BoF: At DVF, Multitasker Jonathan Saunders Revamps An Icon

BoF: At DVF, Multitasker Jonathan Saunders Revamps An Icon

BUSINESS OF FASHION | LAUREN SHERMAN

NEW YORK, United States — 9am. That’s when Jonathan Saunders, chief creative officer of the American fashion brand Diane von Furstenberg, is keen to meet at the company’s offices in Manhattan’s Meatpacking District. It’s a fairly early start time for a design studio, but on this particular mid-August morning, the open-floor seating is heavily populated, with teams already deep in discussion.

The Scottish-born Saunders — clad in a softly puckered black gingham shirt, hair greying perfectly at his 39-year-old temples — is poring over printed copies of his marketing budget. These days, he is as interested in speaking about customer engagement as bias-cut silk.

“In many ways, [DVF] has been more creative than I was able to be with my own brand,” says Saunders, who joined the company just a little over a year ago. His first collection — for Spring/Summer 2017 — was designed in just six weeks. Saunders relocated from London for the job after a brief sabbatical from fashion. (His namesake designer ready-to-wear line ceased operations in December 2015 after facing financial difficulty, although he still designs furniture under his own name and retains the intellectual property.)

On Sunday at New York Fashion Week, Saunders will present Spring designs once again, this time with a year of experience from which to draw. It’s been a difficult year to be in New York, in Trump’s America, and yet Saunders dismisses this. “I’m from Scotland, I’m from a working class background. I have fought tooth and nail to get an education and have a career. Hardness doesn’t ever frighten me or intimidate me — it excites me,” he says. “When I got to New York and started working here, I loved the directness of the city, the normalcy. I love being busy, I love working, I love design, I love creativity, but I also love making it happen.”

“It”, in this case, means designing clothes that sell. While Saunders has long been a fashion-world darling — he was rumoured to have interviewed to replace Raf Simons at Dior — he has struggled like many of his peers to make a designer ready-to-wear business work. At DVF, the clothes are more affordable. His task, instead, is to usher a brand that was built on a dying model into a new era.

DVF has played disruptor several times over the course of its 40-plus year history. First, in the 1970s, by liberating working women from an old way of dressing, landing the brand’s founder, Diane Von Furstenberg, then a young entrepreneur, on the cover of Newsweek wearing her signature wrap dress. (The cover line? “Rags & Riches”.) In the 1980s, waning demand and bad business decisions drove the brand to the verge of bankruptcy, but a successful stint in the world of home shopping gave Von Furstenberg the boost she needed to persevere. By the late 1990s, DVF was well positioned to stake a claim in the then- emerging contemporary market. With the help of then-president Paula Sutter, the wrap dress became a must-have once again.

Now, it is Saunders’ turn to bring relevance to the classic style. Much has been made of the relationship between Von Furstenberg and her chosen successor — and how he has worked hard over the past year to stand on his own. She, in turn, has been quite open about how important, if difficult, it has been for her to get out of the way.

But this morning, like every morning, her presence is felt. A basket of apples from her Connecticut farm sits at the bottom of the studio stairs for the taking, with famous-artist portraits of her likeness — including Andy Warhol screenprints — hanging on the walls of the waiting room.

These are small, but definitive, reminders that she is not going anywhere. Saunders’ biggest challenge is to be able to use this fact to his advantage instead of trying to work against it, all the while making DVF reflective of his own undiluted creative vision. “Diane has created a fantastic business over the last 40 years,” Saunders says. “She has an iconic product that still resonates, and without this I wouldn't have anything to work with.”

However, before Saunders’ arrival, DVF had fallen into the same pattern as many of its contemporary peers, serving up heavily merchandised product that succumbed to the demands of wholesale partners. They’d ask for fit-and-flare dresses one season, bandage skirts the next. Who cares if these styles and silhouettes were in line with a brand’s ethos as long as the sell-through was good? Or so the logic went.

However, as consumers have shifted their spend away from department stores, those temporary, season-by-season merchandising fixes have proven increasingly ineffective.

“Brands became so big and so overdistributed and higly merchandised that they oftentimes lost their personality and point of view,” says retail and fashion consultant Robert Burke. “At the exact same time, the consumer became more educated because of e-commerce. They have an incredibly high desire to wear unknown brands or emerging brands — things that you’re not going to see a million-times over on Instagram.”

As a private company, DVF declined to disclose revenue figures, but a 2015 report estimated annual sales of about $500 million, though market sources suggest it could be less than half of that. Still, it’s a respectable figure for a brand whose main source of revenue is not handbags, fragrance or t-shirts. DVF makes its bread by selling clothes — lots of them — that can cost $500 or $600 a piece. (A whopping 80 percent of the business is apparel, with only 20 percent of sales coming from other categories.)

But as the industry evolves, Saunders must prove that a market still remains for DVF’s product. “My past experience in America and New York was very merchandise-led in a different way than what I was used to,” he says. “I feel like that’s changing. Not everybody is going to love what you do, and not everybody has to love what you do. It doesn’t have to suit every single person, for every single social or functional need in their wardrobe.”

Instead, for DVF to be successful today, it has to stand for something. Luckily, Saunders has source material. There, of course, is Von Furstenberg herself and her larger-than-life persona. “The brand’s ethos stems from Diane,” Saunders says. “In many ways, it was about ease of lifestyle... it was about women being able to dress in something that felt like fashion, but also didn’t feel so precious that it was unattainable.”

I love being busy, I love working, I love design, I love creativity, but I also love making it happen.

But most importantly, there is the wrap dress, perennially known as a universally flattering style. (The “flattering” bit is debatable, but wrap dresses are indeed adjustable, which means they are more forgiving to fluctuations in body size.) Perhaps it’s because of his background in product design, but Saunders has managed to see the dress for what it is — an idea — and cast it in a different light. “For me, it was important to be able to articulate the fluidity, the movement, the ease of the product without just replicating the product,” he says. “How does it resonate now? I’m trying to articulate it in a new way without ignoring the past.”

The result? People seem to genuinely like what he’s doing, including Von Furstenberg herself. At first, his changes to the brand identity — in particular, the sans-serif logo — felt premature to her. Saunders’ Autumn 2017 advertising campaign, shot by the young British photographer Oliver Hadlee Pearch in Tompkins Square Park and styled by Camille Bidault-Waddington, was also a major departure from the glossy studio portraits of the past. “When Jonathan started a year ago, it was tough for everybody, but it was tough for me because I let him be completely free,” Von Furstenberg says. “It was difficult to let go, but I wanted to, and I’m so glad I did because he gave it a huge fresh-up.”

Autumn’s leopard-print wrap dress, for instance, has all the components of a traditional DVF design — a classic pattern, that “easy” silhouette — but he cut it in silk instead of a pill-prone cotton blend, and dropped the hem to mid-calf. Over the course of multiple deliveries, he has also turned out several dresses and blouses in panelled florals cut on the bias: They are punchy and joyful, and rely heavily on his very specific sense of colour.

“In the traditional contemporary world, one doesn’t usually see this kind of design and individuality,” says Elizabeth von der Goltz, a luxury retail veteran who joined Net-a- Porter as global buying director in July 2017. “We’ve seen his fresh direction attract a new client, so we’ve been able to grow this business.”

That’s all to say that the collection looks special, not some generic department store play. “Jonathan has managed to retain the accessible price positioning of DVF while vastly improving quality to high designer levels,” says Marc Menesguen, a L’Oréal veteran who joined the company earlier this year as co-chairman of the board. “This allows us to develop a very competitive brand positioning and gives us global opportunity for growth.” Oftentimes, companies that experience an overhaul must shrink before they grow, and Von Furstenberg acknowdges that DVF had to “shrink a little” in order to move ahead. However, the company is tight-lipped on sales figures and will only acknowledge that e-commerce is driving a “substantial” amount of growth and that there are “pockets of growth” in the US, specifically on the West Coast, as well as in the Middle East, Brazil and the United Kingdom.

According to DVF, growth categories include knitwear (a Saunders’ specialty), outerwear (particularly leather, suede and faux-fur), dresses and “modern” evening wear. Saunders is also particularly bullish on accessories, which he sees as a significant opportunity, enlisting his friend (and longtime Marc Jacobs handbag consultant) Katie Hillier to collaborate on designs. “It was important to me not to try and provide somebody with solutions for day bags. Yes, obviously functionality is so important within a product, but for me it’s just about having fun, and really enjoying the process,” he says. “It is about a joyous decoration.... Because otherwise, what’s the point?”

So far, wholesale partners insist that shoppers are indeed falling in love with Saunders’ designs. Multi-brand sites with an international reach — such as Net-a-Porter — are faring well in particular.

Currently, the business is split 50-50 between US and international sales. Overall, 60 percent of revenue comes from DVF stores (this includes international franchise doors) and 40 percent comes from true wholesale doors. (The collection is available in 35 directly owned stores — as well as DVF.com — and 973 wholesale-partner doors worldwide.) For a brand so associated with its presence on the American department store floor, both figures must be reassuring to those plotting out DVF’s financial roadmap. (Direct sales and increased international distribution are both key paths to growth.)

Right now, however, Saunders doesn’t seem to have clear counterpart on the business side since the resignation of former chief executive Paolo Riva, who left the company in 2016. Von Furstenberg is still very much involved, as is her board of directors, which includes Menesguen but is mostly made up of family members (including her husband, IAC chairman Barry Diller) and close confidants (including Hamilton South, founding partner of public relations firm HL Group).

For now, however, Saunders — who works closely with Melissa Sussberg, the company’s EVP of global merchandising and US sales and Philip Atkins, its VP of global merchandising — is okay with a CEO seat left vacant. “Every brand, and every company at every stage of its development, needs to take their own situation, their own experience, and deal with it in the right way for that moment, and right now, it’s not the right moment for this brand,” he says of the company’s vacant chief executive role. “What’s so exciting right now is that we have a direct line to the consumer in a way that we’ve never had before. It means that designers, creative directors, creative people can no longer live in this elitist bubble of ‘we’re making clothes for ourselves’ self-indulgence. Yes, it’s wonderfully fun, but it’s also detaching yourself from what you’re trying to do.”

Von Furstenberg seems to agree, especially as she weights her options for the future. “It may seem odd the way I put the pieces together,” she says, referring to the current set up. “But there’s more that’s going to come and I am pleased with what we have have accomplished.”

While speculation regarding a potential initial public offering bubbled up a few years back, and there is always talk of DVF’s prospects as an acquisition target, the only certain thing is that Von Furstenberg wants to do the right thing. “At this stage of my life, I want to make sure that my brand gets in the very best hands so that it will last forever,” she says. “That means putting the right talent in place and also the hiring those with expertise in the new way of running a business. Jonathan was the first step. Now that we have lots of great assets, I may be looking to the next step.”

For now, Saunders is allowing himself to take pride in approving those marketing budgets — and thinking about new ways in which he can communicate with the customer, whether that means via an Instagram post or an in-store event. “It’s an interesting kind of dialogue,” he says. “It’s not about saying, ‘What do you want? I’ll design it for you.’ It’s about saying, ‘This is what I believe in. What do you think about it?’”

WOMEN'S WEAR DAILY: Contemporary Business in Flux Amid ‘Challenging’ Backdrop

WOMEN'S WEAR DAILY: Contemporary Business in Flux Amid ‘Challenging’ Backdrop

Industry executives point out contemporary collections have gotten too big, they’re over-assorted and not focused enough.

WOMEN'S WEAR DAILY | LISA LOCKWOOD

The contemporary category is struggling to become, well, more contemporary.

Faced with a highly promotional retail environment, a slowdown in store traffic, intense competition from the web and fast-fashion chains, contemporary’s large legacy players are trying to reinvent themselves while newer, more agile companies are gaining market share.

“I think contemporary has been especially challenging,” said Robert Burke, chief executive officer of Robert Burke Associates, the luxury consultancy. “It had been so predictable in the way the customer wanted it to be predictable.”

For years, if a customer liked a particular pant, she’d buy four or five every single season, or if she liked a particular dress or wanted a career suit, she’d have a certain brand she’d go to, he said. “It was much more defined. A lot of that is just not what’s happening today. The customer is moving so fast on so many levels and she’s incredibly educated and not as predictable as she once was. It’s caused the brands to reevaluate where they are today.”

Several industry sources blamed the category’s woes on too much sameness in the market, the high prices attached to legacy contemporary brands, less expensive options coming from some of the South Korean and Australian labels that are more trend-driven, and many less expensive options from Zara, H&M and direct-to-consumer firms such as Everlane, Revolve, Asos, Boohoo, Modcloth and Ayr.

“The customer is still buying clothes, but they’re looking at brands like Reformation out of Los Angeles, which is strong in its online marketing and connecting to the consumer,” Burke said.

One retail source noted that especially in spring and summer, the consumer is looking for fun, colorful, festive and romantic looks, and some of the legacy contemporary brands, such as Vince and Theory, are much more serious. “When we move into fall, we’ll see a little more action in those brands because they have investment pieces,” the source said.

Susan Sokol, president of Susan Sokol Consultancy, pointed out that the larger contemporary brands that are overly distributed and more saturated are having the most challenges. “That customer is much more aware of prices and she’s not as devoted to one particular brand. She’ll change it up,” she said.

Soko believes that customer is more exploratory and likes to shop online and at specialty stores such as Forty Five Ten, Hirshleifers and The Webster, where “she’s finding a mix and it’s more exciting for her.” She cited some contemporary brands that are doing well such as Alexis, Jonathan Simkhai, Caroline Constas, Ulla Johnson and Nili Lotan. “She [Lotan] does an amazing job. She really found those core business drivers. She borders between entry-level designer and advanced contemporary,” Sokol said.

Kim Vernon, president of Vernon Co., agreed that the contemporary customer now shops many brands, big and small, for exciting, fun fashion pieces, in smaller multibrand stores, single brand shops and online. “The 20-year-old contemporary brands are not keeping up with fashion, trend and newness that some of the smaller independent brands offer, causing an erosion of their former market share,” she said.

Frank Doroff, vice chairman of Bloomingdale’s, said the contemporary business is “comping up, in the low-single digits.” He said the legacy brands have been a little softer. Where he’s seeing good results are in the denim business, Aqua, and elevated T-shirt brands such as ATM Anthony Thomas Melillo.

“Things that appeal to a younger customer and more fashion-forward customer have been very good,” Doroff said. “So have our high-end, more advanced denim brands such as Mother and Frame,” he said.  He noted that some elevated T-shirt brands, the active business, and some new boho brands such as LoveShackFancy have sold well. “We’re selling a lot of shirting. The shirting trend was great for business from everybody,” he added.

Leah Kim, executive vice president, general merchandising manager, women’s at Barneys New York, said, “Overall, the business in this [contemporary] space has been soft.” She said Barneys doesn’t carry such legacy brands as Theory, Vince, Diane von Furstenberg or Joie, but carries T by Alexander Wang, which is doing very well. Among the brands in this area that are also doing well are Off-White, Monographie, its Saloni exclusive capsule collection and Warm.

 “We have been seeing a shift from casual or oversize looks to elevated feminine looks. At least that’s what the Barneys customer is looking for right now. The streetwear trend is also still very strong into fall,” she said. The retailer continues to focus on securing exclusive brands as well as exclusive packages to draw customers’ interest and to bring them into Barneys over the competition. “We also have many exciting in-store activations and customization events planned for fall that will create a lot of buzz and bring people into the store,” Kim said.

