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

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 | 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 | 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 | 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

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.

New York Times: Another Arnault Takes Charge

New York Times | Elizabeth Paton

PARIS — Cocktail parties during Paris Fashion Week can seem as common as paillettes on an evening gown. But on Monday, one particular event may attract an unusually excited crowd.

Held in honor of the new flagship store for the German luggage maker Rimowa on the Rue du Faubourg St.-Honoré, it is being co-hosted by the brand’s freshly minted — and in some eyes unconventional — co-chief executive, Alexandre Arnault.

Mr. Arnault is 24 and the son of Bernard Arnault, chairman of LVMH Moët Hennessy Louis Vuitton, the luxury conglomerate that bought a majority share in Rimowa last October.

Indeed, some eyebrows were raised when LVMH, alongside its announcement that it had acquired an 80 percent stake in Rimowa for 640 million euros, or $673.6 million, added that the third of Mr. Arnault’s five children would be installed at its helm.

For Alexandre Arnault — whose official start date was Jan. 23 — the store opening on Monday will mark his first official moment in the limelight. And everyone will be watching.

The oldest of Bernard Arnault’s three sons from his second marriage, to Hélène Mercier, Alexandre Arnault graduated from Télécom ParisTech and holds a master of research in innovation from École Polytechnique. He shares his father’s height, and his family’s love of tennis. And he also follows in the footsteps of two older stepsiblings: Delphine Arnault, 41, who spent 12 years working her way through the ranks at Dior to become deputy general manager under its chief executive, Sidney Toledano, and who today is executive vice president at Louis Vuitton; and her 39-year-old brother, Antoine, who spent eight years as Louis Vuitton’s head of communications and now is chief executive of the shoemaker Berluti and chairman of the cashmere label Loro Piana.

Unlike his siblings, Alexandre Arnault has landed atop a brand after only three years of behind-the-scenes work at his father’s behemoth holding company, Groupe Arnault, helping to define digital strategy and being instrumental in a handful of key technology-focused hires and investments.

That his ascent has been so speedy has not been lost on industry observers, particularly as succession questions around Bernard Arnault, who just turned 68, start to arise (though there are no signs the billionaire patriarch is going anywhere anytime soon). Nor was the fact that in January, Alexandre accompanied his father to Trump Tower in New York to meet then President-elect Trump, the only Arnault scion to make the trip.

“From the first time I met him, it was clear that Alex was observant, extremely smart and ambitious, so the suggestion that he would be the head of a company now at the ripe age of — what is he? — 24 was not shocking to me at all,” said the writer and journalist Derek Blasberg, adding that the two had had lunch in January. He described Alexandre as “knowledgeable about what’s going on with the family firm — and proud of it, too,” with a clear vision of what he wanted to achieve with Rimowa, as well as a highly supportive relationship with his other siblings.

“I think that most people when they’re in their early 20s are still feeling out the fashion industry and figuring out where they fit,” Mr. Blasberg said. “But Alex knows exactly what he’s doing. Yes, his father facilitates a great deal of opportunity, but I’ve never doubted Alex’s capabilities. It would be a mistake to do so.”

Reportedly the young Mr. Arnault is both sociable and outgoing, often in the front row of LVMH-brand shows and friendly with designers both in and outside the LVMH fold — though you would never see him falling out of a nightclub at 4 a.m. (he has been known to occasionally take to the decks as a D.J., however). All signs suggest he is game for a challenge, and not worried about showing his age.

Mr. Arnault tweeted the day the Rimowa deal was announced: “Can’t feel guilty for using RIMOWA suitcases anymore. Herzlich willkommen!” (The German phrase means “Warm greetings!”)

The photo with the message shows him clutching one of the brand’s trademark grooved aluminum suitcases, next to Dieter Morszeck, his 63-year-old co-chief executive, the grandson of the German group’s founder. (The family has retained a 20 percent stake in the brand).

Smiley-face emojis have not been part of the C-suite lingo at LVMH, which takes a famously conservative approach to its public interactions (both Alexandre Arnault and LVMH declined to provide comment for this article). But perhaps emoji use will become more common now.

“Alexandre seems bright and determined,” said Luca Solca, luxury analyst at Exane BNP Paribas. “This is a good training ground and an important sign of recognition for him. And from what I understand, he has been a key driver in getting digital onto his C.E.O. father’s agenda.”

Mr. Arnault — reportedly the first to spot the acquisition potential of Rimowa, the last high-end luggage brand left in the market after the acquisition of Tumi by Samsonite last year — speaks German fluently and has moved to Cologne, Germany, where the company is based.

Rimowa is expected to report revenue of more than €400 million for 2016, LVMH said at the time of the deal. The business is also expected to grow substantially — not least because of the enviable profit margins on its ribbed aluminum or more affordable polycarbonate products, which are designs are based on the fuselage of the first metallic aircraft. Prices, which start at $400, can go to as much as $1,000 and more for a piece, and there are limited styles, color choices and fabrications. Mr. Arnault has already outlined plans to open seven more stores in 2017, in addition to the new Paris flagship.

“The major trend in luxury right now is towards travel and experience, and Rimowa is a uniquely placed brand to take advantage of the global boom in tourism and the traveling consumer,” the luxury consultant Robert Burke said. He noted LVMH has strong roots in what he called “the art of travel,” including a string of hotel investments.

“LVMH knows that there is a young luxury consumer who is keen to explore the world and a digital native,” Mr. Burke said. “Alexandre is likely to understand their online interactions — and how to communicate effectively with these shoppers — far better than many seasoned executives, though plenty of those will still be onside to support him. I have a feeling that this brand is being primed to be an incredibly strong and focused online play.”

Indeed, Mr. Arnault’s digital background (he has described himself as a “technology freak and geek at heart”), applied to a low-risk, high-performing heritage brand, in a market with strong fundamentals, has all the makings of a success story.

Still, before LVMH Kremlinologists get too excited, it is important to remember that if there are any deep internal rivalries within the family — and the business — the outside world has not been privy to it.

Besides, there are two more Arnault sons, Alexandre’s younger brothers, who could hypothetically join the family business: Frédéric, 22, a graduate student, who has proved a standout academic star at École Polytechnique, and Jean, 18. When it comes to the question of the great Arnault succession race — and the next generation leadership of the world’s largest luxury empire — only time will tell.

Meanwhile, there’s a luggage brand to tend, and a store to unveil.

BUSINESS OF FASHION: The Decline of the Liberal West Poses Major Threat to Fashion

BUSINESS OF FASHION | HELENA PIKE

LONDON, United Kingdom — “We’re undergoing a structural transformation in which politics is being redefined along the fault line of globalisation… Those that embrace globalisation, and those that are left behind by globalisation," Alexander Betts, Leopold Muller professor of refugee and forced migration studies at Oxford University, told audiences at VOICES, BoF’s first annual gathering for big thinkers last December.

As growing internet access, travel and trade have accelerated the integration of global markets and the worldwide exchange of ideas, information, people and products, some have benefited far more than others, giving rise to a surge of nationalism across the Western world, rooted in a rejection of globalisation and reflected in the election of Donald Trump in the US and Britain’s vote to leave the European Union. “When we look at the [Brexit] voting maps, there is an almost-perfect correlation between the voting patterns of those who wanted to leave, and the hollowing out of labour-intensive manufacturing,” explained Betts. “Those who wanted to stay live in areas where the dominant sectors are professional, financial, technological and innovative.”

With its global supply chain, international talent pool and dependence on new wealth creation, upward socio-economic mobility and optimism to fuel spending, fashion has benefited greatly from globalisation and stands to suffer in a new political reality that could give rise to new curbs on the free movement of people and products, and breed greater uncertainty at a time when many consumers are already feeling less secure.

New barriers to trade

For fashion, the most drastic consequence of the political shift away from liberalism is the resurgence of protectionist trade policies. Many fashion businesses have spent years building up global supply chains and outsourcing vast swathes of their production to manufacturing hubs in China and South East Asia. In fact, about 97 percent of clothing and about 98 percent of shoes sold in the US are imported from overseas, according to the American Apparel and Footwear Association.

As one of his first actions as president of the US, Donald Trump pulled out of the Trans-Pacific Partnership, a 12-nation agreement that was designed to encourage trade between a bloc of countries — including Vietnam, Japan and the US — by reducing import and export duties. Trump has also threatened to introduce punitive tariffs and quotas to restrict the importation of goods from countries like Mexico and China.

