Archive for the 'Luxury retail' Category

Does every airport need to be a mall?

RetailWire panelists commented recently on the trend toward ever more elaborate shopping facilities at airports — especially those with robust duty-free sales. I’m a skeptic about whether this is really a priority, vs. ensuring that airports are safe and efficient transfer points:

I’d be happy if airports like LaGuardia focus on upgrading their cramped facilities, restrooms, overcrowded TSA checkpoints and even places to eat (hello, Auntie Anne’s) before trying to recreate themselves in the image of Heathrow or the Mall of America. Many of our airports have enough infrastructure challenges on their plates without worrying about whether they are world-class shopping venues.

I flew through Heathrow a few years ago, and the process of transferring from an arriving flight from Madrid to a U.S.-bound connecting flight took far longer than any similar experience in this country. Between the bus ride from the tarmac to the terminal and then going through two separate (and lengthy) security checkpoints (after doing the same thing in Madrid), most of our two-hour layover was wasted with very little time left to shop in the fancy new BA terminal. Maybe things have improved, but you get my point: First things first.

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Can Nordstrom find growth outside of its Rack expansion?

Nordstrom seemed immune from the problems plaguing the rest of the department store sector, but this is no longer the case. I posted some thoughts on RetailWire last month after the company’s earnings announcement:

If I were a JWN shareholder, I’d be happy that the company is growing the Rack business. It’s good to have a growth vehicle in light of the well-documented issues with both the traditional department store business and the near-luxury brands like Coach, Michael Kors and Ralph Lauren. And Nordstrom has always been very cautious about opening its full-line stores.

This being said, the company’s brand reputation is really built on the success of its full-line stores. I shopped my local Nordstrom on Saturday (newly opened in Milwaukee last fall) and I wonder whether a little more attention to the store’s value positioning — without hopping on Macy’s promotional carousel — might help its traffic levels and reduce its clearance levels more effectively.

And some further thoughts about how Nordstrom can grow its core business, based on its announcement about a partnership with J. Crew:

For Nordstrom, this continues a trend that already includes partnerships with Madewell and Topshop. A presence inside Nordstrom has helped these two labels create brand awareness (and benefit from the halo effect) as they build out a relatively small footprint of their own stores.

The association with J. Crew is different: This brand has been in the penalty box with its loyal fans for at least a couple of years, and it’s debatable whether its merchandise content problems have been fully addressed yet. (Plus, there is no scarcity of J. Crew locations across the country.) I see more upside for J. Crew than for Nordstrom (especially if JWN has to carve out space that could be devoted to higher-performing goods), but it puts some burden on JWN to make sure that its J. Crew shops put forward the “best of the brand.”

Can near-luxury brands save themselves?

The question posed is especially relevant in today’s environment of sinking department store sales. Aspirational brands like Ralph Lauren and key handbag vendors are really struggling, and they are taking the approach of “less is more” when it comes to distribution. Here’s my recent comment from RetailWire:

Brands like Coach and Kors couldn’t grow fast enough, partly by overdistribution to department stores and partly by overexpansion of their own stores. Investors were happy while the category was hot, but the brands have been compromised at the same time that the demand for designer handbags is cooling off.

A strategy of deliberate scarcity makes sense in the short run (despite the volume hit), in order to rein in discounting and drive better sell-throughs. But the underlying issue remains: How to reignite consumers’ interest in near-luxury hanbags when they aren’t all that interested in visiting department stores at all.

Finally, I’m not sure that near-luxury brands like Coach and Michael Kors are ready and able to abandon the traditional department store as a key volume driver. Some of their recent problems fall on their own shoulders — the overexpansion of their own stores (hundreds in the case of Kors), the willingness to distribute their goods to off-pricers and their own outlet stores, and the failure to cherry-pick the best anchor locations. It’s not an exact parallel, but Apple has always been selective about being in “the right mall,” not every mall — and it’s a lesson that aspirational brands should learn as they continue to do business with department stores.

Apple unveils a new store design

RetailWire panelists offered our opinions about a new Apple Store prototype recently opened in Memphis. Here’s my take, among a lot of dissenting opinions:

It’s hard to mistake the Apple Store for anything else, even in its new iteration. (And yes, I’m seeing the same logo on the right side of the storefront.) Apple can certainly afford to experiment with its design concept and functionality, as it faces more and more imitators and as its own assortment of products and cloud-based services continues to grow. Keep in mind that when the original Apple Store rollout began, there were no IPhones, no iPads and no iCloud.

Ralph Lauren hires outside the luxury box

The management transition has begun at the company Ralph Lauren founded years ago. He’s hired the head of the Old Navy division, whose previous background was at H&M. Here’s my comment, from RetailWire:

Time will tell whether Mr. Larsson’s evident business acumen extends to the importance of brand image at Ralph Lauren. More than almost any company crossing multiple retail channels, Lauren has maintained a focus on near-luxury (and higher) lifestyle merchandising. Most people know what the Lauren brand stands for, which is a credit to Mr. Lauren’s vision and consistency over the years.

You have to assume that Ralph Lauren was sold on Mr. Larsson’s own vision for the company, not simply his ability to manage fast fashion or global sourcing. But clearly some kind of management succession at a big public company like RL was bound to happen, and probably overdue.

An omnichannel experiment…in reverse

Blue Nile has been a successful e-merchant of fine jewelry for many years, and has decided to open a brick-and-mortar “showroom” of sorts, in a mall on Long Island. It’s an interesting reversal of the usual pattern of physical stores engaging through e-commerce, and is a new twist on the idea of omnichannel retailing. Here’s a brief comment from a recent RetailWire discussion:

Omnichannel isn’t just about brick-and-mortar retailers developing e-commerce and then providing an integrated shopping experience. It’s also about web-based retailers needing to establish a physical footprint, and the Blue Nile experiment is a good illustration. In a category like fine jewelry, there will always be a substantial number of customers who need to see the merchandise before buying (especially higher-end diamonds), so even a well-conceived website like Blue Nile will eventually need to reach those shoppers in other ways.

Are Millennials averse to luxury goods?

Karyn Hoguet, the CFO of Macy’s, recently commented that her store’s trouble selling luxury goods to Gen Y customers is made tougher by the amount of money being spent on electronics instead. I argue (on RetailWire) that some of the problem is Macy’s-specific:

The “Millennial problem” is not limited to luxury goods, nor to Macy’s (which sells mostly upper moderate product anyway). It’s been reported that Gen Y and younger consumers’s discretionary purchases have been more focused on “gadgetry” than apparel. It’s not just the smartphone…it’s the data plan, the apps, the subscription to Netflix, the cost of broadband, and so forth. (Not to mention many customers’ growing interest in “experiential spending.”) So Ms. Hoguet makes a valid point without looking closely enough in the mirror.

Part of Macy’s problem drawing Millennials to its merchandise mix is that it just doesn’t try very hard, compared to its “fast fashion” competitors. Adding overlapping private brands geared to the older customer (JM Collection, Style & Co., Charter Club and so forth) exacerbates the problem. And the promotional monotony of Macy’s undermines whatever “luxury” position it is trying to grow.


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