Franck, an industrial designer commissioned to build Gallery concepts. Well into the 21st century, that process gives the Phantom some continuity.

Here’s the best news for those who can’t drop half-a-mil on a car: In the automotive world, what starts as a high-end option often trickles down to the mass market. Watch out for 3D-printed, dash-adorning, family crests at a dealership near you.

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July 27, 2017

Jimmy Choo purchase just the start, says Michael Kors CEO John Idol

South China Morning Post
July 26, 2017

Michael Kors isn’t done with deals. The fashion house, which agreed to buy luxury shoemaker Jimmy Choo for about US$1.2 billion this week, is planning to build a portfolio of upscale brands. And that means acquiring more businesses, possibly in the same billion-dollar range, according to chief executive officer John Idol.

The company is turning to deals as it tries to regain lost sales – a slump brought on in part by its flagship brand becoming too exposed. Michael Kors plans to focus on integrating Jimmy Choo, known for its Sex and the Citystilettos, in the next six to 12 months. Then it will start shopping around again, Idol says.

The Jimmy Choo acquisition was Michael Kors’s biggest effort to expand beyond its own brand name since its initial public offering in 2011. The takeover gives the company a greater presence in higher-end luxury – and helps it play catch-up with Coach Inc., which agreed to buy Stuart Weitzman in 2015 and made a US$2.4 billion deal to buy Kate Spade & Company in May.

It also helps decrease Michael Kors’ reliance on handbags. Both Michael Kors and Coach are trying to become something akin to European luxury conglomerates, with a diversity of brands.

“These two fashion houses are trying to achieve what Kering and LVMH have done in an American way,” says Milton Pedraza, a New York-based luxury consultant.

But Michael Kors faces a critical challenge: maintaining the cachet of Jimmy Choo while building up its distribution.

“You don’t overexpose it, you don’t oversell it and overexploit it,” Pedraza says. “You can still grow viably without growing like a weed and becoming a weed.”

Like Ralph Lauren, Michael Kors opened too many stores and stretched itself too thin. The company also has relied heavily on struggling department stores and discounters like T.J. Maxx, where steep discounts hurt the brand’s image. On the Macy’s website, for example, Michael Kors’s signature US$298 tote bags are currently sold for as low as US$149.

Its stock tumbled 32 per cent in the past year as the company struggled to mount a turnaround plan.

As Michael Kors works to regain its prestige, it will close up to 125 retail locations in the next two years. The company also is renovating the stores that remain, stepping up product innovation and further cutting promotions – part of the Runway 2020 turnaround plan that Idol announced in May. The Jimmy Choo acquisition will increase the sales contribution of its footwear business to 17 per cent from 11 per cent currently, Idol says.

Michael Kors is buying Jimmy Choo from JAB Holding Company, owned by the billionaire Reimann family. It will pay 230 pence a share for the shoemaker, a premium of 18 per cent over Monday’s close. The price is equal to about 13 times Jimmy Choo’s adjusted earnings for 2017, according to Bloomberg Intelligence analyst Deborah Aitken.

Jimmy Choo rose to prominence in the late 1990s, boosted by high-profile fans, including the late Princess Diana and the fictional Carrie Bradshaw in television series Sex and the City. The brand gets its name from its Malaysian-born co-founder, who created it in 1996 with British designer Tamara Mellon.

For future acquisitions, Michael Kors could seek luxury-footwear and accessories makers with visionary designers, Idol says. The company is looking for names that aren’t already widely distributed. “We are definitely interested in having things that we can help develop.”

Source: http://www.scmp.com/lifestyle/fashion-luxury/article/2104185/jimmy-choo-purchase-just-start-says-michael-kors-ceo-john 

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July 25, 2017

Wine as Beethoven … or pop tunes

In Daily
By: Philip White
July 25, 2017

 

Last summer I visited a winery tasting and sales room with a mate from New Orleans. Dr Robert DeBellevue is a music fiend as much as a top-flight wino and obsessive bird-watcher; he’s been to Australia more than 30 times pursuing such delights.

