WSJ: Retailers Stalk the Elusive Millennial Shopper

WSJ: Retailers Stalk the Elusive Millennial Shopper

WALL STREET JOURNAL | RAY SMITH

What kind of clothing sale has DJs and performance artists as the stars? Or pairs designer fashions with hoodies and sneakers? Or offers piercings along with $4,850 Givenchy orange leather pants? Call it the millennial mashup.

Old-line department stores and fashion brands are rejiggering sales floors and websites to court millennials in their twenties and thirties and the even younger members of Generation Z. To woo this elusive demographic, department stores like Barneys New York and Nordstrom are concocting entertainment-filled Instagrammable shopping experiences with exclusive “drops” of limited-quantity products. They are hosting brief pop-up sales, merchandising high-end brands alongside casual ones and loading up on items that can be personalized and customized. Among their exemplars are Dover Street Market, Ssense, Maxfield and other specialty stores that have figured out what makes millennials tick—and shop.

Here’s how veteran retailers are taking a page from their cooler counterparts to captivate the next generation of shoppers:

Millennials defy uniforms but one fixture of their wardrobes is streetwear—hoodies, tees, sneakers and baseball caps often emblazoned with bold graphics, colors or logos. “Basically, streetwear is fashion today,” said Robert Burke, of luxury-goods consultancy Robert Burke Associates. Prices range widely, such as $155 for Nike Air Force high-top sneakers and $575 for a logo hoodie by the label Off-White.

But streetwear alone won’t draw younger consumers. Stores have to mix up the selection, offering high-fashion options, too. Traditional retailers’ practice of compartmentalizing brands and categories “is not appealing today,” to millennials and Generation Z, Mr. Burke said.

Dover Street Market, the avant-garde store created by the heads of label Comme des Garçons, was a pioneer in displaying streetwear labels alongside designer offerings. In its New York shop, which opened in 2013, streetwear brand Supreme was next to Prada. The approach reflects how younger consumers dress and made high-end designer fashion seem less intimidating to them.

Nordstrom took note. The Nordstrom Men’s store that opened in New York in April carries more streetwear and edgier fashion brands, said Paige Thomas, Nordstrom’s executive vice president and general merchandise manager for men’s apparel. To draw younger shoppers, she said, the store mixes brands at different prices and styles more than usual, “from Vans to Valentino and Nike to Balenciaga.”

To sustain its mix-it-up appeal, Dover Street Market departed from another retail tradition. “When we open a new store,” said general manager James Gilchrist, “we do our very best not to tell the brands who they’re next to so that they design the space they’re in without the knowledge of what’s going next to them.” Dover Street Market, which has stores in Tokyo, London, Singapore and Beijing, plans to open a Los Angeles outpost this year.

Specialty retailers are attracting young people by mounting temporary “pop-up” spaces and in-store events involving creative types such as artists, indie musicians and tattoo designers.

In recent years, Maxfield has run pop-ups that are both an art installation and a boutique for edgy or streetwear-inspired brands, including Off-White, READYMADE, Maison Margiela and Vetements. The pop-ups at the Los Angeles store often feature limited-edition exclusive products—in retail parlance, a “drop.” The events are popular with millennials, said Sarah Stewart, the buying director for Maxfield. “There’s a line outside waiting to get inside them,” she said. As word spread, the events “brought in a client that might not have known about us.”

“Millennials are the ‘experience generation,’ so pop-up and store events work well to draw their interest,” said Melanie Shreffler, senior director, insights, at research firm Cassandra. “They judge a good experience on its share-ability. For example, will they get some great photos for their Instagram to show off that they were a part of the cultural moment?

Last fall, Barneys New York joined with fashion blog Highsnobiety to host a weekend-long event aimed at millennials and Generation Z shoppers. Called “thedrop@barneys,” it featured exclusive, limited-edition merchandise and appearances by designers of streetwear and other brands such as Fear of God and Palm Angels, which are popular with millennials and Gen Z. Shoppers could get custom sneakers, tattoos and piercings. There were exclusive launches by Gucci and Alexander Wang, as well as by fashion-insider labels Ambush and Unravel Project. In its first day, the “drop” led to a 25% sales increase, with 20% of the customers new to Barneys. This weekend, the retailer will host a “drop” at its Beverly Hills store.

Jeff Carvalho, managing director of Highsnobiety, said that to attract younger shoppers, traditional department stores “are all pulling cues from those ‘indicator’ retailers”—meaning smaller, hip counterparts.

“Clienteling has to be rethought” by old department stores, Mr. Carvalho said. Such stores “have to cater to them differently if they want that youthful mindset to become clientele.”

Daniella Vitale, Barneys’ chief executive and president, said the concept came from a “company-wide effort for innovation” and acknowledged other influences.

While department stores traditionally hosted events for one individual, smaller boutiques often bring together several designers and artists. Dover Street Market periodically hosts a sprawling Open House that includes book signings, art installations, live music and sales of exclusive merchandise. The unique blend of attractions “really resonates with younger people,” Mr. Gilchrist said.

Ssense, a 15-year-old online retailer, scarcely promotes clothes on its site the way most mainstream retailers do. Instead, Ssense (pronounced essence) offers profiles of top musicians, artists, and recently, a chef. The site’s editor-in-chief founded the Berlin-based culture magazine 032c.

“Millennials don’t see distinctions between fashion, music, content and commerce,” said Krishna Nikhil, Ssense’s chief merchandising officer. The Montreal-based retailer, which opened its first bricks-and-mortar outpost there early in May, sells streetwear-leaning brands like A-COLD-WALL* alongside luxury labels like Givenchy. When a customer clicks on an item, it usually appears with merchandise from other brands, a departure from the retail playbook of showing a head-to-toe ensemble from one label. “That’s something young consumers in particular have connected with very strongly,” Mr. Nikhil said. About 80% of Ssense’s customers are between 18 and 34 years old, he said.

Bloomingdale’s has refreshed its web site to emphasize storytelling, adding curated content on trends and buzzy designer labels rather than merely filling the home page with merchandise. The goal is to create more engagement with consumers, especially younger ones.

“We have incorporated more editorial content created for the millennial customer,” said Frank Berman, Bloomingdale’s executive vice president and chief marketing officer. “In addition, we have been actively acquiring a younger consumer through advanced targeting on digital social platforms such as Instagram and curated influencer programs.”

“A key to understanding young retail consumers is to realize that many of them, especially Gen Zs, have been shopping online their whole lives,” said Ms. Shreffler, of Cassandra, the research firm. “While it may still seem revolutionary and simple to older consumers, young people are looking for this mature market to evolve and show them something new.”

Matthew Godin, a 22-year-old personal stylist in Toronto said Ssense is “the first place I check for anything.” He occasionally shops at Barneys but finds other department stores like Nordstrom and Saks staid. “Ssense has a really great mix of high-end, contemporary and emerging designers,” Mr. Godin said. “They also do a really great job at styling looks together in a really non-traditional way.”

Gian Rodriguez, a 17-year-old high-school student in Dublin, Ohio, said that aside from Supreme and Nike, he doesn’t “shop that much from other sites except Ssense.” He loves the range of brands and said the store appeals to members of his generation who are “starting to get into fashion and …need a reliable site” that understands what they want.

 

NYT: The Return of Marchesa

NYT: The Return of Marchesa

NEW YORK TIMES | VANESSA FREIDMAN

Thus begins the rehabilitation of Marchesa, the fairly or unfairly damned-by-association red carpet brand that was a casualty of the Harvey Weinstein horror story: with the Met Gala, a Vogue story and the support of the American fashion establishment.

Marchesa, as you might remember, was the latterly tarred and always feathered line codesigned and co-founded by Georgina Chapman, the now-estranged wife of Mr. Weinstein, which at one point was a red carpet staple. Seemingly beloved of women from Renée Zellweger to Anne Hathaway, it became another symbol of Mr. Weinstein’s abuse of power when stars suggested they were strong-armed into it: an example of how the producer manipulated the women in his orbit to do what he wanted, whether come to his hotel rooms or wear his wife’s dresses.

Ms. Chapman announced she was leaving Mr. Weinstein, and went to ground, but it didn’t seem to matter; celebrities appeared to abandon the brand, which disappeared from premieres everywhere as if it had never existed. A collaboration with the Helzberg Diamonds was put on hold. It was reported that employees were fleeing. Faster than you could say “bugle bead,” stories appeared last October asking, as the Daily Beast put it, “Did Harvey Weinstein Kill his Wife’s Fashion Label?” A February New York Fashion Week show never materialized.

And then this week happened.

On Monday Scarlett Johansson wore an off-the-shoulder blood-red dégradé Marchesa gown strewn with flowers on the Met Gala red carpet, becoming the first star to appear in the brand since the allegations against Mr. Weinstein broke. “I wore Marchesa because their clothes make women feel confident and beautiful, and it is my pleasure to support a brand created by two incredibly talented and important female designers,” the actress said in a statement to Entertainment Tonight.

Then, on Wednesday evening, Anna Wintour, the editor of Vogue and artistic director of Condé Nast, told Stephen Colbert on his TV show: “I think it was a great gesture of support on Scarlett’s part to wear a dress like that — a beautiful dress like that — on such a public occasion.”

The next morning Vogue posted the editor’s letter from its June issue. The letter was entirely devoted to a feature on Ms. Chapman that ran inside the magazine.

Under a photo by Annie Leibovitz of Ms. Chapman standing on a pebble-strewn shore as her two children with Mr. Weinstein played, and with the title “Starting Over,” Ms. Wintour wrote: “I am firmly convinced that Georgina had no idea about her husband’s behavior; blaming her for any of it, as too many have in our gladiatorial digital age, is wrong. I believe that one should not hold a person responsible for the actions of his or her partner.”

Both Ms. Wintour’s and Ms. Johansson’s highly visible statements followed Ms. Chapman’s appearance on March 18 at a board meeting of the Council of Fashion Designers of America, the governing body of New York fashion — the first time she had attended such a board meeting since the exposure of her husband. According to Steven Kolb, the organization’s chief executive, she was greeted by applause from the gathered designers.

“The feeling was of universal support,” said the designer Prabal Gurung, who was there and clapping.

It is increasingly clear a carefully orchestrated public rehabilitation is underway. The fashion world is ready. But is everyone else?

At a time when Charlie Rose and other men brought down by the roiling wave of revolt against sexual harassment have reportedly begun to plan their returns to the public eye — largely to incredulous reception — Ms. Chapman, once seen as an enabler, now framed as another victim, is another kind of test case.

“Well, everyone loves a comeback, and now the dust has settled,” said Robert Burke, founder of the luxury consultancy that bears his name and former fashion director of Bergdorf Goodman (which sold, and continues to sell, Marchesa).

Indeed, fashion has a history of welcoming back the exiled after a period of atonement; see John Galliano, the former artistic director of Christian Dior, who was fired from that house after a drug-fueled anti-Semitic rant in a Paris bar, and is now the creative director of Maison Margiela.

Not coincidentally, his return also was bolstered early on by Ms. Wintour, who wore a Margiela dress of his design in 2014 when she received a statuette for Outstanding Achievement at the British Fashion Awards. She believes in redemption of talent.

Still, the editor has also been embroiled in the sexual harassment scandals, thanks not only to her former friendship with Mr. Weinstein, but her professional connection to the photographers Mario Testino, Bruce Weber and Patrick Demarchelier, all of whom have been accused of sexual misconduct and dropped by Condé Nast. It could be that she has her own interest in helping those found guilty by association.

Yet, Mr. Burke said, “It was smart of Georgina to start with the Met instead of the Oscars, as the Met is really an event for the fashion world; it’s a kind of safe space for her.”

In addition, he pointed out, “the timing is good. This is a moment of solidarity with women, and Georgina has always positioned herself as part of that axis.” Hers was a rare female-run company; and she and her co-founder, Keren Craig, were known for their fantasy dresses that seemed to speak to the fairy-tale imaginings of women the world over.