In bid to encourage businesses to reshore manufacturing, the US president has backed a so-called “Border Adjusted Tax” prompting fierce opposition from a coalition comprising over 100 companies from Nike to LVMH. The measure would be “absolutely crippling” for businesses, says Robert Burke, chief executive and chairman of Robert Burke Associates, a retail advisory firm. “It would virtually put businesses out of business immediately… Brands have spent years and years developing production and mills in foreign countries. [They] are not set up for a quick change on this. If there is going to be any kind of evolution in bringing jobs and production back [to the US], it has to be done strategically.”

Certainly, reshoring production would allow some businesses to play on the appeal of movements like “Made in America,” which have been gaining momentum. But the West — after losing ground to Asia for decades — currently lacks the skilled labour pool and the modern equipment necessary for mass garment manufacturing. What’s more, the high cost of labour in the US and Europe would also all but eliminate product margins and make it impossible for companies to maintain current prices. “Some [American workers] are making $15 or $16 dollars an hour — in a day, they make more than someone in Bangladesh makes in a month,” says Edward Hertzman, founder and chief executive of Sourcing Journal, a trade publication focused on fashion’s supply chain.

Indeed, according to Americans for Affordable Products, the coalition formed to oppose the “Border Adjusted Tax” plan, the tax could result in a 20 percent price hike on everyday items including clothing. In today’s subdued retail market, this would be devastating. “The industry has struggled with getting people to buy clothing right now that is manufactured overseas for exorbitantly low rates unless it’s discounted heavily, so how are you going to get people to buy clothing that’s four or five times the price?” asks Hertzman.

The situation in Europe is equally bleak. “If the new [post-Brexit] trade agreement is not favourable and suddenly we have all of these additional taxes and import duties put on stuff, that’s going to affect the pricing of products coming into the UK,” says Fflur Roberts, global luxury manager at Euromonitor. “Somewhere along the line, someone’s got to pick up that bill… I’d imagine at the end of day the consumer will have to pay.”

While the actual terms and conditions of Britain’s departure from the EU remain unknown, it would be “politically untenable” for the UK government to pursue a so-called “soft Brexit” option where the country remains part of the European single market, explains Dr Peter Holmes of the UK Trade Policy Observatory. A more likely scenario would see the UK losing its favourable trading status and “dealing with the EU like any other member of the World Trade Organisation.”

“Ultimately, anything that limits free trade is not good for global business,” says Mario Ortelli, a senior research analyst at Sanford C. Bernstein.

Curbs on talent migration

The decline of liberal values across Europe and the US has also manifested itself in calls to restrict immigration. Less than two weeks after his inauguration, US president Donald Trump issued a highly controversial executive order barring anyone from seven Muslim-majority countries — including Syria, Iraq, Iran and Sudan — from entering the country. (The ban has now been lifted following legal challenges.) Meanwhile in the UK, Prime Minister Theresa May has refused to guarantee EU citizens living in the UK the right to remain after Brexit. In turn, British citizens’ freedom to live and work anywhere in the EU will almost certainly be revoked. For the fashion industry, which depends on a global talent pool, restrictions on immigration are bad news.

“Brands have a worldwide audience. They need to have an understanding of the world. In order to do so, they must be able to access and hire the most qualified profiles in every field, from entry level to C-suite,” says executive search consultant Floriane de Saint Pierre. “Companies absolutely need to hire the talent they need — so to have free movement of talent.”

A tightening of immigration policy will likely not have a huge impact on top-level personnel. “If you’re the best design director in the world and you’re based in the UK and Bernard Arnault wants you, he’s going to get you — whatever the political situation is,” says Moira Benigson, managing partner of specialist executive search firm The MBS Group. “Top-level design talent usually don’t have a lot of constraints to get a working visa in the US or Europe, because they are very skilled individuals with a unique skillset,” agrees Ortelli. But some of the fashion schools that train top design talent‚ like London’s Central Saint Martins, would certainly suffer from stricter border controls. “Generally, schools that are not international will be less interesting,” says Benigson.

And the situation is very different at lower levels of the fashion industry. In the UK, 15 percent of workers in retail and related wholesale operations were born abroad, with 6 percent coming from the EU, according to Oxford think tank Migratory Observatory. Across Italy and France, many of the highly skilled artisans working in the manufacturing ecosystems of large European luxury brands come from all over the world, says Ortelli. “The limitation of visas could be dreadful for this sector.”

Dampening tourist flows

Rising uncertainty, a less welcoming political climate and restrictions on travel would also undermine tourism, a key source of sales for the global fashion and luxury industry. Indeed, according to a 2015 report by Bain & Company, a consultancy, tourists are responsible for more than half of the luxury goods spend in Europe.

“If you make it more difficult for people to travel around, the consequence is that the touristic flows will probably decrease,” Ortelli says. The drop in tourist travel to Paris following a wave of terror attacks in Europe, demonstrated just how dependent sales of fashion and luxury goods are on tourism.

And while tourists from the seven countries barred from entering the US don’t account for a significant portion of the country’s fashion and luxury spend, these sorts of restrictions send off-putting and unpleasant signals to all potential visitors. “Even people from countries that aren’t on the list — lots of people generally won’t feel like they’re welcome or won’t want to go to the US,” says Roberts. “Likewise in the UK, people just don’t feel welcome.”

Of course, some brands, like Burberry, have enjoyed short-term gains as, in the immediate aftermath of the Brexit vote, Britain briefly became the cheapest place in the world to shop for luxury goods after the pound fell to a 30-year low against the dollar, attracting tourists to the country. “But the exchange rate won’t be as low as this forever. Or, failing that, retailers will eventually adjust their prices,” says Roberts.

Eroding consumer confidence

Whatever the long-term policy outcomes, recent political shifts in the US and Europe are feeding increased anxiety for many, with serious implications for the emotionally-driven fashion industry. “In the US, there’s so much anxiety on the streets and so much uncertainty, it’s going to affect overall spend,” says Roberts.

In America, the election of Trump caught many by surprise. The rich, who may benefit from Trump’s plans to cut taxes, are feeling more buoyant than most. “The very high net worth consumer is relatively confident that there are going to be tax cuts… and that they are going to end up with more money to spend,” says Burke. “But overall, the consumer is very uncertain about what the future holds and is in a wait-and-see mode.”

“Uncertainty is not good for luxury spend,” adds Ortelli. “Luxury is supported by economic growth and stability. The consumer buys luxury products when they are reassured that they can afford their mortgage and the school fees for their kids.

“It’s a business of happiness.”

WALL STREET JOURNAL: Ralph Lauren CEO Stefan Larsson Quits After Dispute With Founder Over Creative Control

WALL STREET JOURNAL | SUZANNE KAPNER

A dispute over creative control led Ralph Lauren Corp. Chief Executive Stefan Larsson to leave the struggling luxury fashion brand after less than two years at the helm.

Mr. Larsson, a 42-year-old fast-fashion executive tapped to work alongside founder Ralph Lauren, said Thursday that the two men agreed the business needed to evolve but disagreed over the company’s creative and customer-facing strategies.

“The board, Ralph and I have over the last month worked very hard to find common ground,” Mr. Larsson said on a conference call with investors, calling his abrupt exit a mutual decision. “However, we have found that we have different views on how to evolve.”

Shares fell 12% in New York Thursday, and are now down more than 30% over the past year. Ralph Lauren also reported another slide in quarterly sales.

Executives said turnaround efforts led by Mr. Larsson—which included closing stores, pulling back on discounts and jettisoning some of the company’s smaller labels—were on track, and promised smaller revenue declines next fiscal year.

Mr. Lauren, 77, who is the company’s biggest shareholder, executive chairman and chief creative officer, didn’t participate in the call. In a news release, the founder said he was committed to the business plan laid out by Mr. Larsson and would continue “to move our business and iconic brand forward as we have done for the last 50 years.”

Until a few weeks ago, all had been going well, according to a person familiar with the situation. Mr. Larsson had made strides streamlining the supply chain, with the help of new executives he had brought on board, and Mr. Lauren was supportive of the progress he was making.

Then, Mr. Larsson told Mr. Lauren that in order for him to be accountable for executing the business plan outlined in June, called “The Way Forward,” he would need control of the creative side of the business, which was Mr. Lauren’s domain, this person continued.

In particular, Mr. Larsson argued that he needed the ability to hire and fire creative talent, this person said. Mr. Lauren, who has overseen the creative side of the business since he founded his label in 1967, was unwilling to cede that control.

Tensions continued to bubble over the next few weeks, with the two men disagreeing over how the design, marketing and creative vision should evolve, another person said. The board met to discuss the impasse in recent days, and directors backed Mr. Lauren, this person continued.