We were under deep cover: plain clothes. It was fascinating to watch the staff trying to discover the level of our vinous expertise, especially that of the tall unassuming dude with the gentle Louisiana accent.

“What do you usually drink at home?” the vendor sensibly enquired.

Dr Bob answered, in all honesty: “Grange.”

Once the staff realised he was fair dinkum – he’s one of the biggest collectors in the USA – everything changed. We got what we’d come for: a leap-frog to the top shelf.

Dr Bob’s story of discovering Grange by accident at a Queensland medical conference in 1978 is a lesson in how such passionate addictions can occur. The big door prize was a bottle of Grange. He didn’t win it, but he heard it was Australia’s greatest wine. So on his way home he called in at Len Evans’ Bulletin Place wine shop in Sydney and bought a dozen mixed vintages from the ’50s and ’60s for $6 a bottle.

The lads on duty that day obviously had no more idea of their value – or price – than the Doc, who knows all too well that price is what you pay but value, good or bad, is what you get.

Once home, he went to a restaurant with a wine merchant mate, and opened his first, the 1965. Value? He couldn’t believe his luck. He was a goner. Gone for all money.

Just as political journalists get free politics to grease the gears of their knowledge, the wine critic is exposed to great volumes of wine. One becomes very aware of the gap between top and bottom shelves, in both value and price, and remains confounded by the discrepancies in both measures.

These kidneys have processed wines of prices so far up the scale one daren’t usually admit to drinking them, much less gratuitously boast of it. One could never possibly afford to buy them. Very few can.

Probably just as well in many instances: I’ve had very famous wines at ridiculous prices that given a glass, many of our winemakers would never get to within thousands of the wine’s true price if asked to make an estimate.

Similarly, I’ve wallowed in legendary bottles whose brands, regions, or even varieties would rarely be recognised by the same crew if presented blind.

Nevertheless most who have never had the readies to risk in those nether regions above, say, the price of current Grange, have favourites they treasure and fondly recall that might cost 1 or 2 per cent of such enormous spends. What obsesses me is the mystery of how different folk measure these fluffy calibrations of true quality and fair charge.

There was a fascinating discussion around the cobweb last week when Peter Martin, the brilliant economics editor at Fairfax, reviewed and considered The Memory of Music, a new book by composer Andrew Ford, who hosts the cognoscenti Radio National program The Music Show.

Most wine drinkers have one or two easy chart-toppers they recall as fondly as a favourite ehrwurm

Andy has written about how a mighty Beethoven symphony can invite the listener into its confounding, mysterious world, while a simple formularised pop song moves instead into us.

“It is small wonder, then, that we associate pop songs with the time and place in which we most vividly encountered them, the girlfriend we had at the time, the summer holiday we were on, the college we were at,” Andy writes.

Which triggered me to write this. Consider, say, the new Domaine de la Romanee-Conti La Tâche 2011, whose 6 hectares of Pinot noir in Burgundy produced 18,196 bottles which sell around the world at between $3000 and $4500 each. This is such a disinterested, remote and easily misunderstood wine it could just invite you in like Beethoven if you’re very, very lucky.

And you listen.

On the other end of the scale, most wine drinkers have one or two easy chart-toppers they recall as fondly as a favourite ehrwurm.

“Songs are like elevators between floors of our lives,” Peter Martin wrote. “They transport us to where we were when we first heard them: the faces, the places, even the smells …

“We share our love of special songs with others who grew up loving them, but not necessarily because they are objectively special. Mostly it’s because they’ve been made special … They are precious, but not necessarily because they are good.”

And so it goes with much wine. Unless you’re feeling exceptionally carefree and bearish, it might pay to forget the Beethoven/La Tâche/Grange world and pursue more bottles of that affordable, unforgettable hit single you had with a lover at the beach, on the grave of a brother, by the campfire in the desert … learn your old favourites; their sources; their makers.

Then comes the tricky bit. In a recent white paper on the future of retail, Milton Pedraza, CEO of the New York-based consultancy The Luxury Institute, wrote: “Today, consumers are at their best. They are educated, informed, and they have a mindset that is light years ahead of retailers. Retail will have to reinvent itself in order to become flexible and constantly adapt to keep up with the consumer.”