According to someone familiar with the situation but not authorized to speak about the matter, it was actually Ms. Johansson, who was lauded for her speech at the 2018 Woman’s March in Los Angeles but also excoriated for earlier seeming to defend Woody Allen, who reached out to Ms. Chapman, as opposed to the brand approaching her, to demonstrate female fellowship.

Pointedly, much of the social media reaction to Ms. Johansson’s appearance was positive, in contrast to the mood last October, which blamed Ms. Chapman for being complicit (or willfully ignorant) in exchange for the leverage that her husband’s job and power could provide for the brand.

Although the Weinstein Company has been facing bankruptcy and struggling to find a buyer, Marchesa and Marchesa Notte, the lower-priced line, are still sold in stores, including Neiman Marcus, Saks Fifth Avenue, Lord & Taylor, Net-a-Porter and Moda Operandi, among others.

“Our customers never abandoned the brand,” Ken Downing, fashion director of Neiman Marcus, said in an email sent from a store event. “The Marchesa and Notte by Marchesa businesses continues to be very strong.”

Besides, he added, “Many, if not most, of our customers haven’t connected the dots between the designer and her marriage.”

Now the question becomes what happens next. Will Marchesa be on the Cannes red carpet? Will Ms. Chapman appear at the CFDA awards on June 4?

“I hope so,” Mr. Gurung said. “They do beautiful and unique work, and it was an important part of New York fashion. I definitely missed it.”

And Mr. Kolb said, “Marchesa deserves a place on the red carpet.

“Scarlett wearing the dress at the Met hopefully begins to move the brand away from an unfair exile,” he added. “It should have a voice and place in our industry.”

All of which suggest this may be a strategic paving of the way for a Marchesa return to New York Fashion Week in September. In which case the brand’s time in the wilderness may, indeed, be up.

BoF: Ssense’s Billion-Dollar Ambitions: More Than Hype

BoF: Ssense’s Billion-Dollar Ambitions: More Than Hype

BUSINESS OF FASHION | CHRISTOPHER MORENCY & BRIAN BASKIN

MONTRÉAL, Canada — For a would-be luxury retail mecca, Ssense’s new flagship doesn’t stock many clothes.

Merchandise is confined to a few suspended metal racks — and for the Calvin Kleinpompoms, a display case — spread across five David Chipperfield-designed floors. The space is designed for maximum flexibility; on Thursday, the building was given over to a launch party that featured the performance artist Arca diving into a pink-hued pool. A few hours later, racks and mannequins were in place for the store’s May 3 opening.

But selling $2,000 Gucci brogues to Montréal tourists isn’t really the point. Five years in the making, Ssense’s new store, here in its hometown, is the company’s coming out party — a sign the company, which started over 15 years ago as a student project and today sells high-end streetwear and avant-garde emerging labels, is positioning itself for a run at the top echelon of luxury retailers.

Chief executive Rami Atallah said Ssense is "on track" to hit 1 billion Canadian dollars (about $800 million) in sales in 2020, and plans to open distribution centers in Europe and Asia in the next 12 to 18 months. Ssense declined to disclose current revenue figures.

It’s a long way from the single warehouse and small boutique near its Montréal headquarters that the company operates today. But hitting ten figures won’t be easy. Dozens of companies are competing for luxury goods spending online, a fast-growing market that has tripled in size over the last five years, to about $23.5 billion in 2017, according to global consultancy Bain & Company.

Ssense certainly has some catching up to do. MatchesFashion reported about $280 million in revenue for the year ending in January 2017, and operates three stores in London to complement its online sales. Farfetch moved $800 million worth of merchandise in 2016, and may ride its “Store of the Future” retail technology platform to a $5 billion initial public offering later this year. Richemont’s Yoox Net-a-Porter hit $2.5 billion in sales last year, and LVMH launched its own multi-brand e-tailer in June 2017, though it remains a small player.

But Ssense is also plotting its expansion at a time when global demand for its streetwear-meets-luxury aesthetic is surging. Designers who Ssense championed at the start of their careers, like Virgil Abloh, are hotter than ever.

And unlike many of its competitors, Atallah says Ssense has been profitable from day one and hasn’t raised outside investment. He said that enables the company to play the long game, taking risks on unknown designers, investing in editorial content and projects like the Montréal store that may not significantly boost sales in the short term.

Atallah said the plan is to use Ssense's profits to open the new warehouses in Europe and Asia. He wouldn't rule out going public in the future. The company is also mounting a campaign to boost sales in China, one of the world’s largest luxury markets, with Mandarin and Cantonese versions of its website set to launch in July.

“I believe in sustainable growth,” says Atallah. “You hear a lot about companies that get a lot of funding and two years later you don’t know what’s happening with them. We’re only investing what we’re making, which makes our business a lot more robust.”

Born in Syria, Atallah emigrated to Canada with his family at the age of 15. He built Ssense in the early 2000s as part of his graduate thesis in computer engineering.

He enlisted the help of his two brothers Firas and Bassel — now chief financial officer and chief operating officer, respectively — to transform his part-time passion project into a fully-fledged business.

In 2004, Ssense opened a small boutique in Montréal. The following year it moved into its first headquarters and warehouse, with ssense.com launching in 2006. Early versions of the website featured mainstream brands like Juicy Couture and 7 For All Mankind. Sales quickly started to rise; the company has seen revenue grow an average 60 and 80 percent annually.

Ssense’s big break came in 2009 when it began carrying a more unconventional and tightly curated assortment. Over time, that came to mean uniting established luxury brands like Saint Laurent and Givenchy with streetwear-inspired emerging designers such as A-Cold-Wall and Fear of God.

Where some stores still separate high fashion and mass-market goods, a search for tops on Ssense pulls up options ranging from a $25 Adidas t-shirt to a $1,500 offering from Yohji Yamamoto.

Atallah and other executives said their approach is supported by reams of customer data, which informs decisions ranging from what products to stock to which editorial features to display on the homepage.

The combination of streetwear savvy and data analysis has cemented Ssense’s cultural cred with millennials, who today account for 76 percent of sales. The company has few equals in getting customers to open their wallets online: Ssense says its average order size is nearly 800 Canadian dollars ($700), more than Net-a-Porter’s average of nearly $400, though less than Moda Operandi’s $1,400 per order.

“I think that [Ssense] has been extremely smart and laser-focused in their approach to attracting this customer,” said Robert Burke, founder and chief executive of retail consultancy firm Robert Burke Associates. “They’re not trying to be everything for everyone.”

Ssense’s data-driven approach led it in April to purchase some of the assets of digital fashion community and search engine Polyvore from Verizon subsidiary Oath Inc.

The site’s users learned of the deal when they were redirected to Ssense’s homepage, where a popup displayed the message “Polyvore is now Ssense.” Users rebelled, with over 16,000 signing an online petition to bring the site back, and flooding third-party rating sites like Sitejabber with one-star reviews of Ssense.

Atallah wouldn’t say why Ssense bought Polyvore, other than as a means to extend his site’s audience. Arnie Gullov-Singh, Polyvore’s chief operating officer until 2017, said the company had developed an advertising platform that promoted products in search results, then measured the sales and new customers those ads generated. However, he added that Polyvore’s community was its most valuable asset, making it a “bizarre” choice to shut it down.

“I didn’t realise the intensity of the relationships being formed on the platform. In this case we could have handled it differently [but] business is about taking risks,” Atallah said.

Ssense is investing in global expansion just as some of the biggest fashion houses embrace streetwear’s aesthetics to lure younger customers. Just last year, Ssense added key luxury brands including Gucci, Balenciaga and Prada to its online selection. While that’s likely to bring in more mainstream shoppers, Ssense also risks alienating its original customer who comes to the platform to discover "in-the-know" brands instead of commercial labels.

“[In order for] Ssense to grow, they need to keep that niche focus as opposed to a commercial focus,” says Burke. “If it starts to feel commercial or if it loses its cool factor, that customer is the first to abandon it and move on.”

So far, the site’s youth-friendly presentation and knack for listing just the right items still makes it an appealing platform for the next generation of designers, said Matthew Williams, who has been selling his label Alyx on the platform since early 2017. And Ssense is still the go-to website for in-the-know fashion devotees looking to find relevant luxury streetwear.

“It’s that unique combination of their buy that gives them that edge which I would largely attribute their success to,” says David Fischer, founder and chief executive of youth culture title Highsnobiety. “At the same time, they present all that in a very minimal aesthetic that a lot of people really connect with because it comes across as very high quality and contemporary.”

In 2015, Ssense hired Joerg Koch, editor of German contemporary culture magazine 032c, as the website’s first editor-in-chief, and last year redesigned the homepage to hide the site’s products behind a drop-down menu, putting front and center Koch-commissioned articles, photo editorials and interviews with a wide range of cultural leaders from Peter Saville to Donatella Versace.

For Atallah, the investment in editorial was another strategic attempt to stand out from competitors. Koch said he initially presented ideas for product-focused content that would drive the most direct sales, a strategy widely used in online retail. But Atallah told him to focus on stories and interviews that would help create an emotional connection between Ssense and its customers, as well as bring in new audiences.

Today, 29 percent of revenue is generated via Ssense’s readers. Atallah has described content as a relatively untapped revenue stream, and the company plans on ramping up its editorial division in the near future.

Koch said he attempts to strike a balance between data-informed content he knows will go viral or drive sales, and features that might prove less popular but will help sustain Ssense’s credibility.

“When you talk about a story that doesn’t relate to product and you try to shoehorn the product in, it’s not authentic,” Atallah said. “There’s a lot more value in engaging emotional attachment than trying to force the product as [shown by] the data.”

Ssense Montréal is part of that effort, with plans to make the flagship a cultural hub that will stage events, launch products and ongoing cultural programming led by Koch. Already on the calendar are events staged by designers such as Abloh, Craig Green and Grace Wales Bonner, with plans for happenings such as book clubs, record launches and meditation sessions.

Chipperfield’s design is meant to make each event a unique experience. The building’s floors, walls and ceilings are pockmarked with hundreds of convertible sockets, making everything in the store — from displays to lighting — interchangeable.

The top floor is given over to a café and bookshop, while two floors are dedicated to personal shopping appointments. Customers can pick from 20,000 products offered online and have them whisked from Ssense’s main distribution centre within an hour.

While Ssense was developing its store, competitors have focused on speeding up delivery to customers’ homes. Ssense ships to 136 countries out of its Montréal warehouse, but next-day delivery is its fastest service, and free express shipping can require orders as high as $500 in far-flung countries. That compares with 90-minute fulfillment for Londoners shopping with MatchesFashion and some Gucci purchases on Farfetch in 10 cities. Net-a-Porter opened a warehouse in New Jersey in addition to its London distribution center, allowing it to offer same-day delivery in the New York City area.

Relying on express airfreight out of Montréal is likely costly and slower than similar service out of the U.S. or European Union, said Satish Jindel, president of shipping research firm SJ Consulting Group. Opening warehouses in other countries would cut those expenses by as much as half and reduce the number of orders that get held up at customs.

“Every time you cross a border, your shipping charges go up,” he said.

Atallah said the company is looking into ways Ssense can offer same-day delivery, which he said will become more feasible as Ssense opens additional warehouses.

He said the content produced in the Montréal store will help promote Ssense’s brand worldwide, as well as provide a testing ground for Ssense to observe customer behaviour and generate yet more data. The goal is to replicate the Montréal store model in other cities, with each location tailored to local tastes. Atallah declined to say which cities are under consideration.

“I believe we’re doing something no one else is doing or can do,” says Atallah. “We need to raise customers’ expectations and blow people’s minds.”

Disclosure: Christopher Morency and Brian Baskin travelled to Montréal as guests of Ssense.

DIGIDAY: How Net-a-Porter’s 70-person content team operates online and in print

DIGIDAY: How Net-a-Porter’s 70-person content team operates online and in print

DIGIDAY | HILARY MILNES

After running Porter and The Edit, Net-a-Porter’s print and digital titles, separately since 2013, global content director Lucy Yeomans combined the department into a unified front under the Porter name.