Mr. Larsson will leave Ralph Lauren on May 1 and the company has started a CEO search. Its finance chief, Jane Nielsen, will lead the turnaround effort in the interim, the company said.

“Ralph is not interested in running the business day-to-day,” Ms. Nielsen said.

Mr. Lauren is one of the few remaining designers of his generation to retain an active role in his company, which unlike rivals hasn’t sold out to a large corporation.

The designer retained the CEO title until anointing Mr. Larsson his successor in November 2015, two years after his longtime No. 2 executive, Roger Farah, stepped back from his daily role as president and chief operating officer. Mr. Farah later left the company and is now the CEO of Tory Burch LLC.

Although many designers, including Calvin Klein, Donna Karan and Yves Saint Laurent, found success by pairing their creative talents with a strong business leader, clashes between the two sides aren’t uncommon in the fashion industry. Diane Von Furstenberg ’s first ever CEO left her company late last year, after just 18 months on the job.

People who know Mr. Lauren said he is truly interested in seeing his company evolve. “There is not a more modern thinker or someone more open to change than he is,” said Robert Burke, who spent 11 years at the company before leaving to join Bergdorf Goodman in 1999. “But it’s a question of how much change a company and its consumers can handle.”

Citi analyst Kate McShane said finding a successor to Mr. Larsson “could be challenging as the new CEO’s vision still has to fit with that of Mr. Lauren’s.” In a note to clients, she said Mr. Larsson was considered “one of the best players in the industry” and worried that executives he recruited to the company would follow him out the door.

Ralph Lauren’s profits were sagging when Mr. Larsson took the helm in November 2015. His strategy has been to focus on fewer brands and speed the company’s supply chain. He has also started to slash costs, cutting more than 1,000 jobs, or 8% of the full-time staff, and is closing dozens of stores. In an interview in June, he also touched on product changes, saying he wanted the merchandise to focus on core items like blazers, military jackets and polo shirts, but with an updated look.

Mr. Larsson joined the company from Gap Inc. ’s Old Navy, where he was credited with helping revive sales at the casual apparel brand. Previously, he spent 15 years at fast-fashion retailer Hennes & Mauritz AB.

He stands to receive more than $26 million in exit pay, depending on the performance of the company and its shares over the next few years, according to his severance agreement. The company promised to pay him at least $10 million in cash, as well as a bonus for the fiscal year ending in March that has a target of $3.75 million, the filing shows.

For the fiscal third quarter, Ralph Lauren reported profit of $82 million, or 98 cents a share, down from $131 million, or $1.54, a year earlier. Revenue fell 12% to $1.71 billion.

Executives said Thursday they expected sales to decline by a midteens percentage for the fiscal year and to shrink by a mid-single-digit percentage next fiscal year.

—Imani Moise and Theo Francis contributed to this article.

NEW YORK TIMES: Samantha Cameron, From 10 Downing Street to Selfridges

NEW YORK TIMES | VANESSA FRIEDMAN

Not quite three months after standing supportively, and silently, behind her husband, Prime Minister David Cameron of Britain, as he resigned his position after losing the Brexit vote, Samantha Cameron is about to do what, to my knowledge, no spouse of a global leader has ever done before.

Start a fashion brand.

Confirming the news, which was first rumored in October when she registered the company name “Samantha Cameron Studio Limited,” Mrs. Cameron told British Vogue, which will reveal first looks in its December issue: “I felt that there were a lot of American and French brands out there that fit that bracket of designer contemporary with the right price point and the right styling. But there aren’t that many British brands which fill that space.” She is aiming to fill it.

The new line, which consists of 40 styles, will be called Cefinn and will be available at Net-a-Porter, Selfridges and cefinn.com.

As to the clothes and their style, “Well obviously you’re thinking about yourself, but at the same time it can’t be all about yourself because that would be pointless,” she said to British Vogue. “I’ve spent a lot of time trying stuff on my friends.”

An image released by the magazine shows her in an ecru midcalf trumpet skirt with a white windowpane print and matching belted shell. It looks perfectly proper and accessible (and less obviously “fashion-y” than some of the looks she wore during her husband’s time in office).

On the one hand, this career segue makes a fair amount of sense. Before she landed in 10 Downing Street, Ms. Cameron was the creative director of the British brand Smythson and responsible for turning it into a buzzy heritage handbag house. As W.P.M. (wife of the prime minister), she remained a part-time consultant for the brand — attending Smythson’s New York store opening last March, for example. Her sister, Emily Sheffield, is the deputy editor of British Vogue.

As W.P.M., Ms. Cameron’s clothing choices were deliberate (and diplomatic), in the model of Michelle Obama, and as a result widely watched: She was applauded for wearing pieces at many different price points and by many different British designers, including Marks & Spencer, L. K. Bennett, Peter Pilotto, Christopher Kane, Erdem and Roksanda.

She also became the ambassador to the British Fashion Council, making it her official duty to support the industry, and hosted numerous cocktail parties for London Fashion Week on Downing Street.

And, given the way pretty much anyone with a public profile and popular image, from rock stars to athletes, has seized on fashion as a career forward, it was probably only a matter of time before politicians or their spouses joined the trend.

Especially considering how much time and thought they are now forced to devote to what they wear, and all its possible meanings, they may as well put all that background research to good use. (A crisis strategist once told me he spent hours discussing tie color with a client who was a head of state when they could have been talking about the peace accords.)

Mrs. Cameron is in her mid-40s — she clearly has more career left in her — so why not? And other former Downing Street wives (and other political wives) have continued their pre-government careers post-government.

It’s just that the next step has been a little more obviously worthy than fashion.

Consider perhaps the most famous former first lady with a career (at least in recent times), Hillary Clinton. Or Cherie Blair, the wife of former Prime Minister Tony Blair of Britain, a Queen’s Counsel. When her husband left office, she established the Cherie Blair Foundation for Women, which focuses on empowering women in developing economies.

Or Sarah Brown, the wife of Gordon Brown, another former prime minister, who founded the children’s charity Their world and became the executive chairwoman of the Global Business Coalition for Education (among other things).

Receive occasional updates and special offers for The New York Times's products and services.There are exceptions: Carla Bruni Sarkozy, a former model and the wife of former President Nicolas Sarkozy of France, became the face of Bulgari jewelers the year after her husband left office, and it didn’t raise many eyebrows.

But in this case, “The response to what she does is going to be in part about how we process political figures,” Robert Burke, a luxury consultant and founder of Robert Burke Associates, said of Mrs. Cameron. “She’s going to be judged through the lens of her name, and her name is Cameron.”

And that’s even if the name on the label in the clothes is different; even if they are clothes for many, as opposed to the exclusive few. Especially if she continues to be her own best model.

Her products will be assessed not just as a nice skirt, say, or a pretty dress, but as a nice skirt and a pretty dress by the woman married to the former Conservative prime minister of Britain, the man who lost the Brexit vote, with all the implications and emotions that are attached to perceptions of him and his party. It is thanks to both, after all, that Mrs. Cameron is as well known as she is. You can’t detach the designer and her history.

And though the new generation of first ladies has taught us that fashion is an increasingly powerful personal and political tool, and a universal one, it is still widely dismissed as frivolous and unseemly. (I have the social media responses to many column about the politics of dress to prove it.)

As a result, for someone in her position, to make clothes her focus is a risk.

I honestly hope her brand is a success, because if it is, it may legitimize fashion as the serious choice it clearly is, and help break yet another expectation that wives of leaders behave a certain way and reside in a certain box. But I don’t think it will necessarily be a seamless transition.

Something to watch for in the new year.

BUSINESS OF FASHION: Athleisure's Winners and Losers

BUSINESS OF FASHION | HELENA PIKE

LONDON, United Kingdom — A decade or so ago, the average retailer’s athletic wear offering was limited to basic t-shirts and trainers — clothing that was practical for exercise, but nothing else.

Today however, fuelled by increasingly casual dress codes and a growing consumer focus on health and wellness, looking like you have an active lifestyle has become cool and athletic wear has become part of the everyday wardrobe.

“This idea of being healthy and sporty and fit has become the new sexy … There’s a desire to look sporty even if you aren’t practising any sport,” says Bernadette Kissane, apparel and footwear analyst at Euromonitor.

This shift has led to the rise of the so-called ‘athleisure’ category — clothing that marries the functionality and aesthetic of activewear with the desirability of catwalk trends. Demand for fashion-inflected yoga leggings and crop tops helped drive the global activewear market to a staggering $265 billion in 2015, up from $196 billion in 2010, according to Euromonitor. And the market shows no signs of slowing down, with global sales predicted to grow at 4.4 percent CAGR through 2020.