While he referred of course to the buyers of Louis Vuitton, Ferrari, Dior and the like, this observation can be applied to retail liquor outlets: there are some wine sales people who know their field inside-out, but most are part-timer Shoppies working to pay for shoes for their kids or their own education and rent, who have bugger-all knowledge of the products they pump.

At which point it’s pertinent to go back to Peter Martin explaining that a lot of hit singles become so only when the record company pays to get songs played on the radio, citing CBS routinely paying $10 million a year to radio stations in the 1980s.

This happens, too, in wine retailing. The maker of that pallet of discount stuff inside the front door has often paid handsome rent for the floor space. That’ll be what the staff are pumping hardest.

So you have to quite literally shop about until you find somebody you can trust, who knows what you like, and can reliably recommend other wines of the type and price of that favourite that’s stuck in your brain like that catchy ehrwurm pop tune. Once you find such a vendor, be they in a shop or a cellar-door, culture them. Nurture them. Teach them about you as they teach you.

Regardless of your budget, you can save a great deal of money and have a helluva lot more fun. I’ll do my best with fairly priced recommendations.

As for the luxury goods shopper, or the aspirant, try the analogy I made reading the shiny magazine for collectible car perves, Octane:

“I had no interest in something fashionable,” wrote Winston Goodfellow, who was looking for a collectible supercar on a limited budget, “I wanted a car with desirable characteristics at a price less than those same attributes would cost elsewhere. Landmark design, history, performance, rarity, potential capital preservation/appreciation … [providing] a memorable, lingering experience that couldn’t be found anywhere else … Like stepping onto the dance floor with the most perfect partner.”

As Dr Bob discovered, sometimes, if you’re diligent and determined, you can find that most perfect partner for $6. So maybe there is something to be said for the wine retailer with such scant knowledge they don’t even know what Grange is, much less recognise a new wine likely to achieve similar glory.

If you have such luck, proceed realising this love affair is likely to end up costing you a lot more than $6 per bottle. In which case you’ll need more than ever that retailer who does know their business and who you know you can trust.

Nurture them. As the robots march in and internet shopping takes over and outlets become self-serve caverns full of muck, such caring professionals are precious indeed.

Source: http://indaily.com.au/eat-drink-explore/wine/2017/07/25/wine-beethoven-pop-tunes/

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Is Tiffany & Co. Amazon-proof?

CBS MoneyWatch
By: Jillian Harding
July 24, 2017

Though many major American retailers have had their foundations shaken by Amazon (AMZN) and the wider explosion in e-commerce, Tiffany & Co. (TIF) appears to be a rare diamond in the rough of brick-and-mortar retail.

Exhibit A: The company’s stock price has jumped nearly 30 percent over the last year, even as department stores like Macy’s (M), J.C. Penney (JCP) and Sears struggle with shrinking growth.

Analysts point to several reasons why Tiffany’s, despite a recent dip in sales, remains in favor among investors. Those include the touch-and-feel experience of shopping for fine jewelry, the company’s potent brand, and a global, and well-heeled, customer base.

Another advantage is Tiffany’s small physical footprint of 125 stores in the U.S. and roughly 300 total worldwide. Its stores also are in upscale malls, which have been less affected by the mass department store closings that have affected other malls.

That helps keep Tiffany’s operating costs low and its stores churning out profits, with sales of around $2,600 per square foot in 2016 and a sparkling 62 percent gross profit margin.

Like other retailers, of course, Tiffany must cope with the impact of e-commerce and, as ever, the changing tastes of consumers. To that end, it recently named Alessandro Bogliolo, a veteran of luxury retail who is known for his ability to revamp brands like Bulgari, as its new CEO.

As with many luxury retailers, Tiffany also is looking to add millennial buyers that may be more interested in experiences and paying down student loans than spending on big-ticket jewelry. The trick is to attract younger shoppers while maintaining its core high-end client.

One way to appeal to younger buyers is by offering lower-priced fashion jewelry, which does not include gemstones and carries a lower price tag than fine gemstone jewelry. The fashion jewelry category was responsible for 33 percent of Tiffany’s sales in 2016.