“Finally. We had been wanting to do it for a long time,” said Yeomans, who also serves as Porter’s editor-in-chief, a title she previously held at Harper’s Bazaar UK. “Porter is a brand name; it’s rooted in Net-a-Porter, whereas ‘The Edit’ as a title had gotten quite ubiquitous. Now, all of our content happens under one cross-channel platform. It’s more consistent.”

Content is a robust piece of both Net-a-Porter’s marketing and merchandising strategies: The company employs 70 people on its editorial team, and it publishes six issues of Porter’s print edition per year, which have featured celebrity cover stars like Viola Davis, Penelope Cruz and Bella Hadid. Previously, the print team at Porter and the digital content team at The Edit operated separately; while Yeomans oversaw both, there were silos separating each side of the content strategy. The Edit focused on trend-driven content, while Porter covered lifestyle, women’s issues, career and business content alongside its fashion editorial.

But as Net-a-Porter’s traffic shifted to more than 50 percent from mobile, Yeomans said, the need for a cohesive digital content platform became clear. Now, the combined content team works on Porter’s print magazine, as well as The Porter Edit, the digital content site on Net-a-Porter that is refreshed on a daily basis. Previously, The Edit was updated once a week. The editorial site is also translated for a global audience in French, German and Mandarin.

As the lines between editorial and advertising blur at other revenue-starved fashion publications, Net-a-Porter’s content-and-commerce play is working off of the advantage that it’s not dealing with dueling agendas. And in online luxury, as competition among multi-brand retailers stiffens, a strong editorial point of view is emerging as a key differentiator and loyalty driver, an important piece in driving down the steep cost of customer acquisition.

Since Porter sits in Net-a-Porter’s broader ecosystem, editorial’s positioning is the glue bonding marketing and merchandising together into a more consistent machine.

“Today, the customer expects content over straightforward advertising,” said Robert Burke, the CEO of retail and fashion consultancy Robert Burke Associates. “What these retailers can offer, that no one brand can, is industry context. That’s why content sounds fluffy, but is so critical.”

In Yeomans’ eyes, fashion magazines are always trying to sell us something, anyway, and we read them for inspiration. Net-a-Porter’s publications just create a shortcut to getting to the purchase.

“As long as we have our customer in mind throughout everything we do, there’s no reason content and commerce can’t work together,” said Yeomans. “We have a single, editorial point of view that we communicate with the merchandising team and that the marketing team promotes. It all makes sense in the end, if you’re taking the approach of, ‘What would our customer actually wear? What is she interested in?’ That’s our editorial integrity.”

To get on the same page, the editorial team will preview new collections at the same time the merchandising team does, and then they’ll discuss what brands, products and trends they feel strongly about and believe will perform well on the site. That conversation continues as both departments discover new brands: If an editor comes across a new accessories brand not carried by Net-a-Porter, it will tip off the merchandising team, and the merchandising team will flag undiscovered designers for potential coverage.

The editorial team also looks to customer data when deciding what customers want to hear about, from Net-a-Porter’s trend performance reports, personal stylists and conversations with “EIPs,” or extremely-important people, Net-a-Porter’s highest-spending customers that drive about 50 percent of the company’s sales.

“When I was the editor at Harper’s Bazaar, I would have no idea what our readers were responding to,” said Yeomans. “Now I can watch what’s flying off the shelves and I know exactly what she’s buying.”

With editorial now backing one digital-print platform, there’s more opportunity for involved initiatives that extend beyond the publications. Yeomans said an editorial committee is working on a “content plus commerce plus cause” event this summer that, in partnership with a philanthropic organization, will include a content series, an event and a limited-edition capsule collection sold through Net-a-Porter.

“We can now take a cross-platform approach that we really couldn’t before,” said Yeomans.

NEW YORK TIMES: With a Glance Backward, Brooks Brothers Looks to the Future

NEW YORK TIMES: With a Glance Backward, Brooks Brothers Looks to the Future

NEW YORK TIMES | TERI AGINS

In early 2002, just a few months after he officially took over as the new owner and chief executive officer of Brooks Brothers, Claudio Del Vecchio confronted the reality that the classic American retailer had largely lost its way.

Mr. Del Vecchio knew that many of the clothing fabrics were no longer of high quality, that too many of its shirts were ill fitting and that there were often disconcerting irregularities, like a rack of navy blazers that weren’t the exact same shade of navy.

And longtime customers had noticed.

Among Mr. Del Vecchio’s first acts as owner was to read a stack of angry letters from Brooks Brothers loyalists who griped about how the merchandise quality had fallen under the previous owner, the British retailer Marks & Spencer. They also balked at the limited selection of classic blazers and suits in the stores.

Those letters confirmed much of what Mr. Del Vecchio, a wealthy Italian entrepreneur, had seen for himself and stiffened his resolve to return to the company’s roots. “I saw the business opportunity to increase sales,” he said. “I knew how to fix this.”

A new executive team shifted into crisis mode. Led by an experienced chief merchant, Eraldo Poletto, with whom Mr. Del Vecchio had worked at Casual Corner (a women’s wear retail chain that Mr. Del Vecchio sold in 2005), they began to corral the company’s best suppliers to revamp all the store’s merchandise. Hundreds of garment styles required new specifications, better fabrics and apparel factories. It took about six months for the first shipments of the improved garments to arrive in stores — swapping out the oversize khakis and shapeless polo shirts.

Among the upgraded versions were luxurious three-ply Italian cashmere sweaters, replacing the two-ply Mexican cashmeres, and three styles of blazers and khakis, instead of just one. By April 2003, the store had completely overhauled its merchandise — and its loyal fans started coming back.

By 2004, Mr. Del Vecchio said, the privately held Brooks Brothers was modestly in the black, reversing a series of money-losing years that had begun in the late 1990s.

Brooks Brothers operates 244 wholly owned stores in the United States. This branch, in the Flatiron district of Manhattan, recently added a downstairs cafe, which has become a hangout for young tech workers.

The history of Brooks Brothers and the tenure of Mr. Del Vecchio — who has been wearing Brooks Brothers for more than half of his 61 years — will be celebrated on Wednesday evening, when the company will host a black-tie gala at Jazz at Lincoln Center for 1,000 of its best customers, friends and celebrity guests to mark its 200th anniversary. The all-American jazz program, produced by the Jazz at Lincoln Center Orchestra’s artistic director, Wynton Marsalis, befits the all-American clothier, which has been the group’s corporate sponsor and official clothier since the 1990s.

“Brooks Brothers is a special place,” Mr. Del Vecchio said during an interview in his upper-floor office at the 346 Madison Avenue store, where an antique grandfather clock owned by the store’s founder, Henry Sands Brooks, stands across from his mahogany desk. “This is a great institution with a heritage.”

Elegantly attired in a Brooks Brothers navy tweed sport coat, a white button-down shirt, a burgundy knit tie, slim gray slacks and brown oxfords, the chief executive spoke about what he saw as his mission.

“I am here to reinforce a culture,” he said. “I have to make sure that we are building a company that will last after me. I don’t want to be here another 20 years. Forget about another 200 years. It’s really about trying to build a culture that will last longer than the business. That will make it very hard for the next guy to screw it up.”

Bought at a Discount

Claudio Del Vecchio grew up in Milan, the oldest of six children of Leonardo Del Vecchio, the self-made billionaire founder of the Italian eyewear giant Luxottica Group.

Mr. Del Vecchio, like many other Italian men, first learned about Brooks Brothers through the stylish Fiat patriarch Gianni Agnelli, who started wearing Brooks Brothers original oxford shirts in the early 1960s. (He customized his shirts by leaving the collar points unbuttoned.) Generations of Italian men idolized the dashing Mr. Agnelli and copied what he wore.

When Luxottica sent Mr. Del Vecchio to New York to run its North American operations in 1982, the young executive headed straight to Madison Avenue to buy his wardrobe at Brooks Brothers. Later, in 1992, he got to know the store’s executives when he signed up Brooks Brothers to be Luxottica’s first eyewear licensee in the United States.

No-iron shirts, on display at the Brooks Brothers flagship store on Manhattan’s Madison Avenue, are the retailer’s best-selling item. CreditKarsten Moran for The New York Times

Over the next few years, however, he observed with increasing alarm how Brooks Brothers was abandoning its long tradition of being the standard-bearer of American business classics, one that came with its status as an outfitter of the nation’s presidents. It has clothed nearly all of them, including Donald J. Trump for his 2017 inauguration.

Under Marks & Spencer, which bought it in 1988, Brooks Brothers enthusiastically embraced the casual wear boom of the 1990s, as the store’s merchants were told to copy the business-casual look of Banana Republic. (Staff members jokingly called their store “Banana Brothers.”)

In the mid-1990s, the company’s executives even eliminated the signature Golden Fleece logo from its cotton knit polo shirts, which Mr. Del Vecchio, as an influential supplier, says he was able to talk them into restoring, he said.

By 2001, it was clear that the British-American marriage wasn’t working, and Marks & Spencer, suffering from a global recession and a downturn in its home business, put Brooks Brothers up for sale. With American retailers shaken right after Sept. 11, Mr. Del Vecchio was able to swoop in and grab Brooks Brothers for $225 million, less than a third of what M & S had paid 13 years earlier.

After those frantic first years, when management worked on both quality and public perception, retail sales began to steadily improve. By 2017, Brooks Brothers had 244 wholly owned stores in the United States, up from roughly 160 in 2001; in both cases, half were factory outlets. It also had wholesale accounts with stores like Bloomingdale’s, Lord & Taylor and Dillard’s.

Globally, Brooks Brothers had blossomed with sales in 50 other countries, accounting for 35 percent of its total revenue. That was up sharply from 2002, when it operated international stores only in Japan, still its biggest overseas market.

Online and in Airports

Today, Brooks Brothers is typical of most retailers: Online sales now represent its largest percentage of revenue and is now the company’s fastest-growing category. As more people have migrated to shop online, Brooks Brothers has provided more detailed product descriptions and has featured photos of people in lifestyle situations, as opposed to models in studios, which a company spokesman said had helped increase sales.

Brooks Brothers ties are made in Long Island City, their labels embroidered with an American flag and the words “Brooks Brothers. Proudly Made in New York United States of America.”Karsten Moran for The New York Times

Mr. Del Vecchio credits Brooks Brothers’ 27 airport shops, operated by a licensee, for helping win back businesspeople who had rejected Brooks Brothers in the 1990s. He calls the shops a “great showcase” for the brand. (In the 2009 movie “Up in the Air,” George Clooney’s traveling businessman character lingers over a display of striped ties at a Brooks Brothers airport shop.)

Brooks Brothers has also reached out to established fashion designers for exclusive, high-profile capsule collections — Thom Browne from 2007 to 2014; Zac Posen for women’s wear since 2016 — but its business remains rooted in its classic men’s wear, which accounts for 80 percent of its business.

Dress shirts, now in about 1,000 varieties, have long been the calling card of Brooks Brothers, accounting for 30 percent of its sales. In a nod to contemporary trends and to buffed, young guys, the shirts come in four fits: the Traditional, the Madison, the Regent and, the slimmest, the Milano. (Mr. Browne, famous for his tightfitting men’s suits, helped steer Brooks Brothers toward slimmer silhouettes, said Lou Amendola, the store’s chief merchandising officer. “Today over 50 percent of our business is now in slim shirts and slim suits,” he said.)

Charles Moore, founder and president of the Banc Funds, a private equity firm in Chicago, said he had stopped wearing Brooks Brothers dress shirts for several years because “the quality of the shirt fabric suffered and the collar wasn’t fitting.” He shifted to $200 custom shirts until a few years ago when he returned to Brooks Brothers, for its trim Regent silhouette, which was new to him.

“I like the fine Supima cotton and the way the shirts ride on your neck — the spread collar and the button-down collar,” he said. For around $80, “they’re great value for the money.”

‘We Are Authentic’

The privately held Brooks Brothers has posted profits for 13 of the last 17 years. For the past three years, annual sales have hovered around $1 billion, with profits at a break-even level, according to figures provided by Mr. Del Vecchio. (In the current challenging retail market — with Ralph Lauren Corp. and Abercrombie & Fitch closing down stores, and J. Crew getting rid of its entire top management team to try to reverse that company’s revenue slide — steady results can be considered something of an achievement for Brooks Brothers management.)