Saks Fifth Avenue re-branded that zone of the business as The Collective. “We believe contemporary is a tremendous opportunity for us,” said chief merchant Tracy Margolies. “It’s curated. We’re focused on mixing brands and mixing pieces. It’s not a monobrand store. We show you how to do it. We’re really going after trends.” For fall, the store is highlighting velvet and the jacket.

“We really get behind these trends in a big way from all vendors, all categories. Lastly, it’s current and featuring new of-the-moment designers,” she said. Saks has added a handful of new vendors this fall such as Maggie Marilyn, Ganniand Amo Denim.

Margolies said the legacy brands are still important, and there are designated spaces for them. “Our clients know Saks and they come to Saks for some of those legacy brands. They’re definitely a core resource, and what makes it fun is mixing and matching those brands together with some of these smaller brands, or even back to denim,” she said.

What’s changed over the years in contemporary is the influence of social media. “What happens is social media and influencers drive trends, and people come to the store and they want that now. We’re working fast and furiously to make sure we service the trends that are on social now and how quickly can we get them. Our vendor partners are looking to work quicker on lead times. The whole ‘buy-now-wear-now,’ they want to wear it that night,” Margolies said.

“I think this zone of business is changing. It’s not just the legacy brands. The business is changing in general because of social media, things are moving faster,” she said. “Thezone is being much more trend driven and we’re adding new and emerging designers as well.”

She noted that brands such as Zimmermann, Jonathan Simkhai and Cinq à Sept are “doing great.”

Lori Friedman, owner of Great Stuff, a contemporary women’s specialty retailer with five stores throughout Connecticut and New York, said she continues to do well in the category. “It’s all in the buy. I try to aim for brands that are not in department stores, but I don’t always get that,” she said.

Friedman has done well with brands such as Sea and Nili Lotan. “She’s fabulous,” she said of Lotan. Price, she said, isn’t a major factor in the sector. “It’s good when it’s expensive. They seem to want a better product,” she said. She finds what resonates with her clientele is different from what they can buy in the city. “It’s still casual. In the city, it’s more urban. My customer wants lifestyle clothing. She wants clothing to wear on the weekends and Saturday nights when she goes out to restaurants,” she said.

According to Julie Gilhart, a fashion consultant who spent 18 years as fashion director of Barneys New York, the contemporary category truly came into its own when a few key people were delivering style at a price such as Phillip Lim, Alexander Wang, Rag & Bone, Vince and Diane von Furstenberg. Since, the consumer’s attention has splintered.

“They were all of a sudden able to give this designer look for a price and that’s where the traction was, and they started to build a business. What’s happened is the emergence of online, you can shop the web, you’re not limited to have to go into the store, and you have a lot of options. Then you have the fast-fashion brands that have come up. They can deliver a good style at a good price. All of a sudden, you have two categories, you have street brands that really feel in style and are appealing to more than just street kids. Off-White is the quintessential example, and look at Supreme which is collaborating with Louis Vuitton. You have people like Kanye [West], Heron Preston, and they’re getting a lot of attention. Then you have the whole sport thing,” Gilhart said.

Like others, Gilhart pointed out that the contemporary collections have gotten too big, they’re over-assorted and not focused enough. “That’s what the online part of the business has done. It’s made things become very focused. Then you have the growth of The Real Real, and the customer can buy an expensive piece and then sell it. There are many, many choices for the customer now,” said Gilhart, noting that customers frequently gravitate toward the brand’s story, content and Instagram. “If you’re a start-up brand, you’re into that world, but if you’re already a pre-existing business with your structure based around the department store, it’s hard to shift it. A lot of [legacy contemporary] brands grew through the department stores and are one step away from their customer, instead of direct to consumer.”

She encourages young brands to sell online, and then a small specialty store before tackling the department stores. She suggests selling on Instagram, too. “You can do as much business doing that as a young brand, than if you had one store buying your collection,” she said.

Gilhart recalled when she was at Barneys, it was easy for a new brand to start there because the retailer did everything for them. “We did their marketing, we did their sales, we were engaged, and it’s very different now. It’s only been the last five years, that buying online and on your phone, and social media has really influenced things,” she said. Interestingly, it used to be that selling into Barneys was a badge of honor. “Barneys gives an indication to the market in terms of where you are and what you do. But as far as the customer, it doesn’t really matter. They can go online and it doesn’t matter where they get it.”

“Probably one of the most difficult places to be right now is to be a contemporary brand in a department store,” Gilhart said.

Among the biggest problems facing the contemporary sector are the incessant sales going on that have influenced the way the consumer shops. She doesn’t need to buy it at full price, because if she waits, it will be marked down 20, 30, 40 and eventually 70 percent.

That constant sale mentality influenced one contemporary collection, ATM Anthony Thomas Melillo to develop a new business model outside frequent markdowns.

“The [current] model is based on markdown and not design. You have all these brands, they have an enormous amount of product, and in the end, what is the design, where is the lifestyle? Contemporary is an odd word,” Melillo said.

 “I was not launching ATM to do what the legacy brands were doing, rather I was launching to fill a white space. To me the white space then and now was a brand that had the brand aesthetic of something dedicated to a new type of lifestyle I was seeing — the chic customer who wanted to look and feel relaxed, but chic and special, not mass. Legacy brands were pumping out a lot of clothing, but without a personal touch. Nothing about a piece of clothing that you can find in all avenues of distribution feels special,” he said. “We have always felt we do not need to be on every markdown and ‘friends and family’ promotion. This to us is the death of a brand,” Melillo said.

He said he does business with Bloomingdale’s and insists that they don’t mark it down, put it on sale or “friends and family” promotions. “If I can get that customer to still go in that store and buy me at full price, it’s a pretty good accomplishment on my end,” he said.

Andrew Oshrin, ceo of Milly, is showing gains by raising the company’s profile via social media and advertising.

“I think Milly is a bit of an outlier. We’re seeing some significant growth at our three biggest accounts — Saks, Neiman Marcus and Nordstrom,” he said. In addition to seeing some international growth in core product classifications, he’s also seeing 4 to 5 percent growth in its own omni-retail channels, where it operates two stores. E-commerce is trending up 15 to 20 percent.

Stacey Bendet, ceo and creative director of Alice + Olivia, said her business in department stores is strong. “We’re up at Neiman’s and Saks. And we are fighting a lot of the markdowns. It hurts our own stores. It’s hard for us to sell things at full price when everyone else is selling at markdown,” she said about the brand that operates 36 stores. “We’re in the world of Amazon. Everything is available at the touch of a button. You have to make your shopping experience and your brand experience easy for the busy woman.”

Bendet believes the department store retailer “needs to act as curators and stores with a fashion point of view, instead of becoming a market of everything. If they become OK with downsizing a little bit and becoming like a European department store model, I think they will go back to being successful. There needs to be a bit of a correction of the size that they are. I think we will enter this era of a boutique department store, instead of a mass department store. I think Amazon in its own way has crushed the concept of the mass department store.”

Alice + Olivia changed its business at Bloomingdale’s to a concession. “We manage it, we operate it and we control those markdowns,” she said. “We’ve had double-digit growth through that, in fewer doors. It’s been excellent. We’re managing that business and operating it, and it’s been really profitable and great.”

Jane Siskin, ceo of Cinq à Sept, is finding success in its first year of business. She had earlier been the licensing partner of Elizabeth & James.

“I think that we came into the market at the best time and maybe the worst time. It was the best time because the customer was hungry for new brands and that has been incredibly important to all the retailers, both majors and specialty stores. Everyone is always searching for something new. Obviously we came to market with a new brand with none of the new brand problems. They knew we were going to ship, they knew we could do reorders and would chase hot items; that was a big advantage. As for the worst of times, it’s no secret the retail environment is very challenged right now. We’ve been in a very interesting place, sort of nestled in the middle, between having something great and new with a tough environment,” she said. “I think that to grow a brand right now you really have to be in tune with what’s going on out there. You have to listen and watch every single day, what’s working, what isn’t working, where are you getting traction and where are you not getting traction? Categories you could always rely on are more challenging than others.”

For example, Cinq à Sept had a particular dress that sold everywhere. When she recut it in new colors, the customer was no longer interested in that dress. “In the past, you could sell that dress over and over again. The customer is more discerning. The higher-end customer, when she sees people wearing the dress, she isn’t that interested in buying the dress. When we added embroidery, it was excellent. You have to look and listen every single day. Your ear has to be to the ground,” she said.

Cinq à Sept is housed near more advanced contemporary brands such as Rag & Bone, ALC, Alexis, Jonathan Simkhai, Zimmermann, and Tanya Taylor.

Siskin said her business is split evenly between specialty and department stores, and frequent promotions at the latter are a fact of life.

“Listen, in order to grow a business with department stores today, you have to be a partner on all sides. Obviously, we’re not immune to partnering on the profitability side. But we’re much more focused on partnering on how to bring more people into the stores to shop, to bring more brand awareness, to create an experience. It’s a 360 strategy,” Siskin said

“The idea of putting goods in, hoping they sell, and paying at the end, as far as I’m concerned is antiquated and not sustainable anymore. Our challenge with the retailers is how can we make it better. We are hyper focused, laser focused on being part of the solution,” she said.

NEW YORK TIMES: Colette, Paris Fashion Destination, Is to Close in December

NEW YORK TIMES: Colette, Paris Fashion Destination, Is to Close in December

NEW YORK TIMES | ELIZABETH PATON AND VANESSA FRIEDMAN

Colette, the fashion and lifestyle emporium in the First Arrondissement of Paris that proved to be a launchpad for young designers and a shopping destination for industry insiders and tourists alike, will close its doors on the Rue St.-Honoré in December after 20 years.

A statement confirming the decision was posted on the boutique’s website on Wednesday.

“As all good things must come to an end,” the statement said, “after 20 wonderful years, Colette should be closing its doors on December 20th.” The company cited retirement plans for the founder, Colette Roussaux, who ran the store with her daughter, Sarah Andelman, and made it one of fashion’s favorite new-style family businesses.

“Colette Roussaux has reached the time when she would like to take her time; and Colette cannot exist without Colette,” the statement read, referring to the store requiring its founder.

The closing of the store, long considered an apex of Parisian fashion trends and a vital champion of emerging labels, comes amid rising rents for retailers in Paris and increasingly unpredictable consumer habits, including a move toward more fashion-spending online. The city of Paris has also been hit by volatility in the tourism sector in the last two years, after a series of terrorist attacks.

Colette had sales of 28 million euros ($32 million) in 2016, with e-commerce accounting for 25 percent of that and the rest coming from its single store.

An eclectic three-story trove of elaborate cocktail gowns, tuxedos, sneakers, postcards, pens and gadgets, all across 8,000 square feet, Colette was founded by Ms. Roussaux in 1997. It was one of the first stores to cater to an aesthetic lifestyle, as opposed to a specific product category, becoming a model for a new kind of retail. Ms. Andelman functioned as the store’s buyer and public persona.

“The first stop the fashion crowd would make was to Colette,” Robert Burke, founder of the luxury consultancy that bears his name, said in an email. “The selection of brands, the way the forms displayed, the cloths and the mix designers was inspiring. If you were carried at Colette, you were cool. If you had a launch of product or a book signing at Colette you were recognized by not only the fashion world but the international fashion consumer.”

The end of the Colette era is bound to raise question about the continued viability of such “concept stores,” which place an emphasis on attitude and discovery over the bottom line. (Colette famously never had a marketing plan.)

However, other concept stores, such as 10 Corso Como in Milan, which was founded in 1990 and has been on an expansion spree with stores in Seoul, South Korea; Shanghai and Beijing, and one to open in South Street Seaport in New York next year, have successfully navigated the new retail environment. The British store matchesfashion.com has transformed itself by focusing its business online.

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It is possible that the decision to close Colette is that rare thing in fashion, which is notoriously bad at succession planning and finds it almost impossible to let sleeping brands lie: an active attempt on the part of a globally recognized name to determine the end of its life span. If that is true, instead of being a cautionary tale for the industry, it may be yet another example of the store’s pioneering nature.

The industry accolades for Colette began almost immediately.

Bryanboy, the fashion influencer, wrote on Instagram, “Colette to me is the ultimate shopping (and research) destination in Paris, with their well-edited buys and support for many people whether it’s a big brand or a small entrepreneur or artist. When I didn’t have a lot of money to buy designer clothes, I used to buy my music compilation CDs from you! For a generation, Colette was the gold standard of cool.”

According to the company statement, also posted on Instagram, negotiations are in progress with Saint Laurent, the French luxury house owned by Kering, to take over the store location.

“We would be proud to have a brand with such a history, with whom we have frequently collaborated, taking over our address,” the statement said, adding that such a move could “also represent a very good opportunity for our employees.”

Francesca Bellettini, chief executive of Saint Laurent, acknowledged the history of the space, saying, “For the last 20 years, Colette has been such an iconic and prestigious project and destination in Paris. It feels natural to us to discuss the opportunity to take those amazing premises over in order to give them a second life.”

For the time being, however, the Colette team are taking pains to emphasize that until December, it will be business as usual. “Until our last day, nothing will change. Colette will continue to renew itself each week with exclusive collaborations and offerings, also available on our website, colette.fr.”

BUSINESS OF FASHION: Is Mulberry’s Turnaround Working?

BUSINESS OF FASHION: Is Mulberry’s Turnaround Working?

BUSINESS OF FASHION | LIMEI HOANG

LONDON, United Kingdom — On Wednesday, British luxury handbag maker Mulberry reported a 21 percent rise in annual pre-tax profit, helped by demand for the new designs of its creative director Johnny Coca and a rise in online sales.

The company reported pre-tax profit of £7.5 million ($9.6 million) for the year ended March 31, up from £6.2 million last year, and revenue of £168.1 million. Sales from its online channels also increased by 19 percent, now representing 15 percent of its group revenue.

However, the results also showed that Mulberry’s overseas like-for-like sales fell by 3 percent for the 10 weeks ended June 3, and its domestic sales only grew 1 percent, less than in previous reporting periods, causing its shares to fall around 2.6 percent in early trading.

“It’s really a set of results in two halves,” said Neil Saunders, managing director of research firm GlobalData Retail. “There’s a reasonably encouraging set of numbers coming from the domestic business and I think there has been a bit of a pick up there in growth. Although it’s not what you would call stellar, it’s reasonable and it shows that some of the new lines have gained traction and interest.

“The international side of the business is a little bit less encouraging; that’s where Mulberry continues to struggle to carve out a presence in markets that are very crowded and very saturated. Especially as you’ve seen brands like Coach come back and revive sales, I think it’s becoming a little bit more difficult for Mulberry perhaps to cut through.”

They’re definitely going in the right direction, there’s just a little bit more that needs to be done.

The improvement in Mulberry’s profit and revenue comes as the company is in the midst of orchestrating a turnaround strategy to bolster the brand after an ill-considered attempt to radically elevate its offering backfired, alienating former customers without attracting new fans.

Since then, the company has worked hard to move away from turbulence of 2013 and 2014, a period marked by three profit warnings, hiring a new creative director Johnny Coca from French luxury brand Céline, and chief executive Thierry Andretta.

Andretta, who has worked at LVMH, Lanvin and Gucci, has helped to oversee Mulberry’s turnaround strategy which is focused on driving four pillars of the brand: product, brand, omnichannel and operations. The company also recently announced plans in May to adopt a "see now, buy now" model, a decision it says it hopes will drive further engagement with the brand and increase its relevance to customers.

Mulberry’s results suggest its turnaround efforts are gathering pace. But are they enough to win back its legions of former fans, particularly at a time when the market for affordable luxury handbag brands is saturated?