Edward Jones analyst Brian Yarbrough said the company must be cautious about not devaluing its brand. While having different price points opens the door to a different mix of consumers, “You have to be careful — they had this problem in the early 90s… People who are buying $20,000 or $30,000 pieces don’t want teens running around,” he said.

Retail consultant Howard Davidowitz, CEO of Davidowitz & Associates, said that for Tiffany to retain the luxury customer, the company might consider looking to do an offshoot for fashion jewelry or acquire a brand like Pandora to appeal to a different kind of consumer.

“If you have a store and you load the store up with a lot of middle-level merchandise because you are trying to sell to tourists and everyone else, they are going to want to buy a small item and get the Tiffany bag. If you do that, you are a going to lose luxury customers.  I don’t think there’s any way to do it unless you can come up with a store within a store strategy — there is clarity in that.” he told CBS MoneyWatch.

In reporting its first-quarter earnings, the company laid out a new strategy for driving growth, including finding ways to more effectively engage with customers, adding new products, and revamping or even closing some stores.

Yarbrough said Tiffany needs to refresh its product line and improve its marketing, while adding that a greater focus on supply-chain efficiency could boost the retailer’s profit margin. But he also thinks that the company’s core strengths — its allure in overseas markets and high-end jewelry niche, in which customers want to make purchases in person — help buffer it from the competitive ravages of e-commerce.

“We think it’s a brand, as well as a retailer, that is more Amazon-proof,” he said.

Echoing this theme, Cowen senior retail analyst Oliver Chen wrote in a recent note, “In our view, Un-Amazon-Able qualities include… store and vertical integration focus at Super-Premium luxury stocks (Tiffany, LVMH, Sotheby’s),” he said in a recent note.

But Tiffany can’t rest on its diamond-studded laurels, Davidowitz said, noting that high-end clothing retailers with strong brands have been hurt by e-commerce and that Amazon could eventually decide to encroach on the jeweler’s turf.

“They have to have a plan to address the gigantic change taking place… Now is the time to do it. There is no way to say people are not going to buy jewelry online.”

Milton Pedraza, CEO of retail research group the Luxury Institute, said the key for Tiffany is to foster strong relationships with customers built on its compelling products and prestigious brand. 

“I think the world will become a barbell — at the one end it will be Amazon, commoditized products — and then there will be real luxury,” he said. “There are a lot of ‘luxury’ pretenders….Tiffany is no pretender. I think they will continue to survive and thrive.” 

Source: http://www.cbsnews.com/news/is-tiffany-co-amazon-proof/ 

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May 12, 2017

‘The unfortunate thing about Macy’s’: Just about everything

The Washington Post
By: Abha Bhattarai
May 11, 2017

Macy’s, it seems, can’t catch a break.

The beleaguered retail chain, which has been aggressively closing stores in recent months, announced more bad news Thursday: Sales were down in the first quarter of the year, leading to a 39 percent drop in profits.

As a result, the company’s stock price plunged more than 16 percent Thursday, to its lowest level since 2011.

Macy’s steady decline, analysts say, is the result of a number of factors, including the demise of shopping malls, as well as competition from online stores and off-price retailers such as TJ Maxx. Another issue: The company tends to sell run-of-the-mill products that shoppers can find more easily — and often more cheaply — elsewhere.

“Here’s the unfortunate thing about Macy’s: There’s nothing that sets it apart,” said Milton Pedraza, chief executive of the Luxury Institute, a New York-based research firm. “It’s crowded, it’s messy, the service is poor. The business model of Macy’s is no longer justifiable in a world dominated by Amazon and Walmart.”

The company’s woes come as other longtime retailers like Sears and JCPenney face similar headwinds. Americans are increasingly skipping the shopping mall in favor of buying online, which means department stores are left with hordes of inventory and pricey real estate. Macy’s last year announced plans to close 100 of its stores, and analysts said more closures may be in the works if the company’s fortunes don’t change soon.