Drawing hip, millennial shoppers inside America’s oldest retailer isn’t easy — even to check out novelties such as Brooks Brothers’ latest machine-washable merino sweaters, designed without side seams, and its lightweight hooded outerwear, rivaling labels like Moncler and Canada Goose.

“He’s elevated Brooks Brothers without deviating from its heritage and tradition,” Robert Burke, a New York retail consultant, said of Mr. Del Vecchio. CreditKarsten Moran for The New York Times

“We have a level of technology and performance that they can’t even dream about,” Mr. Del Vecchio said. “We are authentic, and we have the stories. We just need to do a better job with social media and the influencers.”

Still a big believer in physical stores, Mr. Del Vecchio sees promise with Brooks Brothers’ latest concept, Red Fleece boutiques, featuring midprice casual wear. Its popular Flatiron location recently added a downstairs cafe, now a hangout for the tech workers in the neighborhood.

“We need to refine it to create synergies between the cafe and the boutique,” Mr. Del Vecchio said.

Even with a challenging economic landscape, Brooks Brothers, with its freedom from public shareholders and the pressure of quarterly financial disclosures, “is suddenly the retailer that everyone wants to emulate,” said Robert Burke, a New York retail consultant.

Notably, Nordstrom, which had $15.48 billion in revenue in 2017 and which over the past year had tried to take itself private, finally pulled the plug on that effort in March after the board rejected the founding family’s $50-a-share bid, saying it wasn’t high enough. (Retail stocks, as whole, gained just 2.52 percent in 2017, well behind the 25 percent rise in the Dow Jones industrial average and the 19 percent return of the Standard & Poor’s 500-stock index.)

“Claudio has been very disciplined and measured on how he has grown Brooks Brothers, focused on where the brand will go, upping the quality, not going for the quick sales and not opening too many stores,” Mr. Burke said. “He’s elevated Brooks Brothers without deviating from its heritage and tradition.”

Mr. Del Vecchio said, “I am naturally a long-term thinker, and I don’t see the benefit of going public.”

Though much of Brooks Brothers’ apparel is imported, including its best-selling no-iron shirts (made in Malaysia), Mr. Del Vecchio says he remains committed to producing many signature items at home, including its made-to-measure suits, in company-owned factories where he has invested in new machinery and in the training of workers.

Brooks Brothers, which has outfitted 40 of the country’s 45 presidents, is celebrating its 200th anniversary this year.

Its ties, for example, are manufactured at a factory in Long Island City, with a label embroidered with an American flag and the words “Brooks Brothers. Proudly Made in New York United States of America.”

There are two other domestic factories. One is in Haverhill, Mass., which makes men’s suits, sport coats and trousers, and has produced clothes for the designer Todd Snyder and uniforms for United Airlines. It employs 550 workers, up from 300 in 2008. The other is in Garland, N.C., where 250 workers produce the classic $140 oxford shirt — and is the only domestic factory that operates at a loss, Mr. Del Vecchio said.

“Part of the Brooks Brothers institution are its factories and what it means from a social standpoint to put things together,” he said. “Not every consumer can afford to buy ‘Made in America.’ But we have a brand that can justify that cost, and there are enough customers who understand this.”

Mr. Del Vecchio said he knows that closing the Garland factory would erase the livelihoods of half the town, which has fewer than 1,000 inhabitants.

“Many of the decisions we make are with that in mind as well,” he said. “We keep saying every year this is the year we aren’t going to lose money, so that’s the reason to keep trying to improve. But until the day I can’t afford it, we won’t close it.”

The philanthropic-minded Mr. Del Vecchio began the practice of hiring English-language tutors to teach the immigrants who work at his factories. In Haverhill, the workers speak 30 languages, from countries including Afghanistan, Poland and Myanmar.

“We don’t hire illegal immigrants, but now there are the laws that stop immigrant refugees, which were a great source of skilled labor for our factories,” he said.

He and his wife, Debra, and members of his executive team visit each factory every Christmas season, donning blue aprons embroidered with “Brooks Brothers” to serve lunch to workers. Mr. D., as they call him, joins in to dance and to speak Italian and Spanish with the workers. He also gives out certificates for graduates of the English classes and awards for years of service.

“Whenever he walks into the factory, everybody claps,” said Adriana Lucin, the production manager at the tie factory. “He’s like a star. Everyone wants to take a selfie with Mr. D.”

BoF: Capitalising on the Footwear Opportunity

BoF: Capitalising on the Footwear Opportunity

Business of Fashion | Lauren Sherman

For the luxury industry, future growth may be at its feet.

Footwear is the product category thought to have the greatest potential for rapid expansion. It has certainly attracted the interest of some of America’s biggest fashion players. Just last year, Michael Kors acquired Jimmy Choo for £896 million (or about $1.2 billion), quite a windfall for previous owner JAB Holding, which bought the British luxury shoe label in 2011 for a little over £500 million. Meanwhile, Tapestry’s 2015 purchase of fast-growing accessible-luxury line Stuart Weitzman for $574 million has helped to boost its bottom line as the newly formed American luxury group has focused on improving performance at Coach and Kate Spade New York.

On the other side of the Atlantic, Europe’s biggest mega-brands have reason to be just as enthusiastic about the category. At Gucci, for example, shoes drove 19 percent (€1.2 billion) of the brand’s 2017 revenue, up from 13 percent (€409 million) in 2011. And Louis Vuitton, which has also enjoyed traction in shoes, invested more than €30 million on building a footwear product-development facility near Venice's Riviera del Brenta.

The wider market for luxury shoes hit €18 billion in 2017, up 10 percent year on year, according to Bain & Company. In terms of percentage growth, it was matched only by jewellery. But the size of the footwear category is still dwarfed by handbags, worth €48 billion in 2017, and apparel, which generated €61 billion, signalling significant space for growth.

Footwear is attractive for other reasons, too. “Shoes wear out, so their replacement cycle is short — even established consumers need to buy them again and again,” wrote Luca Solca, head of luxury goods at Exane BNP Paribas, in a recent report. And even though there are plenty of shoes priced over $1,000, like handbags, footwear has lower cost-per-wear and higher margins than apparel.

Consumers are also spending more on shoes than ever, averaging $248 on shoes in 2016, up from $212 in 2006, according to data from the American Apparel and Footwear Association. And they're buying more pairs, too, at least in the US: Americans purchased an average 7.6 pairs of shoes in 2016, up from 5.9 pairs in 1996. “In the past you only needed three or four pairs of shoes and you were sorted,” said Sagra Maceira de Rosen, non-executive chairperson of Naga Groupand co-author of The Towering World of Jimmy Choo. “Now, there are so many more categories. Fashion is driving the market more than ever before.”

But footwear is more complicated than it looks and performance in the category has been inconsistent from brand to brand. “There is significant polarisation between brands,” said John Guy, an analyst at Mainfirst AG. “Some of it has to do with product and price positioning.”

For example, Italian shoes and leather goods business Tod’s has struggled to maintain market share as competing brands develop their own versions of its iconic driving shoe — often at a lower cost. In 2017, the company reported sales of €963.3 million, down more than 4 percent from a year earlier. Another Italian heritage label known for its footwear, Salvatore Ferragamo, saw net profits drop 42 percent in 2017. In early 2018, chief executive Eraldo Poletto exited the company and the 90-year brand is aiming to course correct by installing British-American shoe designer Paul Andrew, whose footwear collections for the brand have been well-received, as its head of women’s ready-to-wear as well. Andrew showed his first collection at Milan Fashion Week in February 2018.

So, what makes footwear so tricky?

One challenge is that a shoe’s success is predicated on the temporal relevance of its silhouette, even more so than fashion or handbags. (Kitten heels and flats may be having a moment, but just a few years ago platform pumps were de rigueur.) If a creative director is not able to master the current look — all while maintaining a distinctive brand identity — it’s difficult to sustain momentum.

“The big question for investors is, 'How long can a business that’s made up of a single shoe last?'” asked Robert Burke, chief executive of advisory firm Robert Burke Associates. “Can they go beyond what they’ve done in the past or is it a one-trick pony?”

And yet, the category continues to hold the interest of investors and luxury groups, in part because of the expertise needed to produce a quality shoe. “It is the most difficult category in terms of product development and manufacturing,” says Franco Pené, chairman of Onward Luxury Group, which acquired a controlling stake in London-based label Charlotte Olympia in 2017 for its manufacturing expertise. “A one-millimetre difference can be a pain for your feet. It’s not a product that is so easy to manage.” (In February 2018, Charlotte Olympia’s three American subsidiaries filed for bankruptcy protection in the US, citing “unprecedented brick and mortar retail disruption.” These businesses were separate from the UK-based business in which Onward invested.)

Consumer appetite for luxury sneakers — which generated €3.5 billion in 2017, up 10 percent year-over-year — is also fuelling the footwear fire. From Balenciaga’s “dad” sneakers to Valentino’s low-top trainers, nearly every major fashion brand now has a robust sneaker programme. “Women come to lunch in Chanel suits and sneakers,” said Karine Ohana, co-managing partner of the Paris-based Ohana & Co, an independent investment bank that advises on M&A and represented Onward Luxury Group when it acquired Charlotte Olympia. “Whatever happens, the trend of tomorrow is that shoes will become more and more technical and support the physical needs of individuals.”

So, which brands are investment targets? Makers specialising in trainers are top of mind. (As are the stores that sell them: In February 2018, LVMH’s investment vehicle Luxury Ventures put money into New York-based multi-brand retailer Stadium Goods.)

But it's the labels with classic sensibility and operational know-how that are most coveted. There is plenty of interest around ultra-high-end Italian brand René Caovilla, but family owners say they do not want to sell. Mansur Gavriel — which started in handbags, rode a successful expansion into shoes and now generates well into the eight figures annually, according to market sources — is a possible target. As is Aquazzura, which generated more than €100 million in retail revenue in 2017, with double-digit growth projected for 2018 amid plans to open nine new stores.

What these brands have in common is a diverse product offering that can theoretically weather aesthetic shifts. “A trend-driven and specific brand can grow quite fast in the early days, but then it plateaus a bit unless the creative director is able to broaden up,” Maceira de Rosen said. “Aquazzura is doing extremely well because it was able to build a very nice range beyond the lace-up that made it famous.”

Out of the larger, more established brands, Christian Louboutin is the one investors are watching closely, though its signature red soles read as passé in some circles, with high heels making up 44 percent of its product range. (Its second-largest category is sneakers, which make up 15 percent of the line.) But it’s certainly a widely distributed brand with global name recognition, as well as proven success in category extensions including handbags and beauty — in particular, nail polish. “The one that everyone is waiting for is Louboutin,” Ohana said. Earlier this year, the independent French brand signed a licensing deal with Puig in hopes of expanding the beauty line’s distribution.

But the true white whale may be the most well-regarded shoe brand of all: Manolo Blahnik. The label is enjoying the spotlight once again after receding to the background during the years dominated by platform pumps. “What’s so interesting is that Manolo has stayed so true to his design aesthetic,” Burke said. “Whenever everyone was doing a platform, he refused.”

BNN: Canada Goose plans more in-house production as it eyes higher margins

BNN: Canada Goose plans more in-house production as it eyes higher margins

BNN | Nichola Saminather

Luxury coat maker Canada Goose (GOOS.TO 1.58%) plans to bring more manufacturing in-house in a bid to boost margins and help it live up to lofty investor expectations as the most expensive stock among major luxury brands.

The Toronto-based company aims to make at least half of its outerwear itself in a few years, up from about a third now, Chief Executive Officer Dani Reiss told Reuters in an interview at the company's Toronto headquarters.

"We'd like to grow our internal capacity," Reiss said, referring to the move as one of its "pillars of growth."

"Here's an opportunity for us to have more in-house capacity and increase our profit margins, which is important for our investors and for us," he said.