For existing sports brands and retailers, this trend presents an obvious opportunity. But, while some, like Nike, Adidas, Foot Locker and JD Sports, have been riding the athleisure wave with great success, many have struggled. This past year has seen Sports Authority, City Sports and Vestis Retail Group, parent company of Eastern Mountain Stores, Bob’s Stores and Sport Chalet, file for bankruptcy in the US, while in the UK Sports Direct reported that pre-tax profits for the year to April 2016 were down 15 percent. So what are the necessary requirements for a successful athleisure strategy?

Established players in the activewear market were well placed to tap the athleisure trend when it first emerged, as they were already familiar to consumers. “The reason why sports brands such as Nike and Adidas have done so well is they already had that brand image, the prestige you’d want to be associated with,” explains Kissane. “The fact that [this trend] is more status driven, and wanting to look cool and sexy, than it is actually being healthy and fit, [means] you then want to be associated with the brands in that area.”

“They have built up brand affinity over the years and consumers are accustomed to buying brands they are familiar with,” agrees Diana Smith, senior research analyst, retail and apparel at Mintel. They also have a proven track record of performance-quality product, which is still a core attribute of activewear, even if a garment is not actually going to be worn for exercise, Smith adds.

Multi-brand activewear retailers were less appealing in the eyes of the athleisure consumer. “What they had sold in the past was really performance wear. You went in, you bought your tennis shoes, your running shoes, your wick-away, and it was generally not very attractive but it functioned,” explains Robert Burke, chief executive of consultancy Robert Burke Associates.

“It’s not the sort of environment and soul of what athleisure is — that balance between fitness and fashion and the trend of wellness,” agrees Wendy Liebmann, chief executive of consultancy WSL Strategic Retail.

Investing in the in-store experience to attract the largely female and fashion-conscious athleisure consumer is crucial for retailers attempting to capitalise on the opportunity. “It requires a very different design sensibility, a very different approach — not focused overly on items and products and tickets and prices and discounts and mark downs, but focusing more on presenting the whole assortment,” says Adheer Bahulkar, a partner in the retail practise of global strategy and management consultant firm AT Kearney.

Indeed, Sports Authority’s inability to invest in store rejuvenation — the result of crippling debt from a $1.4 billion leveraged buyout by private equity firm Leonard Green & Partners in 2006 — was a significant factor in its demise.

“That’s been a misstep in this sector — not getting their fair share of women,” says Mintel’s Smith.

In comparison, in 2015, Dick’s Sporting Goods, launched Chelsea Collective, a dedicated women’s fitness and lifestyle boutique, which currently has two locations, in recognition that its typical stores — which cater to a wide range of sports, from golf to hunting to martial arts — weren’t the ideal setting for athleisure.

“They created a totally new format that said, ‘If we are going to sell this type of product … then we need to create a totally different environment for it,’” explains Liebmann. “They understood that they couldn’t force fit it into this sporting motif where they’re selling everything. They understood that they needed to separate it out.”

In a similar move, Foot Locker has opened over 30 Six:02 stores, an elevated retail concept for women first launched in 2012, as well as dozens of Lady Foot Locker stores.

Catering to the fashion element of the athleisure trend is also crucial to succeeding in this shifting sportswear market. “[They] can’t just be geared towards athletes and they have to have a fashion-interesting aspect to it,” says Burke. “Now it’s become the expectation of the consumer today that they expect to have stylish and fashionable athletic wear.”

In order to appeal to the consumer who is wearing athleisure items to look stylish rather than do sport, the likes of Nike, Adidas and Under Armour have noticeably infused their offering with more fashion-led designs. “Those brands are pushing more into a fashion orientation as opposed to just a professional sports orientation. If you look at some of the styling, the colouration, the fabrications, the silhouettes they began to push out, it became a broader fashion statement,” says Liebmann.

They have also employed savvy advertising campaigns and designer and celebrity collaborations. Adidas, which pioneered fashion-active collaborations in 2003 with Yohji Yamamoto, has worked with designers including Alexander Wang, Stella McCartney and Raf Simons, while earlier this year, Nike announced a new collection with Louis Vuitton’s Kim Jones, and Puma released collaborations with both Kylie Jenner and Rihanna, whose second “Fenty x Puma” collection showed during Paris Fashion Week. And instead of using professional athletes in their advertising, recent Nike campaigns have featured Karlie Kloss and Bella Hadid, as well as comedian Kevin Hart, while Under Armour cast Gisele as the star of its 'I Will What I Want' campaign. “What you see [when you look at those adverts] is not an athlete,” explains Burke. “It makes them more approachable to a new customer base.”

For multi-brand sporting goods retailers, catering to athleisure’s fashionable consumer means ensuring they have the right product from the right brands. Both Foot Locker in the US and JD Sports in the UK have focused on a more prestigious product offering, stocking hot, of-the-moment products including Fenty x Puma and Kanye West’s Yeezy Adidas collection. This approach seems to be working. For 2015, Foot Locker reported a net income of $541 million, up from $520 million in 2014, while JD Sports reported a 20 percent increase in revenue to £971 million for the first half of 2016.

Some sports retailers have also introduced their own athleisure-inspired private labels to cater to this new fashion-focused consumer. Since 2014, Dick’s Sporting Goods has partnered with country music singer Carrie Underwood to create an accessibly-priced athleisure line, Calia by Carrie Underwood.

As the primary consumer of this new trend, women have become an important target in brands and retailers’ athleisure strategies. Along with expanded product ranges, dedicated stores and events have also been used to capture this consumer. In 2014, Nike opened its first women-only store in Newport, California, followed by similar spaces in London and Shanghai. The brand also hosts events such as its NikeWomen Victory Tour marathons. Showing a similar commitment, earlier this year Adidas hired former Lululemon chief executive Christine Day to advise them on targeting women.

But as a flurry of other industry players have moved to take advantage of the athleisure sector — including Selfridges, which now boasts a dedicated luxury athleisure department, and Beyoncé and Sir Philip Green’s Ivy Park label — the market has become significantly more competitive.

Looking forward, “it’s going to be really important to continue to innovate — the industry is so crowded,” says Smith. “There are going to be winners and there are going to be losers.”

FINANCIAL TIMES: New York jewellers open at uncertain moment

FINANCIAL TIMES | RACHEL GARRAHAN

Just as London’s watch retail scene is experiencing the fruits of expansions and refurbishments planned in recent years, so New York’s jewellers are opening and reopening their stores throughout Manhattan to create a luxurious environment for customers. But while the weak British currency is buoying UK sales, the strong dollar — and previous electoral uncertainty — have been weighing on New York’s tourism and these outlets.

Consultants Bain & Co are predicting a slight fall in global luxury good sales to €249bn in 2016 and many jewellers are privately complaining about a slow year in terms of sales. Nevertheless, some observers are enthusiastic about the openings — planned as long as four years ago. “I’ve rarely seen this much activity in jewellery retail,” says Robert Burke, a New York-based retail consultant. “The economy has been less than stable but brands and stores are investing in long-term success.”

On Manhattan’s “luxury corridor”, which stretches up Fifth Avenue from 49th Street to 59th Street, Cartier recently celebrated the reopening of its US flagship store, now its largest boutique in the world, with an event during New York Fashion Week. Neighbouring Bulgari and Harry Winston are also among the luxury brands whose stores are undergoing extensive, lengthy and costly refits.

It took more than two years to complete the refurbishment of Cartier’s neo-Renaissance style mansion, originally acquired in 1917 in exchange for a string of pearls and $100. The jeweller has converted the store — once a user-unfriendly warren of different levels, sales floors and office space — into a cohesive, four-storey, 44,000 sq ft temple to luxury and heritage.

Cartier on Fifth Avenue

A few blocks away, one of Bulgari’s signature Serpenti snake-designs wraps itself around the hoarding of the Italian jeweller’s flagship on the corner of Fifth Avenue and 57th Street — prime real estate that is shared by Tiffany, Bergdorf Goodman and Van Cleef & Arpels. Daniel Paltridge, North American president of Bulgari, declined to share details about the refurbishment, which is scheduled for completion in the second half of 2017, except to say that it will bring “a slice of Rome to New York”. One block south, Harry Winston is is preparing to renovate its home of 56 years; it would not comment.