“There are so many structural issues here that it’s going to take years for all of these challenges to play out,” said Sucharita Mulpuru, a retail analyst for Forrester Research. “This is a company that is fundamentally tied to shopping malls, and I don’t know that there’s any hope of rejuvenation there.”

After a dismal holiday season, 2017 hasn’t turned out to be much better. Same-store sales — a closely-watched industry metric — fell 4.6 percent, marking the ninth consecutive quarter of declines. Profit, meanwhile, plunged nearly 40 percent to $70 million from $115 million a year earlier.

“These are unusual and challenging times for retail, especially for mall-based department stores,” Jeff Gennette, who took over as Macy’s chief executive in March, said in a Thursday morning call with Wall Street investors. “We don’t have our head in the sand as to the significant challenges we face in getting the business growing again. We certainly don’t have all the answers yet, but we are working on them with a sense of urgency.”

To that end, he said, the company is revamping its fine jewelry and women’s shoe departments, adding furniture and mattresses to 60 locations, and forging exclusive partnerships with brands like DKNY. It is also planning to expand its buy-online, pick-up-in-store options in an effort to win over shoppers who have grown accustomed to shopping from their homes.

“The consumer has fundamentally changed,” Oliver Chen, a retail analyst for Cowen Group, told CNBC earlier this year. “Customers really expect speed, and the way in which customers shop now, they want their goods immediately.”

The retailer is facing considerable competition online. Amazon.com, which has a private-label clothing brand and is experimenting with custom-fit items, is widely expected to usurp Macy’s as the country’s largest clothing retailer this year. (Jeffrey P. Bezos, Amazon’s founder and chief executive, owns The Washington Post.)

Macy’s, founded nearly 160 years ago in New York, has been a household name for decades. Through the years, it has bought up a number of regional chains, including Hecht’s, Foley’s, Rich’s and Bullock’s, and consolidated them into the country’s largest department store brand. Today, Macy’s parent company also owns the department store Bloomingdale’s and beauty chain Bluemercury.

In recent months, it has also begun experimenting with its own off-price store, Backstage, which it has been quietly opening inside existing locations. The goal, executives said, is to target shoppers who might otherwise go to Nordstrom Rack or TJ Maxx. Two-thirds of Macy’s most loyal customers and 70 percent of millennials shop at off-price retailers each month, Gennette said.

“Macy’s needed to solve for that,” Gennette said, adding that the company is also lowering prices in certain departments, such as housewares. “We’re obviously dropping our prices to be competitive. We don’t want to have like-products that are more expensive online or in our stores than our competitors. That is why we have really pushed to make sure we’re giving customers value.”

But Pedraza, of the Luxury Institute, says that may not be a viable strategy.

“All they’re going to do is dig a deeper hole,” he said. “They may get a little bit of a dead cat bounce that way, but other than that it’s not a long-term strategy.”

In recent years, analysts say, retailers have been engaged in a race to the bottom, offering never-ending promotions and sweeping discounts as a quick fix for long-term problems, and Macy’s has been no exception. But the plan has also backfired: Customers have become trained to expect large-scale discounts on everything they buy, which means retailers are increasingly settling for slimmer profit margins.

“If you missed last week’s sales numbers, you can literally make that up with a promotion this week,” Mulpuru said. “That’s the only short-term lever retailers have. Anything else — new real estate, new inventory, new vendors — is going to take six months to three years, which is why retail has degenerated into a promotional business.”

As Macy’s executives scramble to shore up sales, they are also finding creative ways to bring in extra income. The company has sold off the top floors of certain properties, including stores in Brooklyn and Seattle, to be converted into office space. Its flagship in New York’s Herald Square, which takes up an entire city block, is also being floated by analyst as a potential source of cash.

“The value of that real estate alone is billions of dollars,” Mulpuru said. “This is a company that’s in trouble, but they’ve still got a few aces in their back pocket. It takes a long time to kill a retailer, and I don’t think Macy’s is there, yet.”

Source: https://www.washingtonpost.com/news/business/wp/2017/05/11/the-unfortunate-thing-about-macys-just-about-everything/?utm_term=.fec3244ec83b

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