By tightening their hold on manufacturing, luxury outerwear makers such as Canada Goose and Italian rival Moncler as well as Kering's Italian fashion label Gucci are able to increase control over quality to justify charging eye-watering prices.

"If you’ve got a multi-tier supply chain, you’re leaving profit margin throughout every element of the supply chain for everybody along the way," said Rod Sides, Deloitte's U.S. retail and distribution leader.

Companies still have to be able to predict future demand accurately for the strategy to succeed, and other factors, like the location of new facilities, can make a difference.

For instance, putting new facilities in Canada Goose's home province, Ontario — which has the highest electricity rates in Canada and raised the minimum wage 21 per cent this year — would likely not help the bottom line, said Brian Madden, portfolio manager at Goodreid Investment Counsel.

But the risk is worth it for Canada Goose, which has all of its coats made in Canada and sells them for between US$725 and US$1,695. The company posted December quarter operating margins of 60 per cent on online and own-store sales versus 43 per cent from wholesale, causing investors to cheer the growth in its direct-to-consumer business.

The stock has almost doubled since it listed a year ago, vastly outperforming the flat Toronto stock benchmark, and is trading at 55 times forward earnings, more than double Moncler's.

Canada Goose, which opened the first of its own stores in 2016, plans to have as many as 20 by the end of 2020 from six now, compared with Moncler's 201 stores.

"At this point they're relatively under-penetrated across their ultimate audience, and they're going to grow into that," said Nomura equity analyst Simeon Siegel.

Despite Siegel's positive view, he has a neutral rating because of its valuation.

As it expands its footprint, and starts selling online in China and possibly Russia beyond that, Reiss said the company needs to ensure it can keep up with demand.

GRIP ON QUALITY

For many luxury companies, having a tight grip on quality for big ticket items is often crucial to convince customers to fork out small fortunes. Most luxury companies would also rather sell out temporarily at full price than produce too much and have to discount merchandise.

Moncler took control of its own jacket manufacturing site in Romania and slightly reduced the number of its suppliers in 2016. Most of its manufacturing and supply chain remains outsourced, though it declined to detail how much.

Kering's Gucci is also looking to bring more of its handbag production in-house this year with a new facility near Florence.

Though operating in a different sphere, France's Hermes, best-known for its US$10,000-plus Birkin and Kelly handbags, makes all its leather goods at its own domestic workshops.

But outsourcing can also make sense, especially for basic items like T-shirts, if there are compelling cost reasons, or if expertise lies elsewhere.

Canada Goose has no plans to change suppliers for its knitwear lines from Italy and Romania, nor the exclusive external suppliers for its coats' components, according to the company.

It has six factories that make its outwear in Canada, and has lifted manufacturing capacity by building new sites, acquiring contractors and adding employees.

"What this offers is more control on the quality and timing and product," said luxury consultant Robert Burke, who has counted Canada Goose among his clients. "The risk is to ensure you buy [a facility] that's big enough for future growth but not cumbersome."

ROBB REPORT: Change Agent Natalie Massenet Helps Kick Off Muse by Robb Report

ROBB REPORT: Change Agent Natalie Massenet Helps Kick Off Muse by Robb Report

Robb Report | Christina Binkley

Natalie Massenet does not heed barriers. During her time as a fashion journalist, she saw women struggling to locate designs they’d discovered in magazines. This launched an idea that became Net-a-Porter, an e-commerce juggernaut that defied the luxury industry’s objections about selling online and, since its 2000 debut, has transformed how fashion brands operate. As a former chairman of the British Fashion Council (a position she held for five years starting in 2013), Massenet noted a gaping hole in the fashion awards system, so she launched the Fashion Awards—a global awards program that replaced the former British Fashion Awards. Her cool demeanor at the 2016 announcement, at a breakfast at Soho House West Hollywood in Los Angeles, belied what had just transpired: The American, French, and Italian fashion awards would thereafter be regional prizes, while London’s would rule the world.

Massenet’s determination to improve the status quo is an ongoing mission. The Los Angeles–born Massenet, now 52, begins each January with a fresh diary in which she lists her major projects for the coming year. In 2017, these included “have baby.” In September, she checked that off with the arrival of her third child, Jet Everest Torstensson, a son with her partner Erik Torstensson, a photographer and entrepreneur who cofounded Wednesday Agency and FRAME fashion brand. Massenet thanked her surrogate in an Instagram post of her baby’s tiny fist.

“I can definitely attest to the fact that you can survive having a baby at my age,” says Massenet, who has two teenage daughters from her previous marriage. “It’s actually even nicer because you know how brief those moments are.”

Her juggle now includes serving as non-executive cochairman of Farfetch, an e-commerce venture that connects independent luxury retail stores and fashion brands with shoppers, a concept like Airbnb or Uber but for fashion. Massenet says she sees in Farfetch, which was founded in 2007 by entrepreneur José Neves, the opportunity to further her mission to connect designers with consumers who want to buy their most creative work. “José called me and basically said his plans for Farfetch were what I felt were the next obvious step for e-commerce,” she says. “He’s not a disrupter, he’s an enabler.”

Neves caught Massenet at an opportune moment. She had left Net-a-Porter Group in 2015, shortly after the company was sold and became Yoox Net-a-Porter Group. At that time, it was reported she sold her approximately $153 million stake in Net-a-Porter. Without a company to run for the first time since launching the portal in 2000, she had thrown herself into building up the British Fashion Council, but she remained engaged in the future of retail fashion. “She was very interested in the vision for Farfetch,” says Neves. “Natalie brings her incredible expertise in brand building and a love for customer experience with her, which she shares with our team here at Farfetch as we develop and build our brand.”

From the beginning of her shift to e-commerce, Massenet presented herself as a consumer advocate for the luxury sector. Working as a fashion editor at Women’s Wear Daily, W, and later Tatler, she saw the frustration of many women who were unable to locate the edgy clothes that appeared in fashion-magazine editorial spreads. Often, those clothes came right off the runway and
were never manufactured because they were deemed either too outlandish or too expensive. Massenet begged to differ.

At a time when industry logic held that people would buy books or pet products online but not expensive luxury goods, she went to friends, family, and angel investors to raise cash and to designers, asking them to allow her to put their designs on a website without, in those early days, paying for them up front. Tamara Mellon (then at Jimmy Choo) and Anya Hindmarch were first to agree. “Two women, mothers,” Massenet notes. “We’re risk takers, having that feminine outlook.”

As Net-a-Porter grew, the staff exuded Massenet’s take-no-prisoners approach to getting the newest, most directional looks before the department stores. Net-a-Porter buyers would enter a Paris showroom and needle a designer to produce theatrical runway pieces they had thought too outlandish or pricey to sell—zany $2,000 sunglasses, fully sequined gowns that cost tens of thousands of dollars. There might be only a few clients for such pieces, but with its global reach, Net-a-Porter could sell from Dubai to Shanghai or New York.

The website took an editorial attitude, with fashion shoots that were more like magazine spreads than Amazon.com pages. “It was turning a media platform into a shop, not the other way around,” says Massenet.

Robert Burke, now a business consultant, was an executive at Bergdorf Goodman, a rival whose executives bumped into Massenet and her buying team in Paris, Milan, and London. “We were always kind of in awe of her in the showroom,” Burke says. “At that time, luxury department stores were extremely full of themselves and refused to believe that some little Internet site could come in and make a difference.

“Natalie came in with no boundaries and great vision and great creativity,” continues Burke, “and she did what everyone thought was impossible.” He chuckles at a memory of getting access to a collection that Massenet had wanted exclusively for Net-a-Porter: “She was not messing around. She did not enjoy sharing exclusivity with other retailers. She was not keen on sharing, and rightfully so.”

The e-commerce site’s success fueled expansion into men’s online site MrPorter, an off-price brand the Outnet, and a glossy fashion magazine, Porter, and Richemont ultimately invested in Net-a-Porter Group.

Massenet is now Dame Natalie Massenet, having been awarded in 2009 an MBE, or Most Excellent Order of the British Empire, and in 2016, a DBE, or Dame Commander of the Most Excellent Order of the British Empire, for her contributions to British fashion and retail. She’s based in London, but spends an increasing amount of time in Los Angeles these days.

She recently started her 2018 diary, with a new list of projects that she describes as “shorter but bigger” than usual. Stay tuned for the debut of a venture capital business called Imaginary Ventures and for further developments at Farfetch, which inked a deal with Condé Nast last June to direct the media company’s consumers to shop on Farfetch (the deal involved Farfetch acquiring Condé Nast’s style.com shopping website).

Down the road, Massenet says, “I probably have a start-up or two under my sleeve. I’m putting those at the bottom of my list.”

FINANCIAL TIMES: Now Amazon is disrupting fashion retail, too

FINANCIAL TIMES: Now Amazon is disrupting fashion retail, too

FINANCIAL TIMES | ANNA NICOLAOU AND LESLIE HOOK

According to the book The Everything Store, Jeff Bezos told Amazon employees in 2007 that “in order to be a two-hundred-billion-dollar company, we’ve got to learn how to sell clothes and food”. 

Amazon is expected to report next week that it made about $175bn in sales for 2017, closing in on the $200bn mark thanks in part to its acquisition of grocery chain Whole Foods Market. 

But while that acquisition, which firmly establishes the company as a force in food, grabbed the headlines, more quietly Amazon has also been improving its position in clothes.

In the past year the company has rolled out private label clothing brands, such as Lark & Ro, which resembles fast-fashion looks from the likes of Zara. It has placed adverts on the pages of Vogue, struck partnerships for collections with Calvin Klein and actress Drew Barrymore, and unveiled a camera for customers to send selfies of their outfits to an artificial intelligence-powered stylist. It even convinced Nike, a longtime holdout, to begin selling shoes on its site. 

The company’s moves pose the same question for fashion executives that hovered over book publishers, movie producers and big box retailers in previous years: is their industry Amazon-able? 

By some measures, Mr Bezos has already succeeded. Amazon is set to overtake Macy’s to be the largest seller of clothing to Americans this year. Analysts are bullish. Nomura estimates apparel could be a $45bn-$85bn business for Amazon by 2020. 


The global apparel and accessories market is worth more than $1tn, and margins are higher than in other categories like electronics or food, making it an attractive source of profits to fund Amazon’s other ambitious investment plans, Nomura points out. 

So far, though, the majority of Amazon’s apparel sales are not designer dresses but rather basic commodities, like socks and T-shirts. 

Observers say that the fickleness of clothing purchases makes the sector less susceptible to ecommerce. “Selling underwear is easy, but fashion is a browse, and Amazon is not a browsing experience,” says Simeon Siegel, analyst with Nomura Instinet. 

Amazon has already become a go-to destination to restock basic necessities — it is the largest seller of batteries in the US, for example. But finding something less specific on its sprawling website is trickier. Searching for “black dress” on Amazon.com yields more than 20,000 results.

Elaine Kwon, a former executive at Amazon’s fashion business, who helped build its relationships with luxury brands and who now runs the consultancy Kwontified, believes this is changing. “For a long time people thought of Amazon as the place to get toilet paper or cat food,” she says. “In 2014, many brands were very hesitant to even let it be known publicly that they wanted to work with Amazon.” 

But as Amazon’s influence has deepened, and the department stores that brands have relied on struggle, the power has shifted. In the UK, for example, a quarter of clothing sales are now made online, and Amazon dominates. 

“Brands are now realising that people are buying from Amazon, and if I, as a brand, refuse to participate, someone else can take my product and make that money,” says Ms Kwon. 

At least part of the fashion industry remains dismissive of Amazon’s entrance. Andrew Rosen, chief executive of clothing label Theory, told a conference last year that “fashion sort of looks good to [Amazon] . . . but I don’t think they’re really that serious about it”.

Amazon has unveiled a number of new private-label apparel brands in recent months, including seven in the UK in September. It now has “dozens”, spanning women’s, men’s, children’s and baby clothing, a spokesperson said, without providing an exact number. The looks range from Amazon Essentials, which sells $12 men’s polo shirts to Lark & Ro, which is more fashion-forward but still reasonably priced. The most expensive Lark & Ro item listed is a $199 women’s scuba leather jacket. 