“Mulberry’s turnaround remains on track with 2017 organic growth up 8 percent,” wrote analysts at Barclays in an early morning note. “Real progress has been made on product and factory efficiency, which led to a much higher gross margin than we had expected with these proceeds being reinvested into marketing,” they added, noting the progress the brand had made in the Asian market.

Its a view shared by Robert Burke, chief executive of advisory firm Robert Burke Associates, who believes the company is making some headway in tackling the challenges it faces in the fast-growing handbag market.

"I think it shows signs that its working but the consumer is moving extremely fast and the brands have to move just as fast today," said Burke. "The consumer is also much more well researched than ever before and they want to know and see and read, and it has to be in the forefront of their minds.

"The handbag market takes a long time when it comes to positioning, to establish a brand image," he continued. "It moves slower when it comes to consumer awareness and desirability. And people tend to be more brand loyal with handbags than when it comes to ready-to-wear. What’s happened in the last few years, is it seems that customers have focused on fewer and fewer brands, where there used to be a lot more variety in the market. It seems to be gravitating towards much bigger brand names. And that’s just a trend of the market."

But Saunders believes the company still faces a number of challenges, particularly as its international business has slowed and affordable luxury competitors like Coach and Michael Kors have struggled to regain market share lost to new brands like Mansur Gavriel.

Going forward, Mulberry needs to carve out more of an international presence, something chief executive Thierry Andretta has marked as a focus for the company as its UK retail stores account for 60 percent of sales. “International remains the focus,” Andretta said in a call with reporters. “We are still fine-tuning our network.”

“The brand still struggles a bit with its identity,” added Saunders. “I think there’s a case for it really trying to firm up in the international mindset, what Mulberry stands for, what position in the market it has.

“If people aren’t clear, it’s very difficult to sell through those products at the premium that Mulberry charges. They do need to really think about the brand image — and the marketing that goes with that internationally — to really get those sales up across some of those key markets that they’ve tried to expand into.

“They also need to look very carefully at what lifestyle image they’re projecting. It does give a brand more of a chance of succeeding, especially when the bag market is very crowded and very competitive. They’re definitely going in the right direction, there’s just a little bit more that needs to be done just refining and honing that brand.”

Mulberry need to look at signature bags and creating newness, adds Burke. "That is a critical point, creating that desire. Today creating that desire oftentimes is not just marketing, but connecting with the consumer and social media and marketing themselves in a different way. They can certainly play up on their heritage but they have to appeal to the new and be desirable."

NEW YORK TIMES: Bleecker Street’s Swerve From Luxe Shops to Vacant Stores

NEW YORK TIMES: Bleecker Street’s Swerve From Luxe Shops to Vacant Stores

NEW YORK TIMES | STEVEN KURUTZ

Someday urban planners and retail executives may want to debrief Robert Sietsema. As someone who has lived at the corner of Bleecker and Perry Streets for 27 years, he has witnessed the rise and fall of a luxury shopping district that grew out of workaday surroundings in the 1990s and has left empty storefronts in its wake.

Bleecker Street, as Mr. Sietsema wryly noted, became “the epicenter of the designer-store revolution, whereby many of the old, functioning stores, like bodegas, laundromats and video stores, were replaced by shops selling $400 T-shirts.”

During its incarnation as a fashion theme park, Bleecker Street hosted no fewer than six Marc Jacobs boutiques on a four-block stretch, including a women’s store, a men’s store and a Little Marc for high-end children’s clothing. Ralph Lauren operated three stores in this leafy, charming area, and Coach had stores at 370 and 372-374 Bleecker. Joining those brands, at various points, were Comptoir des Cotonniers (345 Bleecker Street), Brooks Brothers Black Fleece (351), MM6 by Maison Margiela (363), Juicy Couture (368), Mulberry (387) and Lulu Guinness (394).

Today, every one of those clothing and accessories shops is closed.

Indeed, over the past year, Mr. Sietsema, the senior critic at Eater NY, has watched with mild schadenfreude but greater alarm as his neighborhood has undergone yet another transformation from a famed retail corridor whose commercial rents and exclusivity rivaled Rodeo Drive in Beverly Hills, Calif., to a street that “looks like a Rust Belt city,” with all these empty storefronts, as a friend of Mr. Sietsema’s put it to him recently.

In the heart of the former shoppers’ paradise — the five-block stretch running from Christopher Street to Bank Street — more than a dozen retail spaces sit empty. Where textured-leather totes and cashmere scarves once beckoned to passers-by, the windows are now covered with brown construction paper, with “For Lease” signs and directives to “Please visit us at our other locations.”

“There’s graffiti, trash inside,” Mr. Sietsema said. “It’s horrible.”

Of the Marc Jacobs mini-empire on Bleecker Street, the only survivor is Bookmarc, at 400 Bleecker, which sells art books along with items like $80 smartphone cases. This used to be the site of the Biography Bookshop, where bookworms crowded into one another as they reached for volumes by James Boswell or Robert Caro on the overstuffed shelves.

If many of the high-end stores along Bleecker didn’t prosper as businesses, “they succeeded in transforming the area into a luxury retail neighborhood that feeds on itself,” said Jeremiah Moss, who has tracked the city’s ever-changing streetscape on his blog, Jeremiah’s Vanishing New York, since 2007.

Bleecker Street, Mr. Moss said, is a prime example of high-rent blight, a symptom of late-stage gentrification. “These stores open as billboards for the brand,” he said. “Then they leave because the rents become untenable. Landlords hold out. And you’re left with storefronts that will sit vacant for a year, two years, three years.”

How Bleecker went from quintessential Greenwich Village street, with shops like Condomania and Rebel Rebel Records, to a destination for Black Card-wielding 1-percenters, to its current iteration as a luxury blightscape is a classic New York story. It involves a visionary businessman, a hit HBO show, an Afghan immigrant, a star architect, European tourists, aggressive landlords and, above all, the relentless commercial churn of Manhattan.

In 1987, after learning about a store for rent from the owner of a Bleecker Street nail salon, Arleen Bowman opened a women’s clothing boutique under her own name at 353 Bleecker, between West 10th and Charles Streets. The space was around 300 square feet; she paid $1,500 in monthly rent.

“It was a time when everybody wanted stuff with fringe on it,” Ms. Bowman recalled. “And I was like the queen of fringe.”

Her neighbors included antiques stores like Pierre Deux, Treasure & Trifles and Susan Parrish; a pet store called the Bird Jungle; the Biography Bookshop; and Nusraty Afghan Imports, where an immigrant named Abdul Nusraty had been selling rugs, jewelry and antiquities since 1979.

“Each store was unique,” Ms. Bowman said. “Susan Parrish — she had the best vintage quilts and linens ever. It took me a half-hour to walk home because I stopped and chatted with everybody.”

After five years, Ms. Bowman moved to a slightly larger storefront next door, signing a 10-year lease for $2,500 a month, but all around her not much else changed throughout the 1990s. The tourist crowds, proliferation of fashion chains and sharply escalating rents in SoHo felt far removed from west Bleecker, with its tiny shops and close-knit vibe.

Ms. Bowman and her neighbors hardly noticed when, in 1996, Magnolia Bakery opened at 401 Bleecker, where the bird store had been. It was just another local business, like the bodega operated by Turks or the Greek diner Manatus.

But on July 9, 2000, Magnolia was featured on “Sex and the City,” in Season 3. The 30 seconds of Carrie Bradshaw and her friend Miranda eating cupcakes outside the bakery were all it took to turn the street. Soon, Magnolia was written up in British Vogue, and what Mr. Sietsema described as a “cupcake bouncer” was stationed on Bleecker to corral the tourist hordes who waited in lines that bottlenecked the block.

The Magnolia crowd in part convinced Robert Duffy, then the president and vice chairman of Marc Jacobs, that the company should open a store nearby. When a space became available on Bleecker and 11th Streets, Mr. Duffy, who lived in the neighborhood and dined regularly at the Paris Commune, outbid five other prospective tenants.

As Mr. Duffy told The New York Times back in December 2001, “If I could have 20 stores on Bleecker Street, I would.”

Like many people, Ms. Bowman believes the arrival of the first Marc Jacobs store, with its trendsetting clothes and clientele of fashion editors and celebrities like Sofia Coppola, was the tipping point. “Once Marc opened up, all the dolls wanted to be on Bleecker Street,” Ms. Bowman said.

Lulu Guinness, the British handbag designer, flew to New York to secure retail space in what had been an incense emporium. Fresh, the cosmetics brand owned by LVMH, took over a former beauty parlor. Ralph Lauren opened a men’s shop in 2003, a women’s store in 2004 and a Double RL outpost in 2005. Intermix, Cynthia Rowley, James Perse, Brunello Cucinelli, Coach, Mulberry, Tommy Hilfiger, Robert Marc, Olive and Bette’s, Jimmy Choo, Burberry, Gant and Nars all followed.

If that sounds like too many fashion brands to squeeze into a five-block stretch, consider that landlords converted ground-floor apartments into storefronts to meet the demand for space.

The gentrification of the meatpacking district, where Jeffrey New York opened in 1999, spilled into the far West Village, turning the area into a shopping and dining playground. When Richard Meier’s first glass residential towers on Perry Street were completed, in 2002, it hastened the continuing change of the Village from Joe Gould’s scruffy bohemia to a prestige address for bankers and movie stars.

It was around this time that Janet Russo, a clothing designer, and her husband, Bill Jacklin, an artist, both longtime Village residents, sold their townhouse on Bank Street to Mr. Duffy. She felt the Village had changed, she said, “to the point where I wouldn’t want to live there.”

But, she added, she didn’t foresee the effects on Bleecker Street, where she used to scour the antiques stores for inspiration and household items like curtains.

“I’m not so sure Marc and Robert knew, either, that what they started was this crazy thing,” said Ms. Russo, who lives in Connecticut with her husband. “I don’t think anybody really anticipated what happened.”

If some of the residents had trouble adjusting, everything was great for the landlords and the luxury brands, at least for a while. Busloads of potential shoppers were deposited on the street during “Sex and the City” fan tours. Each Christmas, Santa Claus made an appearance at the Marc by Marc Jacobs boutique, posing for Polaroids with the well-groomed children of these new Villagers.

Who knew whom you might spot shopping on Bleecker Street — Sofia or Scarlett or Mary-Kate and Ashley? Or even Carrie Bradshaw herself, since the actress Sarah Jessica Parker lived in the neighborhood.

Bleecker Street, said Faith Hope Consolo, the chairwoman of the retail group for the real estate firm Douglas Elliman, “had a real European panache. People associated it with something special, something different.” Ms. Consolo, who has negotiated several deals on the street, added: “We had visitors from all over that said, ‘We’ve got to get to Bleecker Street.’ It became a must-see, a must-go.”

Early on, Ms. Consolo said, rents on the street were around $75 per square foot. By the mid-to-late 2000s, they had risen to $300. Those rates were unaffordable for many shop owners like Mr. Nusraty, who was forced out in 2008 when, he said, his lease was up and his monthly rent skyrocketed to $45,000, from $7,000. Brooks Brothers Black Fleece took over his space at the corner of Bleecker and Christopher Streets. Other exiled businesses included Toons Thai restaurant, Leo Design and the beloved Biography Bookshop, which secured a new space east of Seventh Avenue and renamed itself Bookbook.

By 2012, only a few old-timers remained, including Ms. Bowman, who, through a lucky break, had renewed her 10-year lease in 2002, just before the street took off. But when she called her landlord to renegotiate, his quote — $35,000 a month — all but ended the discussion. She closed, too.

“My space was taken over by the Organic Pharmacy,” she said. “It has nothing to do with being a pharmacist. They sell high-end creams, and they give facials.”

And then? Blowback. While quirky independent stores couldn’t afford the new Bleecker, it became apparent over time that neither could the corporate brands that had remade the street. An open secret among retailers had it that Bleecker Street was a fancy Potemkin village, empty of customers. Celebrities shopped there because they wouldn’t be bothered. The “Sex and the City” fans lining up at Magnolia and snapping photos of Carrie’s stoop weren’t willing or able to fork over $2,000 for designer heels.

“Jimmy Choo — I never saw anybody in the shop,” Ms. Bowman said. “I don’t get it. Who’s buying this stuff?”

Robert Burke, the founder of a namesake luxury consulting firm, said Bleecker Street was “a vanity location — meaning it’s more about the image than about retail sales or foot traffic.”

At a time when shoppers are buying online and fashion brands across the industry are hurting, “the challenging business environment makes it less interesting to do vanity locations,” Mr. Burke said. Especially when the cost to operate them keeps rising, with landlords on Bleecker Street demanding as much as $800 per square foot in recent years, according to Ms. Consolo.

“What happened in the last year is the retailers started to push back,” she said. “They weren’t getting the foot traffic. They stopped renewing, and the vacancies started to roll.”

Now that many of the big fashion brands have pulled out, what will become of the west end of Bleecker Street? Is it possible for shop owners like Ms. Bowman and Mr. Nusraty, who is practically waiting in the wings around the corner on Christopher Street, to lease affordable space there again? It’s unlikely. As indicated by the languishing storefronts, landlords are willing to hold out.

Ms. Consolo, the real estate agent, noted the number of newish beauty boutiques on Bleecker, including Sisley and Aesop, as well as long-term tenants like the perfumer Bond No. 9 and the beauty brand Fresh. The future of the street, she said, may be as “beauty and lipstick alley.”

Other companies have swooped in to fill some of the vacant storefronts, opening pop-up shops, signing short-term leases or risking a longer stay. Many are foreign brands looking to raise their profile in America, like Orla Kiely, an Irish designer, and Enfold, a Japanese line that opened on the street last fall.

Elad Yifrach, the founder and creative director of L’Objet, an upscale décor brand that opened its first New York store last fall in one of the former Coach outposts, believes the area still has retail magic, despite the recent hard times.

“Bleecker is quintessential West Village,” he said. “The most beautiful townhouses are around there. The street needs to go back to bringing a cool factor, things that will inspire the audience.”

For many longtime Village residents, what the street is missing is not a cool factor but the essential mix of businesses that makes a neighborhood function. On a recent afternoon, Marjorie Reitman, who has lived in the Village for 43 years and who was out on Bleecker Street walking her neighbor’s dog, Walter, reflected on the street’s mercantile past.

“I remember when I first moved down here,” she said. “There was a hardware store owned by an elderly couple, a grocery store, a newspaper store.”

She was standing in front of ATM Anthony Thomas Melillo, a clothing boutique that opened in February to sell $115 “destroyed wash” T-shirts and other garments. The store had no customers, and the front door was open, allowing the air-conditioning to pump out into the street, something Ms. Reitman lectured the young sales associates about.

“That’s the attitude: ‘I have money, I can pay the fine, I don’t care,’” Ms. Reitman said.

The original Marc Jacobs store on Bleecker that started the boom was next door with its windows blacked out. Ms. Reitman had an idea for that space and the other empty stores that dot Bleecker Street like missing teeth in a very expensive mouth.

“They should all be pot shops,” she said. “Seriously. I’m not kidding. I can’t imagine what else could go in and pay the rent.”

VOGUE: When Models Become Fashion Designers

VOGUE: When Models Become Fashion Designers

VOGUE | ELIZABETH HOLMES

There is a long-held line of thinking in the fashion industry: if, after a runway show, the models try to take the samples home with them, the collection is sure to be a hit. If they aren’t interested? Not so much. “Models have always been a good barometer of fashion,” says luxury consultant Robert Burke.

Indeed, it stands to reason that the famous faces who spend their days lingering in ateliers and serving as real-life clotheshorses would pick up a thing or two about garment making along the way. But here is the question for today’s It Girls: does that experience, coupled with a recognisable name, help a model become a successful fashion designer?

