Archive for the 'Apparel retailing' Category

Is Amazon Prime Wardrobe another disruptive move?

Amazon is introducing a new feature for Prime members: Risk-free trial of several apparel items with the ability to return what you don’t like. (And price incentives to keep more of what you chose.) RetailWire panelists mostly see this as another Amazon “game changer,” but I view it a bit differently as their response to the lack of physical stores:

If Amazon aspires to be the top seller of apparel in the U.S. (and it’s already getting close), it needs to add a “try before you buy” feature to keep driving more Prime memberships. It’s responding to the challenge of concepts like Trunk Club — but it’s also acknowledging its lack of a physical footprint. Think about it — stores like Kohl’s and Macy’s already have huge numbers of brick-and-mortar locations where you can return unwanted clothing that you bought online. This may be a rare case where Amazon responds to a competitive weakness in its formula.

Why did Walmart acquire Bonobos?

In case you missed it (among the front-page coverage of Amazon and Whole Foods), Walmart acquired men’s online retailer Bonobos last week. RetailWire panelists weighed in on the pluses and minuses of the move, and here’s my take:

The news about Walmart and Bonobos was overshadowed by the Amazon headline on Friday, and understandably so because of the sheer scope and boldness of the Whole Foods acquisition. But Walmart’s news deserves some attention on its own.

This is another case where Walmart is buying a brand that offers more digital expertise and product development skill than the company appears able to build on its own. But there is a disconnect between Walmart’s brand image and the customers who are shopping Bonobos today. Chances are good that the majority of Whole Foods customers are already Amazon Prime members too. How much overlap exists between Bonobos and Walmart, and will the association with Walmart chase away Bonobos’s most loyal consumers?

Changing of the guard at J. Crew

The decision by longtime J. Crew CEO Mickey Drexler to step aside was widely reported yesterday. (I recently discussed the departure of the company’s creative director.) Drexler is being replaced by James Brett, current president of the West Elm lifestyle brand. RetailWire panelists discussed what to anticipate at J. Crew, and I wrote the following:

First, keep in mind that Mickey Drexler is not exactly riding into the sunset: He retains his chairman title and a significant ownership in the company. So it remains to be seen whether Mr. Brett has the freedom to reshape the company as much as it needs. It’s not always easy for somebody with Mr. Drexler’s track record to walk away.

As to the reshaping, I expect to see a few things happen: First, a faster expansion of the Madewell business. Second, a course correction for the J. Crew brand itself, perhaps back to its legacy positioning as a more affordable (but still aspirational) alternative to Ralph Lauren. (Right now it’s nowhere close to a clear point of view.) And, third, expanding the J. Crew brand (once it is fixed) into new categories, just as Mr. Brett has done by treating West Elm as a lifestyle business.

Should Amazon buy Macy’s?

Here are some of my own thoughts from a provocative discussion on RetailWire:

Amazon shouldn’t buy Macy’s if its only motivation is to use the stores as pickup and return centers. And I’m not sure that Amazon “needs” Macy’s to give its own apparel business more credibility — some reports suggest that Amazon will already become the #1 seller of apparel in the U.S. this year.

It should only pursue Macy’s if it is prepared to reinvent the department store model from top to bottom — something that Macy’s itself seems unwilling or unable to do. Amazon is already dipping its toe into other kinds of brick-and-mortar retail, but this would be a big jump.

Are off-pricers bulletproof?

Off-pricers represent the hottest segment of brick-and-mortar retail right now, even more so than “fast fashion” retailers. RetailWire panelists discussed whether they are invulnerable to challenge, especially in a soft demand cycle for apparel. Here’s my point of view:

The “wheel of retailing” is a longstanding premise that new formats overtake old ones….only to be overtaken themselves when a newer innovation comes along. Off-pricers are playing a hot hand right now: Customers like the values and the “treasure hunt,” However, the category runs the risk of oversaturation even though the segment is gaining apparel share at the expense of more traditional models, and it faces the ongoing competitive threat of e-commerce.

Given all of this, hats off to TJX for continuing to develop new formats (especially in the home store) as one way to inoculate itself against these challenges.

Is there a market for “ultra-fast” fashion?

RetailWire panelists weighed in on the growing trend toward “ultra-fast” fashion. If the short lead times of fast fashion retailers (think Zara) aren’t short enough, how about two to four weeks from concept to delivery? And what sacrifices need to happen as a result? Here’s my comment:

Retailers have been too slow reacting to the fast-fashion capability of companies like Zara and Forever 21. These two companies (and a few others) have brought great supply chain management and data science to the art of getting relevant product to their customers quickly. But the key word here is “relevant”: Does a two-week lead time offer enough chance to test and reorder in depth?

Cost is another factor: Ultra-fast retailers will probably have to pay a premium for manufacturing labor close to their stores (especially in the U.S.), even if there is some offsetting saving on transportation. Fast turnaround makes sense if your store needs Stanley Cup championship jerseys tomorrow, but for the majority of goods a little extra time is worth the investment.

Can JCP leverage its Sephora success?

It’s probably note the first time (on RetailWire or elsewhere) that I’ve talked about Sephora at JCP. It’s clearly a win and continues to be rolled out or expanded in more and more locations. So how does Penney use it to attract new shoppers and convert them to JCP loyalists? Here are some recent thoughts:

When Mike Ullman (formerly of LVMH) partnered with Sephora (owned by LVMH), he realized that JCP needed a critical mass of cosmetics even though the legacy department store brands like Clinique, Estee Lauder and Lancome wouldn’t sell Penney. (Lancome is now part of the Sephora assortment.) At the same time, Sephora was growing as a mall-based alternative to the anchor stores’ beauty departments with a unique approach to open-sell layout and fresh assortments. It’s turned out to be a win for both companies, especially as those traditional department store anchors lose share and traffic.

Certainly omnichannel is another opportunity for JCPenney, as Amazon continues its inroads into the beauty business. But perhaps the biggest unmet opportunity for JCP is to convince the (younger) Sephora customer in the store to buy more apparel, shoes and accessories on her visits to the beauty department.

And to add some recent comments posted after a store visit, there is visible sign of improvement in JCP’s assortments:

I’ve been critical for several years of JCP’s women’s assortments — too many brands, too many styles, too much overlap between brands. But credit where due: I shopped a Penney store in the past couple of weeks on behalf of a consulting client, and I saw a marked improvement in key item focus and brand clarity. Shoes were merchandised in a more effective way, and fashion jewelry looked improved too (although not yet handbags).

Penney promoted its men’s GMM last year to the head merchant position, and if what I saw is any indication, he’s got things heading in the right direction. It’s a small sample size but perhaps a leading indicator. JCP isn’t going to solve its sales problems until it figures out how to drive its apparel business, no matter how well it’s doing with Sephora or even major appliances.