Amazon Essentials was the biggest seller among its private brands, according to a report from research group L2 in August, and the top-performing garment was the men’s polo shirt.

Private-label clothing brands could be a new profit stream, and they also give Amazon control of transactions from start to finish. As it stands, the company can’t control which brands decide to sell on its website, or stop them from leaving. 

“They want to own the brands and own the sourcing. That’s important to them,” says Robert Burke, who consults for designers such as Marc Jacobs, Ralph Lauren and Vera Wang. “The problem is that building a fashion brand takes a long time, even for Amazon.”

Amazon does not disclose revenues from its private-label brands. Mr Siegel says it is difficult to estimate at this stage, and that it will be “an uphill battle”. The company has taken strides to make browsing for clothes on its site easier, hiring fashion editors to make “shopping guides”, and testing a service called Prime Wardrobe, that lets customers try on clothes at home before buying them. 

An Amazon spokesperson said the strategy with private-label apparel brands is “to give customers what they’re looking for, and we’re constantly exploring ways to do just that”. 

Ms Kwon likens Amazon’s dive into private-label fashion to that of Zara. “Zara was laughed at by the fashion industry initially, but that changed,” she says, calling some of the brand launches part of Amazon’s “awkward phase” of testing customer appetites. 

Amazon is well equipped. The company hired Christine Beauchamp, former chief executive of Victoria’s Secret, as president of its fashion business in June. Megan Salt, the former head of public relations for Vogue, is its head of brand communications. 

It also has deep pockets. Amazon is scheduled to report financial results for its fourth quarter on Thursday next week, and analysts are expecting record revenues. The average forecast is about $59.8bn in revenue, a 37 per cent increase from the same time last year, and profits of $900m, which if achieved would make it the company’s most profitable quarter ever. 

Most importantly, Amazon has the data to know exactly what people are buying, and when. 

Chip Bergh, chief executive of the jeans maker Levi Strauss, recently said his “big challenge” is Amazon’s private label apparel business. “They’re going to be massive in apparel over time,” he told Business of Fashion, the trade publication, this month. “Their real power, over time, is going to be the data they’re able to collect on their consumer. It’s just a question of time.”

It’s unclear just how far Amazon wants to go with clothing. The company sparked rumours last year with a patent for an automated clothing factory, potentially allowing it to make its own custom ranges. 

James Thomson, a consultant and former Amazon manager, views this as a logical next move.

  “Imagine if Amazon had the body dimensions of 100m customers . . . if Amazon will deliver a custom suit quickly to me for $400, I don’t care what the brand is,” he says. “Amazon doesn’t replicate other people’s businesses. They find a cheaper way to do it at a mass scale, and catch everyone going, ‘what just happened?’”

Is Amazon friend or foe to fashion brands?

Fashion’s biggest brands are struggling to work out how to deal with Amazon’s quiet transformation into an apparel powerhouse. Is it friend or is it foe?

“Amazon is like Voldemort,” says one fashion executive. “You hear people talk about it in hushed tones.”

For more than a decade, Nike resisted adding its popular sneakers and athleisure clothing to Amazon, even as competitors Adidas and Under Armour gave in and decided to offer themselves to the ecommerce site’s growing customer base.

Yet Nike was already among the most common brands found on Amazon — because third party sellers were snapping up shoes and re-selling them. As online shopping has become a bigger part of all shopping, brands have struggled to keep tight control over where their products end up. Brands scored a victory last month with an EU ruling that luxury goods companies can ban sales of their products on Amazon to protect their “aura of luxury”. The European Court of Justice determined that US cosmetics group Coty did not break competition laws when it blocked distributors from selling its products on Amazon.de.

But Nike in June had already revealed that it was testing out selling a “limited assortment” of products on Amazon. The reversal “showed the want, need or something in between, to sell through Amazon”, analysts at Nomura said.

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Analysts do not expect the most elite luxury brands to start selling on Amazon, but it is already becoming common for more middle-of-the-pack brands. More than 20 brands listed Amazon as a major customer in their disclosures last year, including Hanes, Fossil and Perry Ellis, according to Nomura.

Goldman Sachs expects to see Amazon establish “additional direct relationships with major brands”, which would “only further its momentum in apparel as the category continues to move online”.

BoF: The Art of the Markdown

BoF: The Art of the Markdown

BUSINESS OF FASHION | VICTORIA BEREZHNA

NEW YORK, United States — After a tumultuous 2017 with a record-breaking number of store closures and bankruptcies in the US, retail’s great transformationis anything but over. However, end-of-season markdowns — which accelerate the offloading of leftover inventory — offer a boost not only to those that are struggling, but also to those making some headway.

In November 2017, US retail sales were $492.7 billion, up 5.6 percent from a year earlier, according to the Department of Commerce. The jump was spurred by holiday shopping’s brisk start online. On Black Friday alone, e-commerce sales hit $5 billion, a 17 percent increase year-over-year, beating records.

But while the industry has long relied on aggressive markdowns to boost holiday shopping, overdoing discounts may sacrifice long-term margins and dilute brand image.

Research firm Edited, which analyses online sales of over 11,000 fashion brands and retailers, found that the US luxury industry experienced the highest volume of discounts on Black Friday, with 46 percent of products discounted. (Almost a quarter of those goods were discounted by 40-to-50 percent.)

In the mid-priced market, 24 percent of items were discounted, while only 20 percent of mass-market items were marked down. The top five biggest retailers by number of products discounted by 40 percent or more by the first week of December were Bluefly (an off-price outlet), Farfetch, Saks Fifth Avenue, Neiman Marcus and Ssense.

Traditionally, retailers prefer to hold off on markdowns until later in the year, as discounting too early and too deeply can shrink already squeezed profit margins. Sometimes, it can also cheapen the perception around a brand or retailer. However, for the past decade or so since the financial crisis, post-Thanksgiving discounting has become commonplace.

This year, many retailers — including luxury department stores Neiman Marcus and Saks Fifth Avenue, and e-tailers Net-a-Porter and Moda Operandi — began discounting in the days leading up to Thanksgiving. Brands including Balenciaga, Tom Ford and Prada were already reduced on Black Friday via their own websites and e-commerce sites alike, according to Edited. Michael Kors was the brand with the most products discounted by over 50 percent by the first week of December. The company did not immediately respond to a query regarding the differences in markdowns.

Brands including Salvatore Ferragamo, The Row, Fendi and Stella McCartney were not marked down until the first week of December, Edited reported. A few brands, including Gucci, remain full price, with products selling out anyway.

Early discounts are “generally not a positive sign,” said Robert Burke, founder and chief executive at Robert Burke Associates. “The retailers would want to sell full prices as long as they could, meaning merchandise is moving well at full price.”

Sometimes, early discounts reflect overall malaise at a retailer and have little to do with individual brands. And other times, the store buyer has simply made a bad call about a specific style. “That is the nature of buying. No one has a crystal ball,” Burke said. “You certainly make some mistakes, but those are generally gaged.”

Labels with good sell-through and limited distribution can take a hard stance on markdowns, negotiating up front when their products are permitted to be discounted during the sales season.

While the ultimate goal is to remain full-price for as long as possible, “What we see happen more often now is that brands are being selective about what products they put on sale,” Burke said. If a piece has sold well, it will be kept at full price. Take, for instance, Balenciaga’s Bazar Python Shopper XL, which is reduced by 50 percent on the brand’s site, while Graffiti and leather shoppers remain at full-price. The brand did not immediately respond to a query regarding the differences in markdowns.

“Whether there was a poor performance and excess of stock, or it was a great performance, there’s always a discussion with [department stores and] brands about when to break sale,” Burke said. “A retailer can’t be shortsighted in the sense of a quick markdown in the risk the brand may not sell with them going forward.”

The case certainly holds true for brands like Saint Laurent and The Row, which both went on sale on e-commerce site Net-a-Porter on December 1 and 2 respectively, while Prada and Miu Miu were marked down on Thanksgiving, and Fendi, Marni and Balmain followed the subsequent week, according to Edited.

Of course, positive gross sales generated by holiday season discounts don’t necessarily equal high margins. While retailers saw a 36 percent lift year-over-year in the number of items that sold out at first discount on Thanksgiving Day through Cyber Monday, the effects on retailer margins were negative. The average price of luxury products sold in November 2017 was $661, compared to $780 in November 2016.

Is there a sweet spot between Gucci’s non-markdown stance and desperately deep discounting? “The ultimate goal is to remain full price for as long as possible and to train the customer to not buy on sale,” said Burke. “What Gucci is doing is such a bold move, and they’re in a position to do it. They’re a highly desirable brand, and have differentiated.” But for the rest, a combination of scale and approach — that is, being selective with marked-down items and avoiding early sales — is key.

WWD: How Art Won’t Be the Only Luxury Changing Hands at This Year’s Art Basel

WWD: How Art Won’t Be the Only Luxury Changing Hands at This Year’s Art Basel

WOMEN'S WEAR DAILY | KATHRYN HOPKINS

Acclaimed artists and art dealers are gearing up for the world’s wealthy to step off their private jets and yachts this week and decamp to the Sunshine City for Art Basel Miami — but they won’t be the only people looking to capitalize on the five-day art fest.

That’s because since the sister festival of Switzerland’s eponymous event began in Miami in 2002, other industries have been quick to piggyback onto the annual gathering of the wealthy. After all, it is the one time of the year when serious art collectors, investors and high-net-worth individuals all converge at once in Miami, with more than 70,000 people expected to attend this year.

While famous designers will no doubt be spotted hobnobbing with the rest of the New York fashion set and enjoying the endlessly flowing Champagne at the plethora of parties, Miami’s nightlife won’t be the only thing on their minds. They’ll also be networking with some of their biggest clients, who collect fashion as well as art.

“I have an art collector who is the largest purchaser of Brunello Cucinelli in the United States. Cucinelli invites him to his place in Umbria,” Emily Santangelo, a New York-based art consultant, told WWD. “I can tell you that the world’s biggest fashion designers are quietly descending on places like Miami and meeting up with their collectors in both the art world sense and the fashion sense.”

And that’s not all. Many of the big fashion houses have jumped on the art installation bandwagon. Gucci, for example, has teamed with Artsy on a multiartist installation called Artsy Projects Miami, while the Loewe Foundation’s third “Chance Encounters” installation will be featured at its store in Miami’s Design District — and naturally many of these events will be kicked off with packed parties.

According to Robert Burke, the chairman and chief executive officer of retail consultancy Robert Burke Associates, as well as being a clever marketing tool, these installations give brands a chance to feel out the market and the appetite of connecting with an artist without launching into a major collaboration globally.

“I think brands are always looking at how to collaborate with art and artists. We’ve seen many good collaborations lately, such as Gucci, and the art world is a natural connection to the fashion world, so it makes sense,” he said. “There is money to be made, but primarily this is about elevating the brand and distinguishing it from another.”

It’s not just the fashion world at play. Real estate agents and developers also use the decadent art fair as an occasion to showcase their opulent homes for sale in Miami and other cities, with many sponsoring events or partnering with organizations at their dinners or gatherings in order to connect their condominiums and mansions to the art world and catch the eyes of the rich and famous. Often events are held at the listings themselves.

“The person that has spent $100 million on a Da Vinci is certainly a prospect for high-end luxury real estate,” added Santangelo, when explaining the real estate industry’s interest in Art Basel Miami.

“You have to realize that there’s something very important that real estate offers art collectors and that’s walls. It’s what really goes with building the collection, especially for those people who are truly passionate and want to live with the artwork.”

All the stops are pulled out, with some brokers and developers chartering helicopters to show off the city’s new towers emerging out of the ground, while others host dinners on yachts docked outside the mansions they’re trying to flog. Then there’s the celebrity factor, with others hiring famous faces to attend their events at their listings to ensure they draw in a well-heeled crowd.

“Brokers sometimes hire a celebrity DJ or musician to perform at a private setting for a really exclusive small group of people,” according to Kipton Cronkite, an art curator and adviser. “You usually hear about those surprise performances after the fact.”