Alexa Chung is the latest to try her hand, with a highly anticipated clothing line launching this week, earning considerable buzz; suggesting an outsize interest in her creations.

For that buzz to translate into a successful fashion label, a model must make the difficult jump from tastemaker to entrepreneur. There is a reason we have seen a rise in the number of collaborations between models and designers, like Gigi Hadid and Tommy Hilfiger. Those partnerships offer the model a chance to use her expertise, and her social media prowess, while benefitting from the team already in place at an established design house", Burke says. “Models tend to have not had any formal training,” he adds. “Starting a clothing line from scratch is a very different - and very expensive - venture.”

“Having a recognisable name helps get your foot in the door, but to go the distance the products have to really work,” says Elizabeth Hurley, who launched Elizabeth Hurley Beach in 2005. The model-actress-designer, and longtime spokesmodel for Estée Lauder, uses her various platforms to promote her line. “I get to talk about my beachwear when promoting movies, TV shows and cosmetics and vice versa,” she says.

Liya Kebede, a mainstay on magazine covers and catwalks around the globe, says her modelling experience gave her “insider knowledge” and “opened doors” when she started Lemlem, a collection of woven and embroidered clothing for women and children inspired by her native Ethiopia. “It was still a challenge and a huge learning experience,” says Kebede. “Having that background as a starting point, though, and understanding the ins and outs of the industry, was definitely useful.”

Celebrities infiltrated fashion’s ranks long ago, successfully parlaying their notoriety into blockbuster businesses (see: Jessica Simpson). “A celebrity’s name on a label effectively fast-tracks a new fashion brand - shaving off as much as 10 years to develop widespread recognition,” writes Teri Agins in her 2014 book, Hijacking the Runway: How Celebrities are Stealing the Spotlight from Fashion DesignersVictoria Beckham and The Row’s Mary-Kate and Ashley Olsen have even won over skeptics on the designer level.

Anine Bing, who started her Los Angeles-based namesake line in 2012, says her time in the industry was more of a hinderance than a help. “I had to work extra hard to prove myself in the business with colleagues, other designers, even friends of mine,” says the Danish-born, Swedish-raised Bing. Despite her loyal following, she says, “it took awhile for people to not just see me as a model, but as a designer as well, and as someone who was running a legitimate business.”

Bing recognised a need for street-style staples, the kind of seasonless and versatile basics that she herself relied on, like distressed denim and leather jackets. So she pressed on, turning to social media to spread the word. “I put a lot of time into growing our Instagram,” she says, “and getting followers excited about new products.”

It also helps to have influential friends. The “Ambassadors” page on Bing’s website is a chic compilation of other models wearing Anine Bing: Kendall Jenner in a lace bra, Cara Delevingne in a “Bing” tee and Gigi Hadid in black booties. Alessandra Ambrosio makes multiple appearances in Bing’s jackets, including a black cropped suede style and an olive green army jacket.

“I tried not to focus on the challenges so much and instead tried to see it as an opportunity, since I had pretty unique insight into this world,” says Bing. “I now have such a stronger understanding into how this business works.”

BUSINESS OF FASHION: WHAT'S NEXT FOR DKNY

BUSINESS OF FASHION: WHAT'S NEXT FOR DKNY

BUSINESS OF FASHION | LIMEI HOANG

After acquiring DKNY for $650 million, apparel firm G-III has cut a series of deals that could initially raise brand awareness and sales, but ultimately damage the label's premium image.

When G-III announced in July 2016 that it would acquire Donna Karan International from LVMH for $650 million, industry insiders wondered what the old-school apparel company — best known for licensing big-name brands — would do with DKNY, the diffusion line that became the core of the fashion house when Karan stepped down and closed her high-end label in 2015.

Since G-III closed the deal in December 2016, it has unveiled a wholesale-focused strategy that flies in the face of current retail trends favouring the direct-to-consumer model, raising the question of whether its approach is a long-term solution or a short-term fix.

Just this week, the company announced a licensing agreement with Calvin Klein and Tommy Hilfiger owner PVH, which will develop a new DKNY brand, DKNY Sport for Men. The first collection will debut in Spring 2018 and be sold in department stores across the United States and Canada.

At first blush, the partnership appears to be downright sensible. “There are a lot of synergies with DKNY and Calvin Klein and Tommy Hilfiger,” says Robert Burke, chief executive of advisory firm Robert Burke Associates. “PVH knows those businesses really well and G-III knows how to produce the product.”

But according to analysts, the move is just a short-term solution to raise DKNY’s brand awareness, and could limit brand control in the long term.

“When you have these kind of partnerships, neither side has perfect control,” says Neil Saunders, managing director of research firm GlobalData Retail. “For some middle-of-the-road kind of brands, that’s fine. But I always think for high-end brands, or more expensive brands, the whole point is that there is a sense of creative direction and brand story behind them that needs close control.”

The new licensing deal follows G-III’s partnership with Macy’s, announced in March, to exclusively sell DKNY women’s apparel, handbags and shoes. “The biggest push from department stores is to have exclusive product,” says Burke. “It’s the only way they are going to be able to compete against each other and all the other online competitors like Amazon and Shopbop.”

A spokesperson for G-III could not be immediately reached for comment, although the company has expressed plenty of confidence in its approach in recent months. “We believe that Macy’s is the ideal partner as we implement our strategy for DKNY to be the premier brand in the world for women’s apparel and accessories,” Morris Goldfarb, chairman and chief executive of G-III, said in a statement announcing the Macy’s deal.

But G-III’s Macy’s deal could actually prove counterproductive, argues Saunders. “I don’t think DKNY has the pulling power of other brands in the market among large swathes of customers so I think that exclusive deal has really limited their exposure,” he says. “[This is] good from the point of view they are not driving ubiquity, but it’s not great from the point of view of driving sales.”

Saunders believes G-III needs a much tighter distribution strategy that is built around the DKNY brand and its own stores, as seen with Coach and Ralph Lauren, which have pulled back from wholesale. “It is more complicated and slightly more expensive but I think in the long run it's likely more successful,” he explains. “The fact that they haven’t done that, signifies to me that what they really want is a kind of a quick win.”

The wholesale strategy could even be described as “dangerous” for a premium brand like DKNY, Saunders warns. “I think you get into devaluing the brand. DKNY actually is not that strong. Overall, they are probably going to get more sales out of [this strategy]. But for the long-term of the brand, I’m not sure it’s quite so sensible.”

NEW YORK TIMES: From Pantene to Polo: The New Man at Ralph Lauren

NEW YORK TIMES: From Pantene to Polo: The New Man at Ralph Lauren

NEW YORK TIMES | VANESSA FRIEDMAN

Can a man with deep experience in razors, fragrance, deodorant and shampoo help turn around the glossy narrative of Ralph Lauren, the brand, which has been troubled lately by store closings, less-than-stellar results and a chief executive’s departure?

Ralph Lauren, the man, seems to believe so, and on Wednesday he named Patrice Louvet, a former president of the global beauty division at Procter & Gamble and onetime leader of Gillette, as president and chief executive of the Ralph Lauren Corporation.

“He’s an enormously skilled business leader with a deep passion for the consumer and a sophisticated understanding of building global brands,” Mr. Lauren, executive chairman and chief creative officer, said in a statement, citing Mr. Louvet’s “collaborative working style, transformation experience and intense focus on results.”

He becomes the most recent example of a trend in luxury brands: looking to the world of consumer products to fill leadership ranks.

 “Every few years, there are certain places that are seen as good training grounds,” said William S. Susman, founder of the investment firm Threadstone Advisors. “For a while it was Bloomingdale’s, then Neiman Marcus. Now it’s the consumer products firms. They teach branding and direct-to-consumer sales, especially direct-to-millennial-consumers, and that is what everyone wants.”

They also may have more in common with billion-dollar global brands such as Ralph Lauren than smaller luxury houses do, said Robert Burke, founder of the luxury-sector consultancy Robert Burke Associates, especially in terms of managing an organization of global scale.

It arguably began in 2001, when LVMH Moët Hennessy Louis Vuitton hired Antonio Belloni, also a former Procter & Gamble executive, as group managing director, a job he still holds. But it didn’t cause much disruption in the industry until 2004, when François Pinault, then chief executive of the conglomerate Pinault-Printemps-Redoute (later PPR, and now Kering), chose Robert Polet, a frozen-foods executive from Unilever, to run the luxury division Gucci Group.

Mr. Polet was replacing Domenico De Sole, a widely respected fashion executive who, with Tom Ford, had revived Gucci and turned it into a global power. The industry scoffed at the idea of an “ice cream salesman” managing brands such as Gucci, Yves Saint Laurent and Balenciaga. The idea being, apparently, that someone with experience in selling such commoditized pleasures could not possibly understand the mysteries and creativity involved in luxury.

That turned out not to be true, and Mr. Polet did just fine until 2011, when François-Henri Pinault took over at PPR.

Since then, other executives have crossed the consumer-luxury barrier without much resistance, notably Fabrizio Freda, chief executive of Estée Lauder, who also previously worked at Procter & Gamble. Though the transitions have generally worked, a notable exception was Grita Loebsack, former executive vice president of skin care at Unilever, who briefly joined Kering as chief executive of its luxury, couture and leather goods emerging brands division in 2015, and quietly departed less than a year later.

“Well, nothing is foolproof,” Mr. Burke said. Especially when the job transition involves moving to what is effectively still a family-run company, like Ralph Lauren.

The risk, of course, is that, as Michael Boroian, president of the executive search firm Sterling International, said, the consumer products groups’ “more analytical, quantitative, rational and marketing-driven approach” is not always compatible with the more “intuitive, qualitative, heritage and high-touch bespoke client-centric approach” of a brand still run by its founder.

Whether this will prove to be a stumbling block for Mr. Louvet, as it was for his predecessor, Stefan Larsson, remains to be seen (Ralph Lauren shares fell slightly on Wednesday). But in the case of Ralph Lauren and its new chief executive, there’s another factor to consider, one that was not, as it happens, mentioned in the announcement.

“The brand has the veneer of luxury, but it’s also a consumer products company,” said Mr. Susman, referring to Ralph Lauren licenses, fragrances, housewares such as towels and sheets, and outlet basics like the Polo shirt. Under the dream, the commodities lie.

 

GLOSSY: How the digital strategies of LVMH and Kering stack up

GLOSSY: How the digital strategies of LVMH and Kering stack up

GLOSSY | Hilary Milnes 

LVMH and Kering, both French conglomerates that each own robust stables of high-end fashion brands, have finally realized their customers have moved online. That realization, however, has played out into two very different approaches for digital luxury.

“Both Kering and LVMH have understood that online is the way of the future,” said Rony Zeidan, founder of the agency RO NY. “But LVMH has taken a provocative stance with flagship, multi-brand, luxury retail, while Kering is keeping its brands’ online initiatives separate.”

Kering, in its calls with investors, its announcements and its annual reports, has stated clear intent to support its brands in endeavors to build out online stores and e-commerce and cross-channel capabilities, but LVMH’s digital guidance for its brands has been vague. As a result, LVMH-owned brands like Dior and Céline have dragged their feet to launch e-commerce. On the other hand, Kering-owned Gucci and Yves Saint Laurent — which back established sites — saw their online sales grow by 22 percent and 75 percent, respectively, in 2016.

Apparently, LVMH was planning something else. On Wednesday, news officially broke that LVMH will be launching a multi-brand marketplace in June. The site, 24 Sèvres, will sell 150 luxury brands online, including Louis Vuitton and Christian Dior, which currently aren’t sold through existing online luxury marketplaces like Net-a-Porter and Matches Fashion. The launch of 24 Sèvres is the first major initiative under Ian Rogers, LVMH’s chief digital officer who was brought on from Apple in 2015.

LVMH doesn’t break out online sales, but industry analysts estimated in September that, overall, e-commerce only accounted for 5 percent of the company’s revenue. Kering said its online sales jumped by 60 percent in the first quarter of 2017, during which it posted an overall revenue increase of 31 percent, to $3.8 billion.

While the overall luxury sector is expecting a small year-over-year growth of 3 to 4 percent between now and 2020, online sales for the industry are expected to drive the bulk of that growth, rising 20 percent year-over-year in the same time frame.

Kering has recognized the opportunity for growth online, citing it as a priority across its group of brands.

“Tomorrow’s luxury isn’t based on heritage and artisanal excellence; there must be creativity,” Kering CEO Francois-Henri Pinault told investors in April. “But creativity is not good enough. The implementation must be huge. Each team has to deliver to our customers, and organic growth will be amplified by the growing role of e-commerce in a cross-channel approach.”

The behind-the-scenes support of a parent company has proven critical for luxury brands looking to modernize. Customers can’t tell this guidance is taking place, and that’s part of the appeal.

“Kering has moved faster to drive its brands. It’s going to remain brand-specific and continue to put its support there,” said Rachel Spiegelman, CEO of the agency Pirch. “It’s an overarching ‘master plan’ message that then plays out on the brand level, where the power ultimately lies.”

The approach has seen major payoff for Kering’s biggest brands, Gucci and Yves Saint Laurent. Gucci sales hit 20-year record highs in the first quarter of 2017, with organic sales jumping 48 percent to $1.44 billion. Yves Saint Laurent revenue jumped 35 percent.

“Supporting your individual brands to succeed digitally is a strong strategy because the customer today is educated and will go to a brand directly when they want to shop it,” said Robert Burke, CEO of Robert Burke Associates. “The Gucci and YSL brands are extremely strong right now, so having robust websites for these brands is critical, because the brand awareness is there. People are searching for it.”

Kering is also driving a group-wide effort to funnel marketing dollars online. Pinault announced in February that 40 percent of the company’s marketing spend would go to digital efforts. While Gucci is nearly there, at 35 percent, other brands have had to do heavier lifting to get on board. Balenciaga is tripling its digital marketing spend, while Bottega Veneta is focusing on digital under its recently appointed CMO, Lisa Pomerantz.

The digital push is part of Kering’s effort to drive more millennial customers to its brands. Gucci’s efforts, having done Instagram and meme-driven campaigns, have resulted in a spike in millennial customers by 70 percent.

“Gucci and YSL have demonstrated how a luxury company can be relevant online,” said Jian DeLeon, editorial director at Highsnobiety. “On the LVMH side, as a company, they lack that digital relevance.”

Digital isn’t off the radar for LVMH, however. LVMH hired Rogers as its chief digital officer in 2015, but so far, his work has been focused on the launch of 24 Sèvres, a holistic, marketplace approach, rather than an impetus on digitizing individual brands.

“Having a chief digital officer focuses the online strategies, and ensures that an online venture is done the right way and is taking into consideration the 360-degree online approach,” said Zeidan. “It’s just like having a CEO for a company that keeps it focused and ensures all touch points are met.”

Both Rogers and LVMH president Bernard Arnault have acknowledged that LVMH’s emergence in the world of luxury online marketplaces is late to the game. But it’s not its first venture in the space: eLuxury.com, a similarly formatted online marketplace owned by LVMH, shuttered in 2009.

“LVMH is taking a massive risk, but they didn’t give up on this strategy,” said Spiegelman. “They just didn’t get on when the time was right, at first. But if they get the curation and the experience down, I think we’ll see that customers will respond to that.”

For LVMH, which is currently scaling back its brands’ presence in department stores, a driving factor is a control over unified distribution, according to Burke.
“LVMH has the capital to invest in this, and brands want to control distribution and not be reliant on another wholesale business,” said Burke. “It’s not really an either-or when it comes to which strategy will win, Kering’s individual brand strategy or LVMH’s marketplace. They’re different. But what drove them here is a move to rely on their own distribution, not department stores.”