New York has the local wealth to justify these stores. It has the largest GDP of any metropolitan area in the US: more than $1.6tn, the Bureau of Economic Analysis reported last year. (Los Angeles was second, with $931bn.) More than 389,000 millionaires lived in the city in 2014, according to Spear’s magazine and WealthInsight, and it has the fourth highest percentage of millionaires per capita (at 4.6 per cent) behind Monaco, Zurich and Geneva. It also has 79 billionaires, with a combined wealth of $364.6 billion, a greater number than any other city in the world, according to Forbes.

It has plenty of tourists too. A record number — 58.3m — visited New York last year, according to NYC & Company, the city’s tourism marketing organisation. The most recent figures available show that in 2014, they spent $41bn, an increase from $38.8bn in 2013.

Taken together, this makes New York City a global hub for luxury spending. It accounted for more than 10 per cent of the global personal luxury goods market, according to Bain, in 2015. With €26bn in sales of watches, jewellery, bags and fashion, according to Bain, it was the top-performing city in the world.

The outlook is not quite as rosy: Bain’s forecast of a fall to €25bn in 2016 is due to the closely-fought election, a slowdown in tourist spending and a shift by consumers towards spending on luxury experiences rather than goods. The Fifth Avenue luxury corridor was the most expensive for retail rent in Manhattan in spring 2016, with an average asking price of $3,358 per square foot, according to the Real Estate Board of New York. But this is down 8 per cent on spring 2015.

There are many other jewellers who have invested in their Manhattan offerings. Wempe, the German watch and jewellery retailer, fully reopened its doors in October on the corner of 55th Street after an $8m, two-year renovation. The family-owned business has more than doubled its retail space to 5,500 sq ft, introducing dedicated Rolex and Patek Philippe areas as well as a VIP room housing its offering of Buben & Zorweg watch winders and safes for dedicated collectors.

Ruediger Albers, president of Wempe US, says the expense of a Fifth Avenue lease is more than justified by the traffic such a location attracts. Wempe’s only US store is the top performer in its 32-branch network. “Thirty million people pass this building every year,” he says. “It’s the least expensive billboard in the world.”

Beyond the luxury corridor, brands are opening shops elsewhere in Manhattan. High-end department store groups are looking for new locations, to attract customers living in growing residential areas across the city and to reverse sagging fortunes elsewhere. Neiman Marcus reported that 2016 sales were down 2.9 per cent on the year before, with four straight quarterly declines. In August, Nordstrom reported its first quarterly revenue decline in seven years, and Saks Fifth Avenue’s most recent earnings reported a 1.3 per cent fall on the same quarter last year.

In the shadow of One World Trade Center, Saks recently opened its first downtown branch, one that mixes fine jewellery with fashion on the sales floor. A $250m overhaul of its Fifth Avenue flagship is also under way, including a new jewellery department called the Vault, which is scheduled to open in spring 2017.

Near Saks by Ground Zero, London Jewelers — a traditional watch and jewellery store — sits in the modern surroundings of Oculus, the recently opened shopping mall and transportation hub designed by Santiago Calatrava.

Candy Udell, president of the company, says the Long Island family business was prompted to open its first Manhattan store to take advantage of the area’s burgeoning residential and retail development. “We wanted to be part of the wonderful, growing community here,” she says.

Jewellers who have been in the area for some time welcome the new shops. Blocks from the Oculus, Greenwich St Jewelers has been located on Manhattan’s southern tip for 40 years. Its toughest times came in the aftermath of the September 11 attacks on the World Trade Center, when its original premises had to close after suffering serious structural damage.

“It was like a ghost town in this neighbourhood. No one came down here for three years,” says Jennifer Gandia, who, with sister Christina Gandia Gambale, took over her parents’ business after they retired. Ms Gandia has seen the area change since then, initially thanks to the city subsidising business and residential development. Residents moved in first, luxury retailers followed. She does not feel threatened by the opening of Oculus and its neighbouring office and shopping complex Brookfield Place, home to Saks and brands such as Gucci and Omega. “We see them as an opportunity. Hopefully this will become a major shopping area,” she adds.

One retail expert, who declined to be named, is less sure: “There are a lot of visitors and commuters coming through the Oculus and Brookfield Place, but it remains to be seen whether there is a luxury customer at the high-end level there.”

New store Material Good, meanwhile, chose the heart of SoHo, an area not traditionally associated with selling watches and jewellery. The shop, which opened in September 2015, was created by Rob Ronen, former wholesale manager at Audemars Piguet, and diamond merchant Michael Herman, who spotted an opportunity to meet the needs of wealthy young consumers living downtown, who do not want to go uptown to shop.

While ecommerce, according to Bain, is the fastest-growing sector in luxury retail, bricks-and-mortar stores are realising they have a unique opportunity to create a memorable experience, a factor that is valued by the luxury consumer. “With the rise of online luxury sales, the client has become very focused on product and price,” says Mr Ronen.

Material Good has tried to create a different ambience from traditional, opulent Fifth Avenue stores. They have a first-floor, loft-apartment-style space with high ceilings, contemporary designer furniture and full kitchen. An Andreas Gursky photograph of a cityscape dominates one wall; a bank of watches lies along another in custom-designed, custom-lit vitrines.

Hosting regular private events and dinners, the store is designed to evoke what Mr Ronen describes as “unforced luxury”, an environment where clients can feel at home while they shop. As well as Audemars Piguet and Richard Mille timepieces, customers can peruse fashion, fine and custom-designed jewellery and a selection of Hermès handbags.

Those loyal to Fifth Avenue are not worried. Bulgari’s Daniel Paltridge says he is unconcerned about luxury retail expanding its horizons across Manhattan. “There are more than enough customers in the city, and it will be interesting to see how it evolves,” he says. One thing he does not doubt: “The Fifth Avenue corridor will remain the iconic location for watch and jewellery brands in New York.”

BUSINESS OF FASHION: Will luxury streetwear get millennials into department stores?

BUSINESS OF FASHION | CHRISTOPHER MORENCY

LONDON, United Kingdom — “Being in Bergdorf authenticates what we're doing. It gives us credibility, 100 percent for sure,” says Ronnie Fieg, founder of upmarket streetwear store and label Kith, which, this September, opened a shop-in-shop at the luxury retailer’s men’s store, just one week after the launch of Rihanna's Fenty x Puma line across the street at Bergdorf Goodman's women's store.

The collaboration was the first of its kind for Fieg’s upstart streetwear empire and the venerable Manhattan department store alike, and kicked off with a capsule collection of six limited-edition products, ranging from baseball caps ($75) and hoodies ($180) to complete tracksuits ($330), many of which rapidly sold out.

But Bergdorf Goodman is not alone in its embrace of high-end streetwear labels. Last month, London’s luxury department store Harvey Nichols worked with Kristian Andersen, fashion and design director of the Copenhagen International Fashion Fair, to launch a contemporary pop-up space on its men's floor, named Project 109 X CIFF, celebrating emerging street fashion brands including 424, Axel Arigato and This is Not Clothing. A number of other luxury department stores, from Galeries Lafayette to La Rinascente to Selfridges, have also been stocking more high-end streetwear labels.

The interest in streetwear is rooted in the need to attract new millennial customers and help shake off slow growth linked to shifting consumer behaviour and the rise of e-commerce and monobrand stores. Between 2015 and 2016, the global retail value for department stores grew by just 2.3 percent, with those in the US increasing by only 1.4 percent, according to recent data provided by Euromonitor.

“Department stores today are most insistent about getting traffic and appealing to a new consumer — those are their biggest objectives,” says Robert Burke, chairman and chief executive of consulting firm Robert Burke Associates. “Street style has offered a way for them to drive customers into the store that perhaps hasn't been there before,” he adds.

“There's a cross-generational appeal and what's interesting is that these two worlds are finally meeting in the middle,” agrees Jian Deleon, senior menswear editor at WGSN. “A typical streetwear consumer might have walked into a Bergdorf or a Barneys and might not have felt like anything spoke to his or her personal style or cultural taste, so it validates the culture now on a more massive commercial scale.”

Department stores are also attracted to the way streetwear labels engage their customers with weekly product drops, communicated via social media and designed to drive excitement with a stream of constant newness. “When Ronnie [Fieg] proposed his idea of this core collection augmented by limited-edition collaboration product that would have organic demand generated by social media, we were very attracted to that idea,” explained Joshua Shulman, president of Bergdorf Goodman and Neiman Marcus Group International, in a previous interview with BoF.

“With these lines in specific, we certainly see a younger customer in the store, but what's also interesting about these brands, specifically, is that their connection to their client is direct, through social media,” adds Bruce Pask, men's fashion director at Bergdorf Goodman. “I think it really has empowered their customer and it maintains that interest and engagement.”