This year seems to be no exception on the party front. The 1 Hotel and Homes South Beach is hosting the New York Post Page Six Art Basel party on Thursday, which is expected to draw a crowd of celebrities and influencers.

The party will serve as an exclusive preview of the 1 Homes penthouse, which will soon hit the market for an undisclosed multimillion-dollar price, while Douglas Elliman Real Estate will be showing off its luxury projects such as Madison Square Park Tower in Manhattan, Monad Terrace in Miami Beach and London’s Chelsea Barracks when it takes over the Delano South Beach Hotel for its Elliman Magazine party on Friday.

Then there are the occasions when real estate and fashion work together on some of the wave of super-luxury residential buildings that are springing up across the city, the interiors of which will be decked out by major fashion designers.

Setting the trend is the Estates at Acqualina, a pair of 50-story luxury towers with 245 units that are currently being built in Sunny Isles Beach and whose lobbies are being designed by Karl Lagerfeld. It has invited a core group of Brazilian influencers such as Alice Ferraz and Lala Noleto to stay at their neighboring hotel during Art Basel and visit the model apartment in the sales gallery.

“Our developers are art collectors and so are our buyers. Art Basel provides a perfect opportunity to entertain guests at the Estates Sales Gallery and in Penthouse 45 at the Mansions at Acqualina which is a mini gallery in and of itself,” said Alexandra Wensley, vice president of communications at the Estates at Acqualina, whose prices range from between $4 million and $9 million.

“Brazil is an important market for us. Hence, we will be entertaining several Brazilian fashion and lifestyle influencers during Art Basel. It provides an ideal fit especially with our partnership with international designer Karl Lagerfeld.”

Missoni Baia, meanwhile, a 57-story, 249-unit building that is being developed by the namesake Italian fashion family and Oko Group in the up-and-coming Edgewater neighborhood, is offering its VIP guests and brokers exclusive tours of Design Miami (a design fair that always runs parallel to Art Basel Miami) with its interior designer Paris Forino.

This, however, is nowhere near as large-scale as their event to coincide with last year’s Art Basel when Vladislav Doronin, chief executive officer of OKO Group, held a party for 200 guests at his mansion on the exclusive Star Island, where speeches were given my Doronin and Ottavio Missoni Jr. from the Missoni family, while guests were serenaded by pianist Elew.

“Art Basel is one of the few times in the Miami calendar where all of these individuals come together in one place,” said Edgardo Defortuna, president and ceo of Fortune International Group, which is handling the building’s sales (prices range from $500,000 to $3.5 million). “By offering experiences such as the Design Miami tour with Paris, these individuals can experience the building in a new and interesting way that wouldn’t be available to them at other times of year.”

The impending arrival of the world’s wealthy will no doubt come as a relief to much of Miami’s luxury real estate community as the sales market has slowed against a backdrop of political and economic uncertainty, as well as currency fluctuations. Combined, these trends have made competition tougher and Miami developers more determined than ever to make their projects stand out.

“While Art Basel Miami has always been important, it’s constantly growing in popularity so in the last couple of years as the market has softened its relevance and importance is higher than ever before,” Jonathan Miller, ceo of appraisal firm Miller Samuel, told WWD. “It’s a draw for the affluent and the affluent are the consumers that buy luxury properties.”

BOF: For Multi-Brand Retailers, Private Label Is a Growth Driver Once Again

BOF: For Multi-Brand Retailers, Private Label Is a Growth Driver Once Again

BUSINESS OF FASHION | CHANTAL FERNANDEZ

LONDON, United Kingdom — When Yoox Net-a-Porter Group reported its latest results last week, executives were excited to discuss the launch of Mr P., Mr Porter’s new private-label brand. Managing director Toby Bateman described the ready-to-wear collection — designed by an in-house team including buyers and merchandisers and manufactured in Italy, Portugal and Japan — as the physical embodiment of the men's retailer. Mr P. includes a collection of essential pieces available year-round as well as five seasonal capsule deliveries per year. Shoes and accessories are expected in Autumn 2018. While offered at a competitive price point (starting at $75 for a T-shirt), Mr P. is positioned alongside the e-retailer’s other contemporary brands.

“It is one of the most significant projects in Mr Porter’s history, and one that sees us delivering on a key strategy from the five-year plan,” said Bateman. In July 2017, Yoox Net-a-Porter Group outlined a plan that included growing private label brands to account for about 10 percent of off-season net revenues by 2020. (At the company’s two off-price channels, The Outnet launched its private label Iris & Ink in 2012 and Yoox’s own private label is forthcoming.)

Private-apparel labels, or exclusive brands typically manufactured by retailers and sold under their own name, have long been a staple of department stores such as Saks Fifth Avenue and Neiman Marcus. The clearest advantages of the business model remain the same: the product has higher margins than the designer brands retailers buy, is predictable and creates cash flow. The collections also often fill in gaps in a store's designer offerings.

Today, when retailers have more data than ever before about what types of pieces their customers want to buy and at exactly what price, the advantages of producing a private-label brand have increased. If done right, these lines can raise retail brand awareness and, by virtue of having a controlled production that can be replenished in-season, respond more quickly to consumer demand. (Retailers are not always able to reorder more inventory from clients in-season.)

In-house collections also offer another reason for a customer to shop at a specific retailer. “These days, with the internet and everyone seeing everything, exclusivity really becomes such a big factor,” says Gabriel Ricioppo, the co-owner and creative director of Virginia-based retailer Need Supply Co., whose private label, Need, launched in Spring 2016 and has since grown to be one of its largest brands. Well-received products include denim for women and T-shirts, shirting and chinos for men.

It's not a coincidence that those are all so-called basics. While a new generation is embracing logos in fashion in a way that the market hasn’t seen since the height of “logomania” in the 1990s, today’s consumers are more willing to turn to private labels for essential pieces. (For an example in the mass market, see Amazon’s growing private-label apparel business.) Globally, the private-label apparel and footwear market grew 10 percent between 2011 and 2016 to $62 billion, according to Euromonitor.

At Barneys New York, for instance, the in-house label is its top performing brand for men, led by staple pieces such as a black cashmere crew-neck sweater and a black suede Chelsea boot. At British multi-brand retailer Joseph, the Joseph brand accounted for 87 percent of total sales as of 2015 and has served as a vehicle for international expansion: its mono-brand stores make up the vast majority of Joseph’s retail network.

What makes a private label successful? For one, the retailer needs to have a positive brand image. “If you don’t have a strong retail brand, then it’s going to be a real struggle to convince the customer to buy private label,” says Robert Burke, chairman and chief executive of consulting firm Robert Burke Associates.

Retailers also need to have a clear strategy of what the private label is going to offer, at what price point and for what specific audience. “These retailers are extremely close to their customer and understand them," says Burke. "That is what is making this work.”

At MatchesFashion, the customer was ready for more than just basics that complement the designer assortment. When Rachael Proud, a designer who had worked for Topshop and Christopher Kane, joined the company in 2014 to relaunch the in-house label, she quickly realised that catering to the MatchesFashion customer was not the right strategy because there is not one single type of customer.

“The original remit was to drive business to Matches,” says Proud. “As soon as we started seeing sales reactions, it became clear that it’s a brand on its own with its own identity."

Womenswear has been a significant success for Raey, particularly in knitwear and denim, and the brand has doubled its sales since its first full year on the market in 2015. “What’s more challenging is menswear,” says Proud, adding that men often seek the approval of a brand name they recognise to reinforce their purchasing decisions. “The Raey man probably knows what he likes and I think we have to get that right."

Proud and the Raey team have data on their side: they have a deep level of information evaluated on a weekly basis, from cost-per-click to real-time sell-through. However, because they consider the brand a complete offering distinct from the rest of MatchesFashion's offerings, they only look at Raey's metrics.

“If we’ve got a jumper and it’s a best seller and we’ve only ever done it in blue, we are immediately thinking: let’s do it in black,” she says, adding that if fabrics and trimmings are in stock, Raey can deliver product in as little as four weeks. In 2016, MatchesFashion — which reported overall revenues of £204 million ($268 million) that year — shifted Raey's deliveries from seasonal to monthly collections that arrive on the site each week. These more frequent deliveries also help drive traffic to the site, says Proud.

Need Supply also benefits from being able to control the cadence of its private-label deliveries. “Different brands deliver at different times,"says Ricioppo. "This just gives us an opportunity to align messages and campaigns.”

The data also informs the price point, which varies from retailer to retailer. Most in-house labels are priced a tier or two lower than the designers the retailer carries. “We are not wholesaling; we just add on the markup to make the profit to keep trading," says Proud. "Category-wise, we always want to have our basics that are a lead-in [in regards to price] to the brand.”

After zeroing in on the right point of view and price point, however, producing a collection and delivering it can be a challenge for retailers not accustomed to the process. The design and strategy can be right, but then retailers need to “back it up with the infrastructure to execute these things,” says Burke. Some retailers outsource design or manufacturing. Like Raey, Need is designed in-house, and Ricioppo says the process was a learning curve: “You have to learn to crawl before you can walk, before you can run — we have a long view of what we are doing.”

Another challenge in private label is that retailers might anger the brands they carry if they are seen to be copying their designs at a lower price point. “You’re the retailer that buys them; that’s a risk that you could run,” says Burke.

At MatchesFashion, the design and buying process is kept separate. “I don’t know what [buying director] Natalie [Kingham] is buying on core," Proud says. "I don’t know how things are performing. I basically went forward with what I thought a working woman would want to wear.” While she isn’t guided by trends, Proud does sometimes align with the major themes of a season. “[Designers] are all seeing the same mills, shopping the same fabrics."

When it is all said and done, the same instinct that guides Need Supply’s edit of brands infuses its approach to private label. “Even when we go to buy, we are not always reacting to what’s out there,” he says. “Often times we are looking for things we know we are excited about, and we go and look for those in the market. That energy and that vision, it’s the same thing that translates to creating product.”

NEW YORK TIMES: The Death Knell for the Bricks-and-Mortar Store? Not Yet

NEW YORK TIMES: The Death Knell for the Bricks-and-Mortar Store? Not Yet

NEW YORK TIMES | MATTHEW SCHNEIER

On a quiet strip of Rue de Marignan, just down the block from the Paris power-lunch spot L’Avenue, Alex Bolen, the chief executive of Oscar de la Renta, was standing outside No. 4, where the brand is to open a store next May.

“We think long and hard before we enter into a lease,” Mr. Bolen said. “With all that’s going on in retail, we need to think even harder. For a luxury brand, what’s the point of a store, at least a bricks-and-mortar store?”

It’s a question many in the industry are asking, and trying to answer anew. In a difficult climate for retail, the stakes are very real, as 4, rue de Marignan makes clear. Above the doorway, a sign hung reading “Reed Krakoff.” Mr. Krakoff, now the chief artistic officer of Tiffany & Company, shuttered his namesake brand in 2015 and never opened a shop in the space.

Recent years have seen store closings from small brands and seismic contractions from major retailers, including Hudson’s Bay Company’s saleof the landmark Lord & Taylor building on Fifth Avenue last month to WeWork, the office-sharing start-up. (Lord & Taylor will rent about a quarter of its former space to continue operating.)

But the solution, say several retail innovators, is not the end of bricks and mortar, as some in the industry once anticipated.

“There was a time six or seven years ago when there was only talk of pure play e-commerce,” said Stephanie Phair, the chief strategy officer of Farfetch, the marketplace and retail platform that helps brands do business online. “What we’ve seen from a millennial consumer behavior point of view is customers really want that joined-up online and offline experience.”

What that means is a renovation of the old bricks-and-mortar ideal. Instead of the arms race for the biggest location on the most desirable street, a new model focused on multifunctional, integrated stores is gaining currency: less storehouses of product than event spaces, classrooms, community centers, showrooms or studios.

In the case of Oscar de la Renta, the two-story Marignan space will serve as not only the brand’s retail home in Paris, but also the showroom for its four annual wholesale presentations. Jeang Kim, an interior designer and sister of Laura Kim, the brand’s co-creative director, is designing it as a modular space: Displays can be cleared for customer-entertaining events and dinners, like the brand has begun to hold in New York following its runway shows, and a tailoring studio will allow customers to have fittings and alterations done on site.