FOOTWEAR NEWS: Why Ready-to-Wear Labels Like Attico and Friends Have Designs on Your Shoes

FOOTWEAR NEWS: Why Ready-to-Wear Labels Like Attico and Friends Have Designs on Your Shoes

FOOTWEAR NEWS I STEPHANIE HIRSCHMILLER

When street-style stars turned designers Gilda Ambrosio and Giorgia Tordini launched shoes under their Milan-based Attico label for spring ’17, the collection was an instant hit for top retailers.

“The fashion message is clear, the price structure is on point and, most importantly, I felt strongly that the product would resonate with our customer,” said Ida Petersson, nonapparel buying manager at London-based Browns Fashion. “We definitely saw this happen as soon as the product hit the store and our website, with certain items selling out within hours.”

But it’s not just new launches consumers are coveting. “There is a wave of brands that have renewed interest in shoes,” said Robert Burke, founder of an eponymous firm specializing in retail and fashion. He cited such established fashion houses as Chloé and Balmain.

For Attico, its 17 SKUs for spring included satin mules with flared heels and crystal-palm-tree embellishments, treading the line between kitsch and sophisticated. For fall, candy-wrapper metallics and opulent velvets were incorporated into sandals, pumps, ballerinas and mules.

The shoes are crafted in a small town in the Marche region of Italy. The whole idea, said the founders, is for Attico to be a complete wardrobe. Following the label’s Milan presentation, Net-a-Porter senior shoe buyer Thalia Tserevegou dubbed it “our favorite newcomer.” Price points for the shoes start at $550, making them more accessible than Attico dresses, which hover between $1,000 and $2,000. “They talk to a wider audience,” Petersson said.

The smart pricing strategy is an advantage for Attico as the brand navigates a competitive high-end shoe market and weak retail climate. The obstacles aren’t deterring more established players from targeting the shoe market, either. In fact, they see shoes as a growth opportunity.

For pre-fall ’17, Balmain’s creative director, Olivier Rousteing, relaunched the Parisian house’s accessories collection. For Balmain’s fall runway show, the label showed soaring stretch boots in snakeskin, modeled by Kendall Jenner.

“It’s important that every Balmain design — whether it be in our newly relaunched accessories line, our men’s collection or women’s collection — forms part of one coherent whole,” Rousteing told Footwear News“When you look at the pre-fall shoe collection, that unique Balmain attitude can’t be missed. The leathers, skins and construction all rely on the type of sourcing, expertise and craftsmanship that one expects from an historic Paris house. The spirit, though, is modern.”

Cassie Smart, buying manager for footwear and handbags at MatchesFashion.com, is confident the new product can complement the current offerings. “Balmain has a strong brand DNA already,” she noted, “but footwear is a great category with variable price brackets, attracting a wider audience than ready-to-wear.”

London-based Victoria Beckham is also placing more emphasis on the market, offering up 24 SKUs across five key shapes for fall ’17. “I’ve been designing my own show shoes for the past few seasons, and I’ve dipped my toe into wholesale,”she said. “The response was so strong that I decided to develop the collection. I’ve worked hard with my team to create a more substantial offering that sits on its own outside of the runway.”

Key styles include gently slouched boots and pointed V-vamp brogues with chrome buckles. They come in a heritage-inspired “gentlemen’s club” color palette of red, white and black.

Chloé CEO Geoffroy de la Bourdonnaye, too, has his eye on the footwear market. Following the appointment of new designer Natacha Ramsay-Levi, the brand is set to up its shoe game and is taking its manufacturing and design in-house. (It was previously done under license.) “Chloé’s footwear already offers strong categories and price points. While the classic Lauren ballet flat remains a strong volume driver, desirable runway styles also sell out fast on MatchesFashion.com,” said Smart. “There is strong potential.”

Paris’ new guard has also expanded into footwear. Glenn Martens’ Y-Project and Christelle Kocher’s Koché, both finalists for last year’s LVMH Prize, debuted shoe collections in February.

Martens, a Rihanna favorite, showed exaggerated ruched python-skin boots and crystallized spiral sandals snaking right up the leg. Coming in at over six feet long, the boots hold their shape via the same metal wire Martens uses to mold his denim. “Footwear offers the customer an easier way to own the identity of a brand,” the designer said. For his show, Martens also chose an offbeat way to spotlight the category. Dresses and skirts came with a slit-like hole at the front, through which one leg protruded. “The clothes were almost decoration around the shoe,” he explained.

Kocher, who has been artistic director at the Chanel-owned Maison Lemarié for seven years, launched Koché — all streetwear silhouettes and couture detailing — for spring ’16. Until now, she’s presented her collections with sneakers and flats. The designer’s intricate heels for fall ’17 were created with the help of jewelry specialist Goossens Paris and French house Massaro. They’re plated in white gold, molded into organic shapes and set with gray Swarovski pearls. “Accessories really drive a brand,” Kocher said. The designer’s styles have attracted buyer attention, including such retailers as Barneys, Style.com and MatchesFashion.com.

Finally, Simon Porte Jacquemus launched footwear for resort ’15 and has found success with the signature Rond Carré style — one heel is round and the other square. The designer has been gradually growing the category, and footwear now makes up 10 percent of his business. “There is more opportunity for expansion in shoes than with ready-to-wear, especially as we propose something different with a real signature,” Jacquemus said.

FALL INSPIRATIONS FROM FOOTWEAR’S NEW GUARD

Gilda Ambrosio and Giorgia Tordini, Attico “We stole some disco vibes from the extravagant ’80s, where ‘more’ was just perfect. We imagined a sort of gentlewomen’s club of passionate, playful, witty women whose attire combines feminine seduction with a hint of masculinity.”

Glenn Martens, Y-Project “The spiral shoes were inspired by cheap models I saw last year in New York’s Chinatown. I wanted to make them into real shoes. I always like to take things I know and develop them and exaggerate them and give them a twist.”

Christelle Kocher, Koché “I chose colors that were positive and happy, like little bonbons, and used a graphic logo on the insole. The look is bold but also refined and sophisticated, to continue the story with the amazing houses I’ve been working with since the start.”

Simon Porte Jacquemus, Jacquemus “My inspiration for fall was a couture girl who has fallen in love with a Gypsy. She’s trying to be more like him by wearing Gypsy-style accessories, but she still looks very Parisian.”

WSJ: Neiman Marcus Finds Even Wealthy Shoppers Want Better Deals

WSJ: Neiman Marcus Finds Even Wealthy Shoppers Want Better Deals

Wall Street Journal | Suzanne Kapner and Ryan Dezember

Lysa Heslov used to be a loyal Neiman Marcus shopper. Now, she buys most of her clothes, shoes and handbags at websites that carry the same designer brands, often at cheaper prices. 

“I price compare now much more than I ever did before,” said Ms. Heslov, a 52-year-old documentary film director who lives in Los Angeles. 

Neiman Marcus and other luxury retailers were long thought immune to the troubles of mass-market chains—falling foot traffic and the constant price wars that have triggered widespread closure of brick-and-mortar stores. 

But high-end chains, which raised prices incessantly over the past decade, are learning the hard way that even wealthy customers are hunting for better deals and selection, whether online or at shops run by individual brands. 

“Even a very rich person can say, ‘Enough is enough,’ when it comes to price,” said Matthew Singer, Neiman’s former men’s fashion director, now with his own clothing line. 

Sales of personal luxury goods, such as designer apparel and handbags, fell 1% last year, the first decline since 2009, according to Bain & Co. The slowdown contrasts with 4% growth in the global luxury market, which reached $1.16 trillion when including expenditures on pricey cars, travel, restaurants and such. 

“In the past, women had loyalty to a particular department store, and they would come in with a page torn from the retailer’s catalog and say, ‘I want that look,’ ” said Robert Burke, the former fashion director of Bergdorf Goodman who now runs his own consulting firm. 

The shift in consumer tastes has put pressure on several storied brands, including  Tiffany & Co. and Ralph Lauren Corp. , which both recently ousted their chief executives. 

“Consumers no longer prefer a one-stop approach to shopping,” said Deborah Weinswig of Fung Global Retail & Technology, a think tank. “This coincides with the current sentiment that big is the opposite of cool, making it very difficult for major retailers and brands to maintain a high level of cachet.” 

Few are feeling the heat as much as Neiman Marcus Group Ltd., which holds nearly $5 billion in debt that has grown through more than a decade of private-equity ownership. The company, which lost $406 million on sales of nearly $5 billion in the year that ended in July, recently abandoned plans to go public; credit-rating firms have warned there is a high risk it will default on its obligations. 

With their equity practically wiped out, Neiman’s owners, Ares Management LP and the Canada Pension Plan Investment Board, are looking for an exit. They recently approached Saks Fifth Avenue parent Hudson’s Bay Co. , about buying the retailer, according to people familiar with the situation. The continuing talks, first reported by The Wall Street Journal, are aimed at combining Neiman with its chief rival to cut costs and boost clout with suppliers. 

The company is “well-positioned to deal with both the secular and cyclical changes taking place in the luxury market,” said Neiman board member and Ares co-founder David Kaplan. “The brand remains a preferred destination for customers who value the expertise of the store associates and a differentiated product offering as well as for the design community.” 

Once upon a time, all Neiman needed to do to lift profits was raise prices. That model has since fallen out of fashion. 

Neiman Marcus opened its first store 110 years ago in Dallas, catering to those who made their wealth in Texas oil. One tycoon asked for all the items in a store window display delivered to his home for Christmas morning. Stanley Marcus, chief executive from 1950 to 1972, made it happen. 

The company, which now includes two Bergdorf Goodman stores in Manhattan, opened outposts in Beverly Hills, Palm Beach, Fla., and other high-net ZIP Codes amenable to $5,000 gowns and $2,500 handbags. Its annual Christmas catalog displayed such gifts as a $1.5 million Valkyrie-X private plane. That kind of extravagance earned it the nickname Needless Markup. 

“Our mantra had always been, ‘There is nothing too expensive for our customer,’ ” one former executive said. 

Burt Tansky, chief executive for nine years until 2010, was fond of saying, “I’d rather have one customer spending $5 million, than five million customers spending $1,” other executives said. Mr. Tansky declined to comment. 

The strategy allowed Neiman to increase average prices 7% to 9% annually until 2015, executives said. Some didn’t believe it was sustainable. “Every time Burt would say that I would cringe,” said Steven Dennis, who was Neiman’s senior vice president of strategy and marketing from 2004 to 2008. 

Price-hike profits, though, were common among Neiman’s peers. A 2015 Bain study found the entire luxury industry benefited from “relentless price increases over the past five to 10 years.” 

Consumers had little choice but to pay up because high-end brands tightly controlled distribution of their goods, usually keeping supplies limited to avoid end-of-season markdowns. And, until recently, few luxury goods were sold online, which gave brands a tighter rein on prices. 

“One of the tricks to luxury is price discipline,” said Aaron Cheris, the head of Bain’s retail practice for the Americas. Shoppers pay full price, he said, when they can’t “get stuff for less.” 

But competition from startups like Farfetch.com and Matchesfashion.com are forcing more discounts. Over a recent 24 hours, Farfetch’s prices averaged 2% lower and Matchesfashion’s 15% lower than Neimanmarcus.com’s prices on 32 identical items, according to price-tracking firm Market Track LLC. 

A Neiman spokeswoman said the comparison didn’t take into account a promotion at the time that offered a gift card worth 25% off a purchase. 

While brands still exert control, particularly over the newest and most popular items, it is harder for them to police prices that change rapidly across websites and fluctuate with shifting exchange rates, industry executives said. 

The explosion of discount chains, led by T.J. Maxx , that sell designer brands at cut-rate prices also made consumers rethink the need to pay full price. To compete, high-end department stores rushed in with their own off-price chains—Neiman’s Last Call, Saks Off 5th and Nordstrom Rack. 

Market forces have “started to commoditize products that were once extremely exclusive,” said Jenna Giannelli, a Citigroup Inc . analyst. About 37% of luxury goods sold at less than full price last year, Bain estimated, up from 32% two years ago. 

Anais Assoun, a faithful Neiman customer, said she was never a sale shopper: “If I wanted something, I would buy it at full retail.” 

These days, the Dallas resident shops sales, she said, because “regular retail doesn’t feel like a good value. You can easily spend $2,000 on shoes, which not that long ago would have been insane.” 

Neiman’s Chief Executive Karen Katz has tried to make her stores more accessible to younger, less affluent consumers. “You have to constantly be looking for the next generation,” she said. 

Ms. Katz championed a line of specialty stores called Cusp, which Neiman opened a decade ago, that feature lower-priced clothing and accessories. Neiman stores also have added relatively less expensive goods, such as $700 Prada handbags, about a quarter the price of the brand’s high-end satchels. In November, Neiman struck a deal with Rent the Runway, a startup that will rent expensive apparel at shops located in Neiman stores this year. 

A year after becoming chief executive in 2010, Ms. Katz reduced snob appeal by allowing Neiman shoppers to use Visa and Mastercard . Previously, the stores only acceptedAmerican Express or Neiman credit cards. 

Neiman has invested heavily in e-commerce, drawing roughly 31% of its sales from digital operations. That compares with an 8% online penetration for the luxury-goods market, according to Bain. 

Not all the moves have worked. After building six Cusp stores, Neiman closed two and stopped development of the chain in 2012. “As we came through the recession, we had to re-prioritize,” Ms. Katz said. The experiment continues at Neiman stores, where departments that carry lower-priced items are called Cusp. 

Neiman has suffered from the fall in energy prices that has sapped demand among wealthy Texan shoppers. And like other luxury retailers, it is grappling with a strong dollar that has chased off some foreign tourists. 

The retailer appears to be drawing more youthful shoppers, with a bit more than half of its customers age 50 or younger as of last July, compared with slightly less than half a year earlier, according to securities filings. 

Ms. Katz recently told analysts that Neiman is simply replacing aging baby boomers with “the next generation.” 

While younger shoppers are important to help brands stay relevant, they aren’t buying luxury goods the way they once did. 

“Back in 2007, there were young women who would skip meals to save money to buy the latest Marc Jacobs bag,” said Michael Crotty, a marketing executive who has worked at Nordstrom and Neiman Marcus. “Having the right bag, the right shoe, meant so much.” 

To celebrate her 29th birthday last month, Veronica Kamenjarin, a Chicago attorney, splurged on a wine-tasting trip to Napa Valley, where she and her husband dined at the exclusive French Laundry. The last time she bought a designer handbag was four years ago. 

Ms. Kamenjarin said she chose a classic Louis Vuitton style that wouldn’t go out of fashion: “I didn’t want to worry about having to buy the latest bag every year.” 

Neiman has less of a cushion than rivals because of its debt, which dates to its 2005 sale to Warburg Pincus LLC and TPG for about $5.1 billion. 

To boost returns, Warburg and TPG paid mostly with borrowed money. The owners, along with bankers at Credit Suisse Group AG , came up with a new type of debt—called pay-in-kind, or PIK, toggle bonds—to protect against a downturn. These instruments allow the issuer to make interest payments by issuing new bonds rather than paying in cash. 

Investors were drawn by a better yield, and PIK toggle bonds became a feature of many of the era’s corporate buyouts. To celebrate their Neiman purchase, the buyout firms hung plaques fitted with replicas of old-fashioned factory switches. 

When the financial crisis hit in 2008, and sales fell, Neiman’s owners didn’t want to spook suppliers by drawing on a credit line to make interest payments, said people familiar with the matter. Instead, they issued new debt to cover payments for nine months through October 2009. In Warburg’s New York offices, employees flipped the wall-mounted switches from “cash” to “bonds,” some of these people said. 