“We have seen an immediate response with the drops creating a repetitive customer where they want to come back and spend time in the store,” continues Pask. “You're creating this need and desire that you want to be back in the store and check what the latest drop is, and I think it creates a great level of engagement.”

Kith currently has over 717,000 followers on Instagram, while Fieg’s personal account has over 458,000 followers. Meanwhile, the Instagram accounts of Off-White and its founder Virgil Abloh have a combined following of over 1.25 million.

Clearly, department store partnerships can also benefit streetwear brands, providing them with powerful new sales channels, not to mention access to a new consumer base and increased high-fashion credibility. Kith's shop-in-shop at Bergdorf Goodman, for example, is located adjacent to luxury brands like Thom Browne, Dries van Noten and Tom Ford. Similarly, Off-White has a shop-in-shop across from Louis Vuitton and Alexander McQueen at London’s Selfridges.

“Department stores allow me the luxury to design in both the streetwear and the high-fashion mentality,” says Abloh, whose brand is currently stocked at 25 department stores across the world, including Barneys New York, Galeries Lafayette and Harvey Nichols, which, all together, account for about 15 percent of the company’s total turnover. But this hasn’t diminished the brand’s street-cred, emphasises Abloh. “Streetwear used to be an independent retail thing, very much like you didn't want to sell out. One thing that millennials have taught us is that the idea of selling out doesn't exist to them and you don't lose credibility by being in an established department store.”

Authenticity is critical to ensuring the success of a partnership between a streetwear label and a department store, however. “It's not enough for the department stores to just bring the brands to the store, you have to act and speak the language of the consumer and the brands if you want a long-term relationship,” says Kristian Andersen.

Robert Burke agrees: “When it's anything less than authentic, it can backfire on both parties and it will die a quick death.”

BUSINESS OF FASHION: Why are department stores so scared of Halloween?

BUSINESS OF FASHION | HELENA PIKE

NEW YORK, United States — Halloween is a holiday on the rise. Over the last decade, combined consumer spending for Halloween has grown 12 percent year-on-year, according to the National Retail Federation. This year, it is predicted to reach an all-time high of $8.4 billion, up from $3.3 billion in 2005. Consumer participation is increasing too: more than 171 million Americans — almost 70 percent of the population — are predicted to celebrate Halloween this month, spending an average of $82.93 each.

This explosion in consumer spending can be attributed in part to the holiday’s growing popularity among adults. No longer just a chance for children to go trick or treating, in recent years increasing numbers of adults have adopted Halloween as an opportunity to dress up and host parties. “Halloween is no longer a holiday just for kids or for adults with kids … The millennial group is one of the biggest spending groups right now — they’re coming into their peak consumption years and they’ve really taken on Halloween,” says Elley Symmes, grocery analyst at Kantar Retail.

Social media has also played a role. For many millennials nowadays, “there’s a sense that if it’s not Instagrammed, it didn’t exist,” explains Robert Burke, chairman and chief executive of consultancy Robert Burke Associates. Halloween’s emphasis on dressing up, decorating and hosting costumed parties is well-suited to image-heavy social media platforms, where consumers can showcase how much Halloween-themed fun they’re having. “It’s an opportunity to do some kind of unusual and interesting post … This is a format and a platform for a good Instagram photo,” continues Burke.

Halloween’s participatory element also fits into the wider shift in spending patterns, with today’s consumers increasingly prioritising experiential purchases over products.

Millennials are coming into their peak consumption years and they’ve really taken on Halloween.

“[Consumers] are spending in moments of time where they can be a little bit more experiential, where they can showcase how much they’re enjoying themselves and Halloween is definitely one of those,” says Ana Serafin-Smith, senior director of media relations at the NRF. “[It is an] opportunity for you to go shopping and then use whatever you bought to celebrate that moment and showcase it again, with all your friends and family.”

To date, discount stores and specialty Halloween and costume stores have dominated Halloween spending. In this year’s edition of the NRF’s annual Halloween consumer spending survey, 46.7 percent of respondents said they would be shopping for Halloween at a discount store — the highest response for any type of store — followed by 36.4 percent at specialty Halloween/costume stores.

“It makes sense — the consumers are very savvy shoppers. The majority of those are millenials, they grew up in the recession era so they’re always looking for the best deals,” says Serafin-Smith.

Topshop skeleton dress | Source: Courtesy

“This is a disposable product, so consumers are not necessarily looking to go out and buy an overly expensive product,” adds Marshal Cohen, chief industry analyst at NPD Group.

By comparison, traditional retailers like department stores have done less business around Halloween. Indeed, the NRF’s survey revealed that just 23.4 percent planned to shop at a department store and only 10.2 percent at a fashion store.

In part, this is because these retailers have paid less attention to the holiday. Although Halloween is now the eighth largest consumer holiday in the US, it still lags behind spending stalwarts such as the “Holidays” period, “Back to School,” Valentine’s Day and Mother’s Day.

“Retailers are spending the majority of their time on the seasonal moments where they can get the most money out of consumers … [Halloween] being a one day event and being more fun, there’s not really an emotional connection compared to some of the other holiday seasons. It means it can fall a bit lower,” says Serafin-Smith.

“Traditional department stores haven’t actively participated as much as you’d think they would … They’re probably not doing everything that they could to engage shoppers there,’ says Tiffany Hogan, senior analyst, US apparel, Kantar Retail.

However, at a time when many traditional retailers and department stores are suffering from depressed spending and declining footfall — despite a relatively robust American economy — the enthusiasm and spending power surrounding Halloween offers an opportunity to connect with customers, get them into stores and establish an ongoing relationship.

“This is the kind of thing that the stores have recognised … You can make money out of it, it’s short term and it creates spirit and drives traffic into the store, which is the number one key thing that brands and retailers are trying to do and that is generate consumer interest,” says NPD’s Cohen.

While some department stores, such as Barneys, still aren’t doing anything specifically for Halloween, this year many are getting more involved in the holiday. As well as stocking a small selection of adult and children’s costumes, Macy’s is hosting its first-ever Halloween pop-up, a 1,400-square-foot space at its Herald Square flagship, in partnership with home décor retailer Grandin Road. Bloomingdales is offering Halloween makeup consultations with MAC and pumpkin culinary sessions with Le Creuset at selected stores, while Neiman Marcus and Nordstrom are both stocking a selection of Halloween-themed décor and candy.

Traditional department stores haven’t actively participated as much as you’d think they would.

“[Halloween] used to be something that, ‘Ah, it’s not big enough, let’s not worry about it … Nowadays, every month is a Hallmark holiday in retail. They’re looking for every single growth opportunity in every single month,” says Cohen.

However, department stores should not try to compete with discount and specialty stores, many of which have successfully positioned themselves as “one-stop” Halloween shopping destinations by offering the consumer such a comprehensive product selection.

“We probably have 10,000 SKUs of various Halloween merchandise,” says Michael Long, president of Ricky’s NYC, a beauty and hair retailer that operates three Halloween pop-up stores in New York. “Consumers know that a place like Ricky’s is a destination for Halloween, so you can get everything you need, from a wig to eye makeup to a costume or accessory. You can’t necessarily get fake blood or a scar from Macy’s.”

“Department stores can’t always offer that kind of solution,” says Kantar Retail’s Hogan. Creating interactive experiences and immersive events themed around Halloween, such as makeup lessons and cooking demonstrations, is a more effective way for retailers to leverage holiday enthusiasm to engage consumers.

They can also reinvigorate product categories they are already established in with the Halloween spirit, such as décor and home entertainment, Hogan advises. “Kind of leveraging what they already have in a curated way to be able to bring that Halloween idea out in their assortment, rather than trying to invest in all the extras that would be needed to make it that one-stop shop,” she explains.

For fast fashion retailers like H&M, Forever 21 and Topshop, which are able to move quickly in and out of product categories, creating specific Halloween merchandise is a more viable strategy. Indeed, many of these retailers are offering themed accessories and low-price point fashion items for the holiday. Topshop’s online Halloween shop includes glittery bat masks, lace bunny ears and temporary ghost tattoos, alongside a curation of the store’s normal merchandise, such as velvet body-con dresses and black lace slips.

“They’re just accessories, it’s not like they’re going [for] full-out costumes … They’re going after that younger crowd — even though they are spending more on Halloween, some of them may not want to spend as much on the actual outfit, but focus more on the entertainment factor,” says Hogan.