But while the physical stores continue to drive business, Oscar de la Renta has been finding new customers outside of its usual channels. Since joining Farfetch earlier this year to expand its e-commerce, often by way of the site’s personal shoppers, the company has seen sales in the range of $200,000 a month, mostly from new customers. “Two hundred thousand dollars, seemingly out of thin air,” Mr. Bolen said.

The brand’s stores now are inviting those personal shoppers to visit, to learn more about the collections. And they, in turn, may take their clients to the physical shops.

The model for success, as Mr. Bolen sees it, is a combination of on- and off-line. “We think bricks and mortar is going to be a critical part of it, but a very different part than it’s been in the past,” Mr. Bolen said. “Bricks-and-mortar stores — those aren’t necessarily advantages any more.” Especially in second-tier markets, he added, “stores might be a real millstone.”

Where brands affiliated with major luxury groups, like LVMH Moët Hennessy Louis Vuitton and Kering, once had a clear competitive advantage in negotiating for real estate, given their ability to leverage entire portfolios of brands, smaller companies like Oscar de la Renta and the upstart London-based evening wear label Galvan are finding the playing field leveled by the rise of the smaller shop.

“I was with these very big brands that sell tens of thousands of units a week and have flagship stores,” said Paul O’Regan, the chief executive of Galvan, who previously was an executive at the Gucci Group (now Kering) and Burberry. “Everyone’s closing stores around us and the fashion model’s changing.”

Galvan just opened its first store, combining its work space and showroom with shopping for walk-in customers and by appointment. And its location in the Notting Hill area of London ensures lower overhead than on a luxury retail strip like Mount Street, a few miles east.

Not only will the store have the current season’s options but customers also may order from the next season’s collection and browse past collections to have pieces revived in custom colors, working with personal shoppers or, in some cases, the founders themselves. Appointments also may be made at a client’s home or office.

“We wanted to throw away all of those preconceptions and say: ‘What would be the dream scenario for a woman buying a dress?’ ” Mr. O’Regan said.

Robert Burke, whose New York-based company has consulted on retail strategies for industry players including Ralph Lauren, Chloé and Bulgari, has seen such thinking emerge in recent years. Even the larger retailers, he said, “are looking at just how many flagships or large stores they really need. That format worked for decades and decades. With the growth of online, it doesn’t seem to be working. Bigger isn’t better, necessarily. More focused is better, I think. And more intimate and more personal.”

The distinction, he added, was between the old idea of department stores and the emerging model of the “apartment store.”

Technically speaking, the store-as-home — or hub — is nothing new. Harry Gordon Selfridge, the founder of Selfridges in London, once decreed that “a store should be a social center,” and put an ice rink and a shooting range in his. But after several years of chilly, gallery-like shop design, a homey feeling is again becoming dominant.

MatchesFashion.com, the London-based retailer, began as a single bricks-and-mortar store in Wimbledon Village (called simply Matches). But while business from its (now three) stores has been dwarfed by its global e-commerce, as its rechristening as MatchesFashion.com suggests, the company is continuing to invest in new stores. After a year of testing smaller, homier stores as part of a pop-up program called “In Residence,” it is scheduled to open a new permanent space (the company prefers not to call it a “store”) at No. 5 Carlos Place in Mayfair in the spring.

The space will have two floors of retail as well as floors for private shopping, but equally important will be the floor that is to house the company’s broadcasting and content hub. Classes, panel discussions and events will be held there, all of which will be streamed on Facebook Live and YouTube, its social channels and its website. And all of it will be digitally shoppable.

“That’s the beauty of what we’re doing,” said Ulric Jerome, the company’s chief executive. “You don’t have to create an enormous department store to have a reach that is 10 or 100 times bigger than that department store. The reach is way bigger than the physical space. But the physical space enables you to produce amazing content.”

The Carlos Place store will have fewer choices than the full MatchesFashion.com range; it will be “the curation of the curation, and we’ll change the product quite often,” Mr. Jerome said. But iPads will allow browsing in-store, and all products will be available within 90 minutes for delivery within metropolitan London.

But at the company’s existing stores, 40 percent of the sales already are done via iPad. It reflects the reality that, for Matches, the online dwarfs the physical in every way: 95 percent of Matches’ business is online, Mr. Jerome said, and 85 percent is done outside of Britain.

Mr. Jerome has confidence in the hybrid online/offline model, with smaller physical and larger digital space.

“We tested it,” Mr. Jerome said. “Now we are investing in it. We think it’s part of the future of the way we see retail.” And he added that Apax Partners, which in September announced an agreement to take a majority stake in the company — one that values it at about $1 billion — is fully supportive.

Even those brands born online are stepping into the physical world. The RealReal, the online luxury consignment giant — it receives 8,000 to 10,000 consignment items per day, according to Julie Wainwright, its founder and chief executive — has spent a year testing pop-ups. And this month it is setting up a permanent retail space on Wooster Street in New York City.

Ms. Wainwright is envisioning the space as community center as much as shop: RealReal’s staff of experts, from watch gurus to fashion historians, will offer clinics and classes and offer appraisals, and the store will include a coffee bar and flower shop.

It will also, lest one forget, have a curated selection of the website’s clothes, shoes, accessories, jewelry and more: a fraction of the online offering, but a selection tailored to New York consumers.

The RealReal’s pop-up experiment last December in New York revealed a particular synergy between on- and off-line shopping, and a customer base ready and willing to combine the two, Ms. Wainwright said. And, she added, the average purchase at the pop-up was larger than the average one online.

“If you walk into the store, everything you see will also be online, and anything you see online you can see in-store,” she said. “What we saw when we ran the pop-up, some people went in, saw the item, thought about it, ordered it online that night and picked it up in the store that next morning.”

Such synergy is what drives Ms. Wainwright, and others like her, toward their new approach. While the death knell for the bricks-and-mortar store has been premature, the online experience is never far away.

“There are going to be iPads everywhere,” Ms. Wainwright said.

NEW YORK TIMES: LVMH Reshuffles Management, Shifting Sidney Toledano From Dior

NEW YORK TIMES: LVMH Reshuffles Management, Shifting Sidney Toledano From Dior

NEW YORK TIMES | VANESSA FRIEDMAN

In a sign that the turbulence that has significantly altered the luxury creative landscape in recent years has moved to the executive suites, LVMH Moët Hennessy Louis Vuitton, the world’s largest luxury group, has engaged in the fashion equivalent of a cabinet reshuffle.

Sidney Toledano, the man who built Christian Dior into a multibillion-dollar global powerhouse and shepherded it successfully through one of fashion’s biggest scandals, will be stepping down from the helm of the brand after leading it for almost 20 years. He will become chairman and chief executive of the LVMH Fashion Group, the division that encompasses eight of the group’s smaller brands including Céline, Givenchy, Loewe, and Emilio Pucci. He will also join the LVMH executive committee. Pietro Beccari, the chief executive of Fendi, another brand in the LVMH stable, will become chief executive of Dior.

Pierre-Yves Roussel, the former head of LVMH Fashion Group and the architect of its evolution and expansion, is leaving that role after 10 years to become a special adviser to the LVMH chairman, Bernard Arnault.

The scale of the changes reflects the unrest in the wider industry, which was rebounding this year after a period of difficulty.

The pace of designer hirings and firings has increased to an extraordinary extent over the last two years; just last week Christopher Bailey, president and chief creative officer of Burberry, announced he was leaving the brand. Brexit-induced uncertainty and fears of violence have affected consumer shopping habits, and the scale of digital transformation has altered the retail landscape. The C.E.O. musical chairs point to a conviction that new points of view are necessary to identify the opportunities in the turmoil.

“This is the right moment for change,” Mr. Toledano, 66, said in a telephone interview. He added that when Mr. Arnault broached the subject of his moving to the Fashion Group, “I accepted before he had finished asking.”

“I look around and see people retiring, and that is something I hate,” Mr. Toledano added. “I was never bored at Dior, but it was time for a new direction. I believe in the luxury market — I don’t need to see analysis from consulting firms — and think we can catch more market share.”

Dior holds a special significance in both the group and the overall sector as the first luxury brand acquired by Mr. Arnault in 1985, and is the cornerstone of his empire.

Along with Mr. Arnault, Mr. Toledano, who joined Dior in 1994 as director of leather goods and was named chief executive in 1998, was the mastermind behind the transformation of the elite French fashion house into a worldwide phenomenon that became something of a strategic model for other luxury brands on how to bridge haute couture and haute pop culture.

During his tenure, Mr. Toledano oversaw the opening of almost 200 international stores, the growth of celebrity partnerships, the rise of the star designer, and the evolution of the fashion show into a major marketing initiative. His nearly two-decade stint was in contrast with those of most luxury-sector chief executives, who tended to change jobs more often than even their designers did.

Widely respected, Mr. Toledano wielded influence that has reached far beyond LVMH, through the ascension of a group of chief executives who once worked for him at Dior, including Michael Burke, the chief executive of Louis Vuitton; Claus-Dietrich Lahrs, the head of Bottega Veneta; Valérie Hermann, the president of global brands at Ralph Lauren, and Pierre Denis, the chief executive of Jimmy Choo.

Mr. Toledano also steered the Paris-based Dior through the transition to a new creative director after the firing of John Galliano. Mr. Galliano’s flamboyance and dramatic vision had helped to propel Dior out of fustiness and into relevance, but he was forced out in 2011 after a drug- and alcohol-fueled anti-Semitic outburst. He was replaced by Raf Simons, but Mr. Simons stayed only three years and was succeeded by Maria Grazia Chiuri, the brand’s first female designer.

The executive change comes at a crucial point for Dior: LVMH announced the purchase of Dior, which had previously been a sister brand under a shared holding company last April, and after a comprehensive retrospectiveof the fashion house opened at the Musée des Arts Décoratifs in Paris this past summer to mark its 70th birthday. The Dior merger, in particular, created a giant fashion and leather goods group with combined annual sales of more than 5 billion euros, or $5.8 billion, according to the Exane BNP Paribas analyst Luca Solca.

LVMH has consistently posted strong sales in what has proved to be a volatile global luxury goods market in recent years. Last month it reported higher-than-expected revenue growth for the third quarter, with like-for-like revenues, which strip out currency swings and acquisitions or disposals, growing 12 percent from a year earlier to €30.1 billion.

With Mr. Beccari, who helped build Fendi into the third-largest brand in the LVMH fashion and leather goods division, after Louis Vuitton and Dior, LVMH will be keeping its leadership in the family, while ensuring that smaller brands, many of which have been in flux, are given renewed attention.

Mr. Beccari’s appointment “signals a new era,” Mr. Arnault said in a statement.

“Sidney Toledano is the driving force behind the huge success of Christian Dior Couture around the world,” Mr. Arnault said. “I want to offer my profound gratitude and am delighted that we will continue to work together and benefit from his expertise.”

Mr. Toledano will have his hands full in his new role. Though sales at the fashion group have tripled over the last decade under Mr. Roussel, with most brands becoming profitable for the first time, currentlyEmilio Pucci is searching for a designer; there are questions about whether Phoebe Philo, the feted creative director of Céline, will stay for much longer; and Marc Jacobs, which in 2013 was thought to be a possible candidate for an initial public offering, has struggled with a brand reorganization and management change.

Robert Burke, founder of an eponymous luxury consultancy, said: “This is a sign LVMH is getting serious about growing their smaller brands. A few of them, such as Céline and Givenchy, have the potential to be big global companies, and there is no one better suited to get them there than Sidney. He understands both the silhouette of a handbag and global strategy.”

“What I have learned from 20 years at Dior is you have to be pragmatic, concrete, listen to people a lot, and give guidance,” Mr. Toledano said of how he will approach his new role. “People want leadership.”

Mr. Beccari and Mr. Toledano are to assume their new posts next year. A replacement for Mr. Beccari has not been announced.