When Neiman resumed cash payments in mid-2010, Warburg employees celebrated by switching the toggle back, they said. 

By then, Neiman was generating enough cash to pay down debt, and the owners plotted their exit. They took nearly $450 million out of the company as a dividend a year before selling it for about $6 billion in 2013 to Ares and the CPPIB. The sellers more than doubled their cash investment in the deal. 

The new owners, meanwhile, loaded Neiman with more debt. By 2014, Neiman owed $4.7 billion, up from $250 million in 2005. 

Ms. Katz got this advice after the 2013 deal by one of the sellers: Pursue a public stock offering as soon as possible and use the proceeds to pay down debt, according to a person familiar with the matter. 

The owners have largely eschewed debt reduction, instead spending more than $900 million to refurbish stores, open new ones and beef up Neiman’s online business, according to securities filings and a person familiar with the matter. The company had about $4.6 billion of debt as of January. 

Neiman filed for an IPO in 2015, but withdrew the offering earlier this year as its business faltered. 

With Neiman’s bonds trading at around 60 cents on the dollar, the company could have trouble accessing the capital markets to refinance notes coming due in 2020 and 2021, according to Ms. Giannelli, the Citi analyst, with investors skeptical it can repay the debt. 

On Friday, Neiman’s owners once again chose to issue new debt to cover interest payments through October 14, according to a securities filing. 

New management and cost cuts follow many corporate buyouts. But Neiman’s owners have left Ms. Katz and her team alone. “Each of them has allowed us to do what we’ve needed to do to grow the business,” she said. 

Yet, it is hard to ignore the rationale for combining Neiman and Saks, said Stephen Sadove, former Saks chief executive. “It’s a tougher luxury environment,” he said, “and you need more scale.” 

FINANCIAL TIMES: Luxury retailers beat a retreat from ‘vanity’ real estate

FINANCIAL TIMES: Luxury retailers beat a retreat from ‘vanity’ real estate

FINANCIAL TIMES | ANNA NICOLAU AND JUDITH EVANS 

Manhattan’s Bleecker Street has seen better days. Boosted by a frothy investment market and booming tourism as New York recovered from the Lehman crisis, retail rents on the main drag of Greenwich Village had soared over the past five years. But in recent months upmarket retailers, facing steeper losses to online shopping and ever pricier rents, have shut their stores.

The departure of luxury brands including Marc Jacobs, Jimmy Choo and Ralph Lauren, which helped transform Bleecker Street from a bohemian centre to a high-end shopping paradise, has left two or three vacant shops on each block. 

“The pioneers that made that street are pulling back . . . it really casts a shadow,” says Faith Consolo, chairwoman of the retail leasing and sales division at real estate firm Douglas Elliman. “I haven’t seen a cycle like this before.” 

Similar trends are emerging along the priciest shopping corridors in the US, including Robertson Boulevard in Los Angeles and the design district in Miami, as retailers pull back from “vanity” real estate. They have been deterred partly by what had been runaway rental growth — as much as 50 per cent in five years, according to Cushman & Wakefield, the property consultancy.

But beyond the cyclical patterns of real estate, there is also a structural shift, analysts say, as online sales draw retailers’ focus away from prestigious store sites. While before a presence on a glitzy street was deemed a necessary marketing expense, some luxury retailers are now rethinking their footprint to adapt to a new kind of shopper that prefers browsing the internet from the sofa. 

The Amazon factor is hurting retailers’ margins “so they are spending more on their own ecommerce platforms rather than bricks-and-mortar divisions”, says Ihor Dusaniwsky, head of research at S3 Partners, a financial analytics firm. 

Meanwhile, although consumer confidence surveys appear positive, sales growth overall has dropped. The signs of weakness are leading some landlords to offload properties. 

On New York’s Fifth Avenue, the world’s most expensive shopping street, vacancy rates have jumped from 10 per cent a year ago to 16 per cent, according to Cushman & Wakefield. Rents there have fallen for the first time since the recession “and the trend is not over”, the consultancy warns. Vacancy rates across SoHo have climbed to 18 per cent, from 12 per cent a year ago, according to Jones Lang LaSalle. 

The newfound caution among retailers has had a “very significant and fast” negative impact on retail property, says Chris Conlon, chief executive of Acadia Realty, a real estate investment trust. 

It is not just prestigious streets that have been hit. Malls are also hurting, as chains from Sears to Macy’s shut hundreds of stores. Analysts at Green Street Advisors argue that “low growth is the new normal”, while market rents are becoming decoupled from tenants’ revenue growth as more sales move online. 

“[Rents] are at a price point now that exceeds what retail sales can perform,” says Spencer Levy, global head of research for CBRE. He notes that a stronger US dollar also hurts sales in New York, where deep-pocketed foreigners historically flock for deals. 

Investors have caught the gloomy mood: shares in US retail Reits have tumbled by almost 25 per cent since their peak last August, according to Dow Jones, compared with an 11 per cent decline across all Reits. Capital values in the private markets have yet to mirror that shift, but listed shares often act as a bellwether. 

Meanwhile, hedge funds are building up significant short positions against retail players. Short interest against international retail Reits has more than doubled to $12.5bn since November, according to data from S3 Partners.

Of this, $1.5bn of short positions are held against Simon Properties, the US’s largest retail Reit. “Looking back over several years, this is the first time I have seen [short interest] at over $10bn in aggregate,” says Mr Dusaniwsky of S3 Partners. 

The nervousness is also affecting non-listed groups. Thor Equities, the private equity real estate firm, is seeking to sell three Fifth Avenue properties bought between 2007 and 2011 after failing to find tenants for much of the space, risking an inability to generate income to pay off loans attached to the properties. “If you want big tenants . . . there aren’t that many that want that size footprint any more,” says Jedd Nero, principal at real estate broker Avison Young. 

Thor “did not get the numbers they wanted” and is now looking to lease out the spaces, says someone familiar with the company’s thinking. “Landlords take a little while to face reality,” the person adds. 

Bleecker Street in Greenwich Village, c1965 © Getty One of the properties, a 19-storey office and retail building at 590 Fifth Avenue, has had its asking price cut from $170m last year to $150m, according to Bill Shanahan, a broker at CBRE who is selling the property. Plans to convert it into a flagship retail space failed to tempt a tenant. 

Analysts and brokers say that landlords have been slow to adapt their leasing strategies despite an overhang of supply, leading to “very lengthy” deal negotiations, according to Cushman & Wakefield. 

Mr Conlon of Acadia Realty says: “If you bought in SoHo or Fifth Avenue in 2015 and you underwrote that real estate to capture that kind of growth, then it’s kind of like musical chairs: the music stops and you’re probably disappointed today.”

As rents continue to slip, some landlords and tenants are beginning to meet in the middle, says Patrick Smith, vice-chairman of JLL’s retail brokerage, who predicts that “by the end of this year you’re going to see more transactions”. 

However, most retailers are staying on the sidelines for now, says Mr Nero: “No one wants to catch a falling knife.” 

While there are some pockets of excessive lending in the market — Green Street says, for example, that Reits owning less desirable “B” and “C” grade malls are “carrying too much debt and are ill-equipped for a sizeable decline in asset values” — more prudent lending since the 2008 crisis should help to limit potential distress. 

However, the structural shift towards ecommerce looks likely to have some way to run. Green Street estimates that about 20 per cent of sales for “mall-like products” such as clothing have shifted online; that is forecast to rise above 30 per cent in the next five years. 

Other prime retail sites may also have to confront this shift. Rents in Hong Kong’s Causeway Bay are weakening and on Paris’s Champs-Élysées they were flat over the past year, according to Cushman & Wakefield, though downturns in tourism were bigger factors than online sales. 

In New York, it is difficult to gauge how long the current correction will last because there have been few deals to draw upon, says Mr Conlon. For spaces in SoHo that were renting for $1,000 per square foot at the peak, rents have dropped by as much as 20 per cent. “We’re in the middle [of the correction]. Retailers are saying: I’m not sure what I should pay, so I’m going to wait.” He says Acadia is preparing to buy in these markets because he predicts they will be distressed. 

“You’re seeing a seismic shift in retail, and you’ll continue to see consolidation as tenants that can’t figure it out go out of business,” says Mr Nero of Avison Young. “It’s not the way it was in the past 100 years, where you put a product on the shelf and everyone comes in.”

Food eats up bigger share of US shopping centres While upmarket names are cutting back, one bright spot for landlords has been a different type of shopping experience: food.

Food halls featuring trendy restaurants and fast casual outlets have become a staple of New York’s new retail property developments. “Le District”, a 30,000 sq ft food market, is the centrepiece of Brookfield Place, a luxury shopping centre that opened two years ago in Manhattan’s financial district. Eataly, an Italian food emporium, has leased 48,000 sq ft at the World Trade Center’s new Oculus shopping mall.

Landlords have been keen to lure food tenants, which usually take on longer leases than other retailers, to meet demand from on-the-go urban shoppers, says Faith Consolo, chairwoman of Douglas Elliman's retail leasing and sales division. “It’s like we spit them out,” she says. “The food experience is what made these new developments . . . it is a creative time in retailing.”

Food now takes up about 9 per cent of space in US shopping centres, nearly double that of a decade ago, and is projected to rise to 20 per cent in some markets by 2025, according to a report by JLL. The brokerage expects the number of food halls in the US to increase from 140 this year to 200 by 2019.

Food “can now act as an anchor”, according to the International Council of Shopping Centers. “As demand for traditional merchandise space abates, demand for food service space appears insatiable.” A well-stocked food hall can draw shoppers, particularly millennials, who look to spend money on experiences; food has the added benefit of being “internet resistant”, according to analysts at Green Street Advisors.

“Convenience used to be a bad word. Today it’s a much better word, and a big part of that is food,” says Robert Burke, founder of luxury brand consultancy Robert Burke Associates. “The right food and the right entertainment are now the key components of a shopping centre.”

Manhattan’s Bleecker Street has seen better days. Boosted by a frothy investment market and booming tourism as New York recovered from the Lehman crisis, retail rents on the main drag of Greenwich Village had soared over the past five years. But in recent months upmarket retailers, facing steeper losses to online shopping and ever pricier rents, have shut their stores.

The departure of luxury brands including Marc Jacobs, Jimmy Choo and Ralph Lauren, which helped transform Bleecker Street from a bohemian centre to a high-end shopping paradise, has left two or three vacant shops on each block. 

“The pioneers that made that street are pulling back . . . it really casts a shadow,” says Faith Consolo, chairwoman of the retail leasing and sales division at real estate firm Douglas Elliman. “I haven’t seen a cycle like this before.” 

Similar trends are emerging along the priciest shopping corridors in the US, including Robertson Boulevard in Los Angeles and the design district in Miami, as retailers pull back from “vanity” real estate. They have been deterred partly by what had been runaway rental growth — as much as 50 per cent in five years, according to Cushman & Wakefield, the property consultancy.

But beyond the cyclical patterns of real estate, there is also a structural shift, analysts say, as online sales draw retailers’ focus away from prestigious store sites. While before a presence on a glitzy street was deemed a necessary marketing expense, some luxury retailers are now rethinking their footprint to adapt to a new kind of shopper that prefers browsing the internet from the sofa. 

The Amazon factor is hurting retailers’ margins “so they are spending more on their own ecommerce platforms rather than bricks-and-mortar divisions”, says Ihor Dusaniwsky, head of research at S3 Partners, a financial analytics firm. 

Meanwhile, although consumer confidence surveys appear positive, sales growth overall has dropped. The signs of weakness are leading some landlords to offload properties. 

On New York’s Fifth Avenue, the world’s most expensive shopping street, vacancy rates have jumped from 10 per cent a year ago to 16 per cent, according to Cushman & Wakefield. Rents there have fallen for the first time since the recession “and the trend is not over”, the consultancy warns. Vacancy rates across SoHo have climbed to 18 per cent, from 12 per cent a year ago, according to Jones Lang LaSalle. 

The newfound caution among retailers has had a “very significant and fast” negative impact on retail property, says Chris Conlon, chief executive of Acadia Realty, a real estate investment trust. 

It is not just prestigious streets that have been hit. Malls are also hurting, as chains from Sears to Macy’s shut hundreds of stores. Analysts at Green Street Advisors argue that “low growth is the new normal”, while market rents are becoming decoupled from tenants’ revenue growth as more sales move online. 

“[Rents] are at a price point now that exceeds what retail sales can perform,” says Spencer Levy, global head of research for CBRE. He notes that a stronger US dollar also hurts sales in New York, where deep-pocketed foreigners historically flock for deals. 

Investors have caught the gloomy mood: shares in US retail Reits have tumbled by almost 25 per cent since their peak last August, according to Dow Jones, compared with an 11 per cent decline across all Reits. Capital values in the private markets have yet to mirror that shift, but listed shares often act as a bellwether. 

Meanwhile, hedge funds are building up significant short positions against retail players. Short interest against international retail Reits has more than doubled to $12.5bn since November, according to data from S3 Partners.

Of this, $1.5bn of short positions are held against Simon Properties, the US’s largest retail Reit. “Looking back over several years, this is the first time I have seen [short interest] at over $10bn in aggregate,” says Mr Dusaniwsky of S3 Partners. 

The nervousness is also affecting non-listed groups. Thor Equities, the private equity real estate firm, is seeking to sell three Fifth Avenue properties bought between 2007 and 2011 after failing to find tenants for much of the space, risking an inability to generate income to pay off loans attached to the properties. “If you want big tenants . . . there aren’t that many that want that size footprint any more,” says Jedd Nero, principal at real estate broker Avison Young. 

Thor “did not get the numbers they wanted” and is now looking to lease out the spaces, says someone familiar with the company’s thinking. “Landlords take a little while to face reality,” the person adds. 

Bleecker Street in Greenwich Village, c1965 © Getty One of the properties, a 19-storey office and retail building at 590 Fifth Avenue, has had its asking price cut from $170m last year to $150m, according to Bill Shanahan, a broker at CBRE who is selling the property. Plans to convert it into a flagship retail space failed to tempt a tenant. 

Analysts and brokers say that landlords have been slow to adapt their leasing strategies despite an overhang of supply, leading to “very lengthy” deal negotiations, according to Cushman & Wakefield. 

Mr Conlon of Acadia Realty says: “If you bought in SoHo or Fifth Avenue in 2015 and you underwrote that real estate to capture that kind of growth, then it’s kind of like musical chairs: the music stops and you’re probably disappointed today.”

As rents continue to slip, some landlords and tenants are beginning to meet in the middle, says Patrick Smith, vice-chairman of JLL’s retail brokerage, who predicts that “by the end of this year you’re going to see more transactions”. 

However, most retailers are staying on the sidelines for now, says Mr Nero: “No one wants to catch a falling knife.” 

While there are some pockets of excessive lending in the market — Green Street says, for example, that Reits owning less desirable “B” and “C” grade malls are “carrying too much debt and are ill-equipped for a sizeable decline in asset values” — more prudent lending since the 2008 crisis should help to limit potential distress. 

However, the structural shift towards ecommerce looks likely to have some way to run. Green Street estimates that about 20 per cent of sales for “mall-like products” such as clothing have shifted online; that is forecast to rise above 30 per cent in the next five years. 

Other prime retail sites may also have to confront this shift. Rents in Hong Kong’s Causeway Bay are weakening and on Paris’s Champs-Élysées they were flat over the past year, according to Cushman & Wakefield, though downturns in tourism were bigger factors than online sales. 