Robert Burke agrees: “It’s an opportunity to offer emotional, impulsive, fun product for customers to react to … It’s fun, it’s unique and right now the retailers will do whatever it takes to get the customer excited and in the store and spending.”

WALL STREET JOURNAL: Menswear’s New Shopping Playbook

WALL STREET JOURNAL | JACOB GALLAGHER

BACK IN THE 1970s, if a man wanted a new topcoat, he had but one road to take: a visit to his local department store—or maybe a menswear shop named “Tip Top Tailors” or “Eddie’s.” Now consider the many paths that John Jannuzzi, 30, the U.S. deputy lead at Twitter Moments, will be taking to find a fall coat he considers a kindred spirit: He’ll scroll the pages of e-commerce sites like Mr Porter and Matches Fashion, weave through the racks at New York shops such as Barneys and Totokaelo, and check out popular resale website Grailed. “I’m into the experience of saying ‘I need a coat’ and then searching endlessly until I find the exact right thing,” said Mr. Jannuzzi.

Forty years ago, this infinite sartorial quest would have been unheard of. But today’s environment is much more conducive to shopping overachievement; the various ways you can buy menswear have multiplied like fine angora bunnies.

Now, you’ll find direct-to-consumer brands with shoppable social media feeds as well as physical “showrooms.” E-tailers range from monoliths with offerings as boggling as department stores to tiny, sharply curated virtual boutiques. The made-to-measure route offers both traditional tailoring and custom-fit casual wear. And don’t forget the burgeoning resale market which can net you deals on everything from gently used sneakers to Swiss watches.

Overwhelming? Absolutely. And perhaps that’s why some men aren’t tempted to venture down new retail avenues. “There are more options, but I think that for men, one of their basic requirements has always been shopping with efficiency and speed,” said Robert Burke, CEO and founder of retail consulting firm Robert Burke Associates.

You may be asking, if my shopping routine works for me, why should I give it another thought? Well, there’s always a better way to do everything in life, and that includes buying clothes.

The fact is, you’re probably missing a lot of what’s out there—which could in turn make you a better-dressed man. Even if you’re shopping online, you might not be clicking on the “Just In” or “Latest” tab on e-commerce sites like Matches Fashion and East Dane, which can give you a snapshot of what’s available for the season, week by week, including pieces you might not have searched for otherwise.

Finding a single store or e-commerce site that works for you can make your life easier, but limiting yourself to just one retail resource narrows your scope. That means not taking advantage of, say, the smart mix of Japanese, Italian and American labels at a boutique like Magasin in Los Angeles or the unique woodsy-cool selection of a shop like Askov Finlayson in Minneapolis.

Pounding the virtual pavement a little can also help price-conscious shoppers, who are well served by the increasing number of direct-to-consumer brands, such as Greats (sneakers) or Everlane (clothes and accessories), which offer quality merchandise with easier-to-swallow price tags since they’ve cut out the wholesale middleman. You won’t see their wares in any store—only on their own websites and social media feeds.

You can also stretch your fashion dollar by tapping into the many luxury resale sites like Grailed, an expansive secondhand site populated with fashion-forward merch, and the RealReal, a similar proposition. Charlotte, N.C.-based tech executive Dave Carr recently found an Engineered Garments jacket on Grailed for $225, about $355 less than its original retail price. If you open your shopping mind wide enough to consider (yes) made-to-measure clothes, you’ll find they can be surprisingly economical, too—and deliver a better fit than off-the-rack pieces tweaked through secondary tailoring. Providence, R.I.-based lawyer Vincent Ragosta (see his shopping strategies below) recently became a convert to the modern, made-to-measure New York-based brand Stòffa, whose clothes can be ordered via appointment or at one of its frequent trunk shows.

Another old-school route to reconsider: the personal shopper. You may think it takes a 10-digit bank account to afford such amenities, but stores like Barneys offer gratis personal shoppers who can decode what “smarter casual” means or do a closet overhaul. You can make an appointment online—and while shoppers do work on commission, they’re often more concerned with building a relationship than pressuring you to buy. For more guidance on how to navigate this multifaceted retail world, heed the advice of our three exemplary shoppers below.

THREAD COACHES // Smart Shoppers Share Their Best Retail Plays

THE SAVVY OBSESSIVE

Dave Carr, 41

VP Sales and Marketing, Levvel Inc.Charlotte, N.C.

The tech exec is a modern shopping savant, scouring the internet to unearth great finds and deals.

Identify like-minded stores I find new stores by going to the websites of brands I like and looking at the stockists [list of retailers that carry the brand]. I was searching for Thom Browne in Los Angeles and I found the store Union (pictured below). That’s also how I discovered Odin in New York.

Be social I use social media to find hard-to-get items. Last year, I really wanted Common Projects’ Chelsea boots. Need Supply Co. [a store in Richmond, Va.] posted on Instagram (pictured at left) when they got them in, and I bought them on my phone. I also use Instagram to find inspiration. What influences me mostly is independent boutiques. One I’m following lately is e-commerce shop No Man Walks Alone.

Make time for vintage I almost always buy preowned watches. The majority I’ve traded for watches I own. I don’t need more than three; I’m not a pro athlete. Most of my watches I’ve purchased online. Sites like TimeZone and Watchnet have forums and the resellers on them have been vetted by the community.

Invest wisely In the last few years, I’ve focused on my Holy Grail pieces—timeless things I’ll wear for years. I bought a cashmere Boglioli sportcoat (pictured at left, $1,995, Boglioli, 646-870-8250). It’s perfect. Compared with a Hugo Boss jacket you buy at Macy’s , which is going to look bad in two years, the Boglioli has a much better cost-per-wear ratio.

THE NO-NONSENSE ROAD WARRIOR

Russell Kelly, 42

Brand Manager, Tudor Watch, New York, N.Y.

The frequent flier knows how to spot the right shops for picking up a sartorial souvenir.

Loyalty equals efficiency For suiting, I have my go-tos, like Sid Mashburn in Atlanta and Freemans Sporting Club in New York. They have my measurements on file, so I can pick seasonal fabrics (Freemans swatches, pictured below left) when I’m in the store, or someone will send pictures. That allows me to easily do all my shopping for suits and shirts for the year.

Click with bricks Even if I’ve bought everything I want from a store via its website, when I’m traveling I like to visit just to check the vibe. Askov Finlayson (pictured below) in Minneapolis is one store I love going into. It’s really cool to see their perspective. At stores like RTH or Magasin in Los Angeles, you’re going to see exciting designers that you don’t get a full glimpse of online. Also, it’s better to see the colors of a fabric in person.

Size matters Online stores usually reference the size of the model wearing the clothes, i.e., he’s 5’10,’’ 165 pounds and wearing a medium. That’s helpful to get an idea of what something is going to look like on you. Even if you know your measurements, the manufacturers could have taken theirs differently.

Think global, shop local I really like Japanese brands such as Engineered Garments, Camoshita (pictured below) and Beams Plus. The aesthetic is casual but still put-together. I can find them at stores like Unionmade and Mr Porter.

Know when to take a risk High-end tailoring isn’t the best for experimentation. If you’re going spend that type of money, make a plain blue blazer first. To experiment, go with a shop like Freemans that has a more affordable bespoke program.

THE MADE-TO-MEASURE MAVEN

Vincent Ragosta, 61

Attorney, Providence, R.I.

The rakish litigator has a taste for fine clothing that extends beyond courtroom attire to custom suede jackets.

It’s never too late to change your habits I’ve recently given up the traditional route of going into a retail store and engaging in the quest for a properly fitting product. I used to drive into Boston to go to Barneys or Neiman Marcus. Although they have good offerings, you’re contending with finding the right salesperson to give you the attention you deserve. Sometimes you’d be competing with other customers and then the tailoring would be a gamble. When I discovered [New York-based made-to-measure brand] Stòffa earlier this year, I loved the concept. This year, I also purchased a custom suit by tailor Orazio Luciano (pictured at work, below) at the Armoury.

Custom isn’t always costly l feel I’m getting a lot of bang for my buck with my custom clothes. Stòffa’s hands-on service is special and the trousers and suede jackets (pictured at left, MTM 002 Flight Jacket, $1,500, stoffa.co) are spectacular. Stòffa’s trousers are in the range of $275 to $375, depending on fabric. The prices for high-end, off-the-rack trousers are comparable or higher, and then there’s the sometimes difficult process of alterations.

Get schooled When professionals educate you about construction and fit, and you’re enlightened as to the options, it makes a shopping experience more pleasurable. And it makes you appreciate the value of the final product.