In New York, it is difficult to gauge how long the current correction will last because there have been few deals to draw upon, says Mr Conlon. For spaces in SoHo that were renting for $1,000 per square foot at the peak, rents have dropped by as much as 20 per cent. “We’re in the middle [of the correction]. Retailers are saying: I’m not sure what I should pay, so I’m going to wait.” He says Acadia is preparing to buy in these markets because he predicts they will be distressed. 

“You’re seeing a seismic shift in retail, and you’ll continue to see consolidation as tenants that can’t figure it out go out of business,” says Mr Nero of Avison Young. “It’s not the way it was in the past 100 years, where you put a product on the shelf and everyone comes in.”

Food eats up bigger share of US shopping centres While upmarket names are cutting back, one bright spot for landlords has been a different type of shopping experience: food.

Food halls featuring trendy restaurants and fast casual outlets have become a staple of New York’s new retail property developments. “Le District”, a 30,000 sq ft food market, is the centrepiece of Brookfield Place, a luxury shopping centre that opened two years ago in Manhattan’s financial district. Eataly, an Italian food emporium, has leased 48,000 sq ft at the World Trade Center’s new Oculus shopping mall.

Landlords have been keen to lure food tenants, which usually take on longer leases than other retailers, to meet demand from on-the-go urban shoppers, says Faith Consolo, chairwoman of Douglas Elliman's retail leasing and sales division. “It’s like we spit them out,” she says. “The food experience is what made these new developments . . . it is a creative time in retailing.”

Food now takes up about 9 per cent of space in US shopping centres, nearly double that of a decade ago, and is projected to rise to 20 per cent in some markets by 2025, according to a report by JLL. The brokerage expects the number of food halls in the US to increase from 140 this year to 200 by 2019.

Food “can now act as an anchor”, according to the International Council of Shopping Centers. “As demand for traditional merchandise space abates, demand for food service space appears insatiable.” A well-stocked food hall can draw shoppers, particularly millennials, who look to spend money on experiences; food has the added benefit of being “internet resistant”, according to analysts at Green Street Advisors.

“Convenience used to be a bad word. Today it’s a much better word, and a big part of that is food,” says Robert Burke, founder of luxury brand consultancy Robert Burke Associates. “The right food and the right entertainment are now the key components of a shopping centre.”

Manhattan’s Bleecker Street has seen better days. Boosted by a frothy investment market and booming tourism as New York recovered from the Lehman crisis, retail rents on the main drag of Greenwich Village had soared over the past five years. But in recent months upmarket retailers, facing steeper losses to online shopping and ever pricier rents, have shut their stores.

The departure of luxury brands including Marc Jacobs, Jimmy Choo and Ralph Lauren, which helped transform Bleecker Street from a bohemian centre to a high-end shopping paradise, has left two or three vacant shops on each block. 

“The pioneers that made that street are pulling back . . . it really casts a shadow,” says Faith Consolo, chairwoman of the retail leasing and sales division at real estate firm Douglas Elliman. “I haven’t seen a cycle like this before.” 

Similar trends are emerging along the priciest shopping corridors in the US, including Robertson Boulevard in Los Angeles and the design district in Miami, as retailers pull back from “vanity” real estate. They have been deterred partly by what had been runaway rental growth — as much as 50 per cent in five years, according to Cushman & Wakefield, the property consultancy.

But beyond the cyclical patterns of real estate, there is also a structural shift, analysts say, as online sales draw retailers’ focus away from prestigious store sites. While before a presence on a glitzy street was deemed a necessary marketing expense, some luxury retailers are now rethinking their footprint to adapt to a new kind of shopper that prefers browsing the internet from the sofa. 

The Amazon factor is hurting retailers’ margins “so they are spending more on their own ecommerce platforms rather than bricks-and-mortar divisions”, says Ihor Dusaniwsky, head of research at S3 Partners, a financial analytics firm. 

Meanwhile, although consumer confidence surveys appear positive, sales growth overall has dropped. The signs of weakness are leading some landlords to offload properties. 

On New York’s Fifth Avenue, the world’s most expensive shopping street, vacancy rates have jumped from 10 per cent a year ago to 16 per cent, according to Cushman & Wakefield. Rents there have fallen for the first time since the recession “and the trend is not over”, the consultancy warns. Vacancy rates across SoHo have climbed to 18 per cent, from 12 per cent a year ago, according to Jones Lang LaSalle. 

The newfound caution among retailers has had a “very significant and fast” negative impact on retail property, says Chris Conlon, chief executive of Acadia Realty, a real estate investment trust. 

It is not just prestigious streets that have been hit. Malls are also hurting, as chains from Sears to Macy’s shut hundreds of stores. Analysts at Green Street Advisors argue that “low growth is the new normal”, while market rents are becoming decoupled from tenants’ revenue growth as more sales move online. 

“[Rents] are at a price point now that exceeds what retail sales can perform,” says Spencer Levy, global head of research for CBRE. He notes that a stronger US dollar also hurts sales in New York, where deep-pocketed foreigners historically flock for deals. 

Investors have caught the gloomy mood: shares in US retail Reits have tumbled by almost 25 per cent since their peak last August, according to Dow Jones, compared with an 11 per cent decline across all Reits. Capital values in the private markets have yet to mirror that shift, but listed shares often act as a bellwether. 

Meanwhile, hedge funds are building up significant short positions against retail players. Short interest against international retail Reits has more than doubled to $12.5bn since November, according to data from S3 Partners.

Of this, $1.5bn of short positions are held against Simon Properties, the US’s largest retail Reit. “Looking back over several years, this is the first time I have seen [short interest] at over $10bn in aggregate,” says Mr Dusaniwsky of S3 Partners. 

The nervousness is also affecting non-listed groups. Thor Equities, the private equity real estate firm, is seeking to sell three Fifth Avenue properties bought between 2007 and 2011 after failing to find tenants for much of the space, risking an inability to generate income to pay off loans attached to the properties. “If you want big tenants . . . there aren’t that many that want that size footprint any more,” says Jedd Nero, principal at real estate broker Avison Young. 

Thor “did not get the numbers they wanted” and is now looking to lease out the spaces, says someone familiar with the company’s thinking. “Landlords take a little while to face reality,” the person adds. 

Bleecker Street in Greenwich Village, c1965 © Getty One of the properties, a 19-storey office and retail building at 590 Fifth Avenue, has had its asking price cut from $170m last year to $150m, according to Bill Shanahan, a broker at CBRE who is selling the property. Plans to convert it into a flagship retail space failed to tempt a tenant. 

Analysts and brokers say that landlords have been slow to adapt their leasing strategies despite an overhang of supply, leading to “very lengthy” deal negotiations, according to Cushman & Wakefield. 

Mr Conlon of Acadia Realty says: “If you bought in SoHo or Fifth Avenue in 2015 and you underwrote that real estate to capture that kind of growth, then it’s kind of like musical chairs: the music stops and you’re probably disappointed today.”

As rents continue to slip, some landlords and tenants are beginning to meet in the middle, says Patrick Smith, vice-chairman of JLL’s retail brokerage, who predicts that “by the end of this year you’re going to see more transactions”. 

However, most retailers are staying on the sidelines for now, says Mr Nero: “No one wants to catch a falling knife.” 

While there are some pockets of excessive lending in the market — Green Street says, for example, that Reits owning less desirable “B” and “C” grade malls are “carrying too much debt and are ill-equipped for a sizeable decline in asset values” — more prudent lending since the 2008 crisis should help to limit potential distress. 

However, the structural shift towards ecommerce looks likely to have some way to run. Green Street estimates that about 20 per cent of sales for “mall-like products” such as clothing have shifted online; that is forecast to rise above 30 per cent in the next five years. 

Other prime retail sites may also have to confront this shift. Rents in Hong Kong’s Causeway Bay are weakening and on Paris’s Champs-Élysées they were flat over the past year, according to Cushman & Wakefield, though downturns in tourism were bigger factors than online sales. 

In New York, it is difficult to gauge how long the current correction will last because there have been few deals to draw upon, says Mr Conlon. For spaces in SoHo that were renting for $1,000 per square foot at the peak, rents have dropped by as much as 20 per cent. “We’re in the middle [of the correction]. Retailers are saying: I’m not sure what I should pay, so I’m going to wait.” He says Acadia is preparing to buy in these markets because he predicts they will be distressed. 

“You’re seeing a seismic shift in retail, and you’ll continue to see consolidation as tenants that can’t figure it out go out of business,” says Mr Nero of Avison Young. “It’s not the way it was in the past 100 years, where you put a product on the shelf and everyone comes in.”

Food eats up bigger share of US shopping centres While upmarket names are cutting back, one bright spot for landlords has been a different type of shopping experience: food.

Food halls featuring trendy restaurants and fast casual outlets have become a staple of New York’s new retail property developments. “Le District”, a 30,000 sq ft food market, is the centrepiece of Brookfield Place, a luxury shopping centre that opened two years ago in Manhattan’s financial district. Eataly, an Italian food emporium, has leased 48,000 sq ft at the World Trade Center’s new Oculus shopping mall.

Landlords have been keen to lure food tenants, which usually take on longer leases than other retailers, to meet demand from on-the-go urban shoppers, says Faith Consolo, chairwoman of Douglas Elliman's retail leasing and sales division. “It’s like we spit them out,” she says. “The food experience is what made these new developments . . . it is a creative time in retailing.”

Food now takes up about 9 per cent of space in US shopping centres, nearly double that of a decade ago, and is projected to rise to 20 per cent in some markets by 2025, according to a report by JLL. The brokerage expects the number of food halls in the US to increase from 140 this year to 200 by 2019.

Food “can now act as an anchor”, according to the International Council of Shopping Centers. “As demand for traditional merchandise space abates, demand for food service space appears insatiable.” A well-stocked food hall can draw shoppers, particularly millennials, who look to spend money on experiences; food has the added benefit of being “internet resistant”, according to analysts at Green Street Advisors.

“Convenience used to be a bad word. Today it’s a much better word, and a big part of that is food,” says Robert Burke, founder of luxury brand consultancy Robert Burke Associates. “The right food and the right entertainment are now the key components of a shopping centre.”

 

NEW YORK TIMES: Stores Take Flight From Fifth Avenue in Manhattan

NEW YORK TIMES: Stores Take Flight From Fifth Avenue in Manhattan

NEW YORK TIMES | RACHEL ABRAMS

Bergdorf Goodman. Tiffany & Company. Louis Vuitton. Fifth Avenue in Manhattan is to shopping what Broadway is to theater, defined by the marquee names that for decades have occupied some of New York City’s most prized real estate.

But lately, the avenue’s glittery window displays have been changing more quickly, as retailers have streamed in and out. Tourism has slowed while online shopping has sped up, making it harder for companies to justify the cavernous spaces and sky-high rents along the shopping strip.

On Tuesday, Ralph Lauren became the latest retailer to pull up stakes, announcing that it would close its flagship Polo store at Fifth Avenue and 55th Street as part of a previously announced effort to reorganize the company.

The move highlights how higher-end brands are not immune to the broader troubles facing brick-and-mortar retailers from online shopping and other competitors. Companies must often choose whether to invest in their online or physical stores — including showcase locations like those on Fifth Avenue.

“The Fifth Avenue model seemed to work for a while, and then it got to a point where it just doesn’t work at this price anymore,” said Barbara Denham, a senior economist at Reis, a real estate data and analytics firm. “It got to the point where I think landlords were jacking up each new lease with higher and higher rent, and at some point, something had to give.”

Stores still line the avenue. But in recent years, a record number of brands along the upper part of the shopping strip have shuttered or relocated, including Kenneth Cole, Juicy Couture and H&M, according to an analysis from the brokerage firm Cushman & Wakefield. From 49th to 60th Streets, the availability rate of leases — one gauge of turnover — reached 15.9 percent at the end of last year, up from 6.1 percent five years earlier.

“I think brands are becoming more focused on driving sales and being realistic with what they need as far as the store size,” said Robert Burke, a luxury consultant who worked as an executive at Ralph Lauren in the 1990s. “I think you can still set a brand image without having a huge store.”

Across the country, once-mighty chains like Macy’s and Sears have had to re-evaluate their physical locations. While the majority of shopping is still done in person, e-commerce has grown faster than brick-and-mortar sales. Department and big-box stores across the country have closed locations. Others have filed for bankruptcy, including American Apparel, Radio Shack and, on Tuesday, Payless.

Since the middle of 2015, major brands have shut down at least 470 locations at an accelerating pace, according to Ms. Denham. Those locations, represented in large part by Sports Authority, Macy’s, J. C. Penney and Kmart, add up to about 28.9 million square feet of retail space, she said.

What’s happening on Fifth Avenue reflects “the rebalancing of brick-and-mortar and e-commerce that we’re experiencing,” said Gene Spiegelman, a vice chairman at Cushman & Wakefield.

“Retail sales are still growing,” he said. “The question is, where do those sales originate?”

Fifth Avenue’s Evolution

The retail industry faces turmoil, and not even Fifth Avenue from 49th to 60th Streets, one of the premier shopping strips in the city, has been immune.

Ralph Lauren, a brand that helped define American fashion for much of the past half-century, has struggled to reinvent itself for the modern era. It has long subsisted on core products like Gatsby gowns and polo shirts.

It opened its Polo location on Fifth Avenue toward the end of 2014. The next year, it appointed a chief executive, Stefan Larsson, for the first time, an acknowledgment that the brand’s eponymous founder needed help to compete with fast fashion and other challenges. Last year, Mr. Larsson announced a plan to trim Ralph Lauren’s many labels and focus more on creative designs and a quicker production timetable.

His path toward reinventing Ralph Lauren, however, was short-lived. Citing creative differences with Mr. Lauren, Mr. Larsson said in February that he would depart the company on May 1, an abrupt shake-up that sent the stock price tumbling.

In its most recent quarter, which ended on Dec. 31, revenue fell more than 12 percent to $1.7 billion, and the company said that it was on track to close 50 stores by the end of this fiscal year. On Tuesday, Jane Nielsen, the chief financial officer, said in a statement that the Polo closing helped “ensure we have the right distribution and customer experience in place.”

The company declined to comment further about the decision. Shares of Ralph Lauren fell 4.5 percent to close at $77.74 on Tuesday.

Landlords along Fifth Avenue have not had much sympathy for the troubles of the retail industry. At the end of last year, the average asking price for a square foot of retail space from 49th to 60th Streets was more than $2,900, up from $2,283 at the end of 2012, according to data from Cushman & Wakefield.

Those figures make the area one of the most expensive in a city known for the stratospheric cost of its real estate. But other factors have affected retailers’ prospects in the area, too. Foreign tourists, who typically spend more than domestic visitors, have been pinched by the declining value of the euro and the pound.

And for the first time since the recession, New York City is expecting a drop in international tourism, citing President Trump’s recent travel ban and protectionist rhetoric.

NYC & Company, the city’s tourism and marketing agency, projects that 300,000 fewer international travelers will visit the five boroughs this year. While domestic travel is expected to remain strong, the group has cautioned that it takes four domestic travelers to equal the spending power of one international visitor.

Fifth Avenue was particularly hard-hit between the presidential election in November and the inauguration in January, when Mr. Trump, then the president-elect, continued to work out of Trump Tower, on the avenue between 56th and 57th Streets. Swarms of security personnel made a leisurely stroll around Trump Tower into a nightmarish maze, slowing foot traffic to nearby retailers.

“Yes, there are still some gates and cement barriers,” said Tom Cusick, the president of the Fifth Avenue Business Improvement District. “But the kinds of problems that we had between election and inauguration have mostly evaporated.”

Mr. Cusick acknowledged that the turnover in the past two years or so has been higher than what he has seen in the past decade. But, he said, those spaces are not staying empty.

“There are stores moving in,” he said. “In six months to nine months, if you walk up and down the corridor the same way you might today, you won’t see as many closed stores.”

WWD: Wolf & Badger Unveils First U.S. Outpost in SoHo

WWD: Wolf & Badger Unveils First U.S. Outpost in SoHo

WWD | Lisa Lockwood

The retailer introduces consumers to emerging brands on a three-month rotating basis. Could concessions be the wave of the future?

Wolf & Badger, the U.K.-based multichannel retailer, is bringing its concession business model to the U.S., where it has opened its first outpost at 95 Grand Street in New York. The 2,500-square-foot, multilevel and multipurpose space is located near retailers such as Alexander Wang, Acne, Dior and Saint Laurent.

Wolf & Badger, which has two stores in London, introduces consumers to emerging brands on a three-month rotating basis. The company doesn’t buy on a traditional wholesale model but takes a commission of anything it sells either on the online platform or at the store. Brands pay a small monthly membership fee to be part of Wolf & Badger, which goes toward marketing the brands. Wolf & Badger pays the store’s rent and hires the staff.

Founded in 2010 by brothers George and Henry Graham, Wolf & Badger’s three stores and online operation offer a curated roster of more than 700 emerging brands from around the world. Among the offerings in the New York store are women’s wear designers such as Hebe Studio, My Pair of Jeans, Florence Bridge, ElleSD and Parlor; handbag lines such as Cafune, Ohktein and Scalo;  footwear such as Lucy Choi (Jimmy Choo’s niece); jewelry designers such as Alexa K, Kasane,  Talia Naomi, Bonheur Jewelry and Nan Fusco; men’s wear such as Rubirosa; and homeware such as O.W. London.

“We look to work with incredible up-and-coming talent who are at this stage of their life cycle that they’re focused on design and manufacture of their collections, and rightly so, but lack a reach to consumers that they deserve,” said George Graham, cofounder and chief executive officer,  who was interviewed with his brother at the SoHo store.

Comparing Wolf & Badger to the way concessions operate at department stores, he said, “We call it a service retail model.”

In explaining the fee schedule, Graham said,“Each brand contributes $500 to $1,200 per month towards marketing and in return for all other services provided, including unlimited use of the store for events and for their showcase in a fully staffed store in SoHo.  We then charge 20 percent on sales generated on their behalf in-store or online, rather than the typical 60 percent to 70 percent on a standard wholesale arrangement.”

Graham said the store doesn’t insist on exclusivity. “We like to see our brands develop and grow within the Wolf & Badger platform. We’ve had many who have gone on to open their own flagships, and be in fashion weeks and pick up stockists around the world, and for us, it’s great to see,” he said.

Up until now, the London stores and the web site have been focused on U.K. and European brands. “Now we’re expanding into the U.S. market; we’re working with incredible talent coming out of the U.S.,” he said.

The store rotates 20 to 25 percent of the merchandise every three months. Brands stay on the online platform for a longer period. In order to familiarize the customer with the designers, Wolf & Badger hosts “Meet the Maker” events two to three times a week, where it invites the designer to meet and get to know the customers and vice versa.

Robert Burke, ceo of consultants Robert Burke Associates, sees the potential of the concession model for the U.S. “I think it’s a unique model. I think it provides an opportunity for brands that may not have the reach of their own online sites, or be able to afford having a retail concept to have this type of exposure. I think it certainly serves a lot of the needs that the brands have, but also provides the customer with a highly curated shopping experience and the fact that it rotates regularly. I think one of their biggest draws is their web site.”
The biggest risk for a brand is if it puts in a lot of stock that then doesn’t sell and then the firm doesn’t get money up front, he said. “It’s a matter of timing, but interesting. I think it could catch on. Everyone’s looking for interesting shopping experiences,” said Burke.

Marigay McKee, founder and ceo of MM Luxe Consulting, said, “The concept of Wolf & Badger in SoHo is interesting as it brings together an eclectic mix of talent and design from niche and up-and-coming brands (many English names too) in a lifestyle format that, without the master umbrella that Wolf & Badger creates, for young brands, these couldn’t afford to retail their lines in the U.S. under normal brick-and-mortar scenarios. There is also the feeling of discovery when a consumer enters the store as they want to be surprised and find newness and niche brands they may not have been acquainted with previously. The model is certainly working as a mixed-use concession for new brands.”

She said the multibrand arena is thriving with new concept stores like The Webster, The Line and Forty Five Ten “appealing to the lifestyle-edit concept consumers seek out, and focused around the theater, hospitality and experiential aspects as well as the curation of product and merchandising.”

In the beauty area, she pointed out that it’s evident at stores like Bluemercury, Cos Bar, Blushington and Violet Grey. “Multibrand mix stores each have a point of view that gives a personalized approach and edit to the subject of beauty and the Millennial consumer who values the experiential as well as the digital associations,” said McKee.

“The combination of digital and experiential is the recipe for success for a lot of these lifestyle-concept stores as everyone attempts to design the store of the future. The alignment of digital content, merchandising content in-store and commerce creates value and information for the consumer too,” she said.

The SoHo store was designed by Augustus Brown, a Royal College of Art graduate architect, who also designed the London boutiques. The main level features women’s wear and accessories,  the lower level houses men’s wear and homeware, and the upper floor is dedicated to key designer jewelry collections. Sixty to 70 percent of the merchandise mix is women’s apparel and accessories; 20 to 25 percent is men’s wear, and the rest is home.

The way they discover new brands “is organic,” said Henry Graham, cofounder and creative director. “We have a good reputation among the designers we work with. Most of the brands are coming through recommendations or through other designers we stock or reading about us in the press. We’re always on the lookout for new brands.”

Asked if the store ever gets pushback from an emerging designer who doesn’t want to pay a fee and prefers that the collection be purchased, Henry Graham said, “Of course. But more regularly, we get brands who want to work with us, and we say, ‘We’re not prepared to work with you. You’re not the right fit.’ We turn away 90 percent of the people who want to work with us. We get about 200 to 300 applications a month.”

George Graham said they are looking at retail opportunities in Miami and Los Angeles, where they have an existing customer base. Ninety percent of the company’s business is done online. They carry 20,000 stockkeeping units on the site.

Wolf & Badger launched in 2010 with an online operation and a store in Notting Hill in London. It opened a second store on Dover Street in London in 2012.  “We saw a gap in the market where brands didn’t have the exposure to customers they deserved. They could sit around waiting for a department store to come find them, which wouldn’t really happen without sales metrics or without a track record, or they could go to a street market. That wasn’t appropriate for the premium labels we work with,” said George Graham.

The company employs 15 people in London and New York working on digital marketing for all the designers. To drum up exposure, Wolf & Badger does public relations and product placement, plans to host offline events, and is active across such social media channels as Facebook, ShopStyle, Polyvore, Instagram and Google. It has also developed a lot of relationships with bloggers.

“We have a big flow of customers who are interested in independent brands, and use that data we built to introduce the right customers to the right brands,” said Henry Graham. “That allows us to market these smaller designers that independently they’re unable to because we have a collection of so many brands and have so much traffic. It allows these smaller brands to compete on a level playing field.”

Under this model, participating designers have access to such business services as creative and merchandising consultancy, retail advice, press and marketing support for short- and long-term success.

As for why they decided to expand to SoHo, George Graham said, “We were looking for two years for the right space in New York. We spent a lot of time out here getting to know the city and the different neighborhoods. We felt that SoHo had the right adjacencies and right customer base for the designers we carry.”

“It’s the best place for our brand. We’re hoping it will be as good or better than London. It’s always been a dream for us to be here,” he added, declining to disclose first-year volume projections for the SoHo boutique.

WWD: Out From the Shadows: Chloé Banks on Ramsay-Levi to Maintain Growth

WWD: Out From the Shadows: Chloé Banks on Ramsay-Levi to Maintain Growth

Women's Wear Daily | Joelle Diderich

PARIS — In opting for a relative unknown as its new creative director, Chloé joins the ranks of fashion houses taking a chance on a studio talent used to working in the shadow of a star designer — and no doubt hoping that she turns out to be the next Phoebe Philo.

Ending months of speculation, the French fashion house confirmed on Friday it has appointed Natacha Ramsay-Levi as creative director for ready-to-wear, leather goods and accessories, effective April 3. WWD first reported that the two parties were in talks on Dec. 15.

Ramsay-Levi, a longtime key associate of Nicolas Ghesquière, joins the company from Louis Vuitton, where she had been creative director of women’s rtw since 2013. She will show her first Chloé collection, for spring 2018, at Paris Fashion Week in September, the house said.

Ramsay-Levi succeeds Clare Waight Keller, who exited Chloé earlier his month after showing her final collection for the brand and reportedly has another job lined up — though market sources say it is not at Burberry or Céline, as has been rumored.

Geoffroy de la Bourdonnaye, chief executive officer of Chloé, said Ramsay-Levi was chosen for her personality and rock-solid background.

She started her fashion career at Balenciaga in 2002, and rose through the design ranks to become Ghesquière’s top deputy. When the Frenchman left Balenciaga in 2013, she went on to consult for several brands, including Hermès and Acne Studios, before rejoining Ghesquière at Vuitton, according to a Paris source.

“Natacha is remarkable because she is completely natural. She’s bold, she’s unafraid to be herself, she has excellent creative vision, she knows what she wants, she has charisma and she shines,” de la Bourdonnaye told WWD.

“She’s a Chloé girl and above all, she’s very experienced and very loyal. She has proven that she is capable of working in different environments and handling the pressure of large brands,” he said.

Her appointment comes at a time of radical change in the European fashion industry: Riccardo Tisci left Givenchy after 12 years at the helm and is said to be in talks about heading to Versace, while Emanuel Ungaro revealed this week it was parting ways with Fausto Puglisi and has hired Marco Colagrossi as creative director as it takes production in-house.

The last year has seen changes in creative direction at Christian Dior, Yves Saint Laurent, Lanvin, Berluti, Brioni, Valentino, Roberto Cavalli, Salvatore Ferragamo and Bally.

With a number of established names — including Alber Elbaz and Hedi Slimane — unemployed, going with someone who is not a household name keeps the emphasis on the spirit of Chloé, founded in 1952 by Gaby Aghion to create clothes that allow women to express their identity.

“I am very proud to join a house founded by a woman to dress women. I want to create fashion that enhances the personality of the woman who wears it, fashion that creates a character and an attitude, without ever imposing a ‘look,’” Ramsay-Levi said in a statement.

It is understood that Ghesquière has been supportive of Ramsay-Levi taking the Chloé job, and that her post will be filled internally at Vuitton. In an Instagram post on the day of his Louis Vuitton show, held inside the Louvre Museum, Ghesquière posted a photo of him with Ramsay-Levi alongside a tribute.

“Thirty shows and many more fantastic projects we experienced together @nramsaylevi. We spent an extraordinary part of our life sharing our passion. You are an inspirational, talented and generous woman and I am truly grateful for that ❤️❤️❤️,” he wrote.

De la Bourdonnaye said the choice was in line with Chloé’s history.

“The interesting thing is that since the creation of the house, all the designers who started out at Chloé were virtually unknown, and not all of them, but a vast majority, became stars,” he noted, reeling off the names of Karl Lagerfeld, Stella McCartney, Phoebe Philo, Martin Sitbon and Waight Keller.

“The brand is strong and there is a strong message that hasn’t lost an ounce of relevance since the day that Gaby founded it,” he added.

It’s an approach that harks back to former Chloé ceo Mounir Moufarrige tapping a young and inexperienced McCartney – then 25 – to succeed Lagerfeld as creative director. Philo, previously McCartney’s right-hand woman, followed suit in 2001.

More recently, Gucci president and ceo Marco Bizzarri took a winning gamble by promoting Alessandro Michele, a longtime Gucci employee who was second-in-command to Frida Giannini, overseeing accessories. Within the year, he had been named International Designer of the Year at the British Fashion Awards.

Emma Davidson, owner and ceo of Denza, a fashion recruitment firm based in London whose clients include LVMH Moët Hennessy Louis Vuitton, Compagnie Financière Richemont and Roberto Cavalli, said the decision to tap an under-the-radar designer could be purely pragmatic.

“There was a time when people only wanted someone who was famous, but the costs involved in that are astronomical. In the current climate, there will be many factors in forming those kinds of decisions: Looking for a breath of fresh air, looking for something design-wise that’s a little bit different, something of the next generation and an understanding of a different kind of customer and individual in the world today,” she said.

Star designers typically throw a house into turmoil. “Often half the team leaves, or the new creative director wants to pick their own team and then bring a whole team with them from wherever they’ve come from. All of the teams get changed around, and for the very senior management of any house, it’s a huge logistical nightmare, with huge extra costs involved,” Davidson said.

De la Bourdonnaye noted that Ramsay-Levi would not be coming with an entourage. “Natacha is arriving alone to work with the Chloé teams,” he said. “We have a very high-quality studio with strong talents at every level, and I am very confident that Natacha will rapidly blend in with the rest of the family.”

Robert Burke, chairman and ceo of fashion industry consulting firm Robert Burke Associates, said although brands have been shying away from star designers for the last few years, this may be changing as social media increasingly dictates the way luxury houses run their business.

“The houses put in relatively well-known people and then became beholden to them, and then they went through a period where they felt that the brand was bigger than the names and didn’t really want to have such big names,” he noted.

“Now there’s so much emphasis on social media, and recognized names, and celebrity friends and associations, and stylist associations. That seems to be a more recent movement for the brands,” he said, citing the hire of Raf Simons at Calvin Klein. “He was used to set the image for the Calvin brand, he himself as much as his design talent.”

Nonetheless, Burke did not think there was a one-size-fits-all approach.

“There’s a danger both ways. You can have someone that has a huge Instagram following and lots of connections, but no one can underestimate the amount of hard work that goes into leading a brand, so those things absolutely do not guarantee successful collections or a successful brand,” he said.

“It’s really important that they bring in the new talent that is oftentimes behind the scenes working,” Burke added. “There’s no hard and fast rule that it works or doesn’t work. I guess the risk is if sometimes these designers are better as a number two person, or can they really be the brand from a creative vision?”

Since joining Chloé in 2011, Waight Keller — an alum of Pringle of Scotland and Gucci — brought a sure and steady hand to the house, rejuvenating its rtw and accessories business and winning largely positive reviews for her collections.

In its interim report for the fiscal third quarter ended Dec. 31, Chloé’s parent, Compagnie Financière Richemont, said Chloé’s performance helped its “other businesses” division log growth of 7 percent at constant exchange rates during the period.

Some have questioned whether Ramsay-Levi, who is identified with Ghesquière’s futuristic, sport-inspired aesthetic, is the right fit for a brand best known for its floaty dresses and men’s wear-inspired coats and pants. De la Bourdonnaye said he was confident she was up to the task.

“The intelligence of great designers is to adapt their style to the houses they work for,” he said, noting that Philo worked successfully in different registers, first at Chloé and then at Céline.

“When Natacha was at Balenciaga, she did Balenciaga. When she was at Vuitton, she did Vuitton. I am not recruiting the culture or the creative inspiration of Vuitton or Balenciaga. The Chloé girl stays, the Chloé strategy stays,” he said.

“There will be some bad surprises occasionally, but that’s the nature of the creative process. If you don’t allow designers to take risks, you will never have beautiful creative results. I am convinced we will have more good surprises than bad, and that is why I am very confident about this choice,” he concluded.