Don’t rule out online I rarely purchase clothing online but if I need some sportswear, I’m not going to fight the crowds at Dick’s or Modell’s. I’ve bought good quality Bogner ski clothing from a small internet retailer. With items like that, I know what my size is.

ASSOCIATED PRESS: Yoox Net-A-Porter's Plan to Become a Mobile-Only Company

ASSOCIATED PRESS | ANNE D'INNOCENZIO

NEW YORK, United States — The merged luxury group Yoox Net-A-Porter Group is aiming to be as mobile as its shoppers.

Since the two joined last year, chief executive officer Federico Marchetti has invested in new technology, added services like seaplanes to drop off rush orders to the Hamptons, and plans to expand same-day services in key markets like Dubai. Now the world's largest online luxury retailer, the company has launched a television shopping app with Apple TV and is making a big push into the Middle East and China.

"One of my biggest objectives is to transform the company into a mobile-only company," Marchetti, formerly CEO of Milan-based Yoox, told The Associated Press. "It's a new luxury conglomerate of the digital era."

Marchetti expects business from smartphones and tablets will account for three-quarters of total sales by the end of 2020. Right now, it's less than half. And these shoppers spend big. Its 2.6 million customers plop down an average of €335 ($366) per order.

The global luxury business has become increasingly competitive online. Neiman Marcus bought MyTheresa, a fashion e-commerce site last year, while Saks Fifth Avenue is offering more services for its online shoppers. And sites like renttherunway.com let customers rent designer outfits.

But Yoox Net-A-Porter is optimistic. It's laid out plans that call for net revenue growth of 17 percent to 20 percent every year through 2020. That's much higher than the 2 percent to 3 percent global luxury growth forecast from consulting firm Bain & Co. through that same year.

Yoox Net-A-Porter, which delivers to customers in more than 180 countries, generated sales of $1.7 billion euros ($1.88 billion) in the fiscal year ended March. Marchetti says its so-called EIPs (Extremely Important People) make up about 2 percent of its customer base but account for more than a third of annual revenue.

It's a new luxury conglomerate of the digital era.

Marchetti says Yoox and London-based Net-A-Porter, both founded in 2000, are complementary. He organized the company into three separate businesses — current season, under Net-A-Porter and the men's brand Mr. Porter; offseason, which is under The Outnet and Yoox businesses; and online flagship sites that include Giorgio Armani and Jimmy Choo.

Net-A-Porter is a fashion-magazine themed site focused on regular prices, and the merchandise comes in elaborate black bags with ribbons. Yoox and Outnet sell out-of-season goods, frequently at discounts, but Marchetti calls the experience much higher-end than shopping at a designer outlet mall.

Geographically, Net-A-Porter was much stronger in the US, the United Kingdom and Hong Kong, while Yoox's strength had been in Continental Europe, Japan and Asia. The combined company's largest business is the US accounting for nearly one third of annual sales, followed by the United Kingdom and Italy.

"Net-A-Porter is becoming a one-stop shop for fashion consumers and a source of editorial content. And Yoox is a force in technology with a deep understanding of brands and websites," says Robert Burke, president of his namesake New York-based luxury consulting business.

Marchetti is investing in technology that will improve customer service and delivery speed. The company's adding same-day service in Dubai, Tokyo and Milan, beyond London, Hong Kong, New York, and Long Island's Hamptons. The summer seaplane service in the Hamptons did very well, he said. In China, Yoox began offering a few years ago a kind of butler service for online shoppers — a courier waits outside the door for 15 minutes so customers can try on their purchases. If they don't like them, the items go back with the courier.

It's also fine-tuning or starting new apps. It launched an app for Yoox.com that features a new text search allowing shoppers to better find the half a million products available. The Mr. Porter site has an app that allows Apple TV users to use their iPhones or iPads to buy merchandise that appears on videos that are on its weekly digital magazine. And it is opening a new tech hub in London next year to accelerate its move in mobile shopping.

Marchetti brought in new brands like Prada and Moncler that had a limited presence on the web, and for the winter holidays he's starting to introduce fine jewellery and watches at Net-A-Porter and Mr. Porter.

"We have the highest quality in terms of packaging, in terms of presentation, pictures, proximity with other brands," he said. "We respect their pricing. We respect their markdown strategy."

The company's also working to integrate the experience of the physical flagship stores of the brands like Valentino's Fifth Avenue store with their online presence.

"You can have it at your home in three hours," he said.

By Anne D'Innocenzio.

BUSINESS OF FASHION: Can Tory Burch Build Another Billion Dollar Brand?

NEW YORK, United States — If Tory Burch’s “accessible luxury” empire was built on the Reva, a ballet flat adorned with a gold ‘TB’ buckle reminiscent of the art-deco-inspired doorknobs bolted onto grand Palm Beach homes, the crown jewel of Tory Sport, her activewear brand, may turn out to be the $125 Chevron legging, which riffs on 1970s athleticwear without being overly retro.

The leggings are highly comfortable — not scratchy or plastic feeling — made out of a densely woven but lightweight nylon fibre called Tactel. It’s velvety to the touch and so opaque there’s no chance of the wearer — or the company — being scandalised by see-through fabric à la Lululemon’s infamous sheer pants debacle

“Real function meets style,” is how Burch, both the creative director and co-chief executive of her namesake fashion company, describes the concept for Tory Sport. “I thought we had something different to say.”

Burch first had that thought six years ago in 2010, she says, long before Lululemon became a multi-billion dollar brand; long before the birth of the much-loathed moniker “athleisure” and long before the rapid expansion of the global sports apparel and footwear market, which reached $270 billion in sales in 2015 and, according to Morgan Stanley, is on track to grow another 31 percent to $353 billion by 2020. In the US alone, sales of activewear reached $97 billion in 2015.

But “activewear” is a loose term, incorporating the gear worn when participating in rigorous exercise — like a highly-engineered sports bra or windbreaker — but also items that are intended to be worn long after the sweat is wicked away, like a pair of sharply designed leggings or high-tech knitwear meant to be thrown on after a yoga session. The vision of an American woman in yoga pants, clutching a venti Starbucks as she steps into a juice bar in a perfectly manicured suburban shopping centre, is by now a cliché. But activewear has gone further by spoiling the consumer to expect more from all garments no matter what the use case.

“The customer expects the more casual ready-to-wear lines to have an element of function today,” says Robert Burke, a retail consultant who was the fashion director at Bergdorf Goodman when the company became Burch’s first wholesale account in 2004. “You can see it in denim; there’s a lot more technology in it. But there is also more quick-drying fabric, and more comfort, in ready-to-wear.”

The designer and her brother, Tory Burch president of corporate development Robert Isen, spent three years developing the concept for Tory Sport before hiring the first members of the brand’s still small team. Activewear pioneers like Sweaty Betty had been in business for over a decade, but by the time Tory Sport began to take shape in 2013, plenty of major retailers, from Old Navy to H&M, had cottoned on to the potential of the market and new brands were emerging left and right, including fashion favourites Lucas Hugh and Live the Process, as well as venture-backed startups such as Tracksmith, Yogasmoga and Outdoor Voices. “What she saw is what many people saw,” Burke says. “It’s more competitive than I think anyone imagined it would be.”

“I guess three, four or five years ago it wasn’t as clear as it is today that it’s a shift in the way women are dressing,” Burch says. “It was more an instinct; something that I was personally missing and thought could be a nice addition to our company.”

The impetus for Tory Sport doesn’t sound all that different to how Tory Burch was launched in 2004 with a quest for a perfect tunic blouse. This time around, Burch — always her own customer — was feeling let down by the activewear options on the market. “I grew up as a tomboy and an athlete and I just found myself always thinking the things I love the best were from high school and college,” she says. “Items with a more classic, a bit retro vibe.”

What’s different now, though, is Burch has plenty more to lose, despite some major advantages. With more than a billion dollars a year in revenue, Tory Burch was expected to launch an activewear concept akin to what other established brands were putting in place: a capsule collection of products that would live in many of its more than 150 standalone stores, perhaps in a corner delineated by specially made signage and clothing tags

But Burch has bigger ambitions. “We didn’t want it to be a second part of the brand, like a second line,” she says. “We wanted it to be more.”

Yet the company is advancing carefully. “One of the reasons we’ve set it up like we did is to keep it very entrepreneurial in the beginning. To keep it scrappy, to use it as a laboratory for innovation,” adds Isen. “It complements the main brand in many ways by doing that. We also take what we’ve learned from building the company over the last eight years and overlay that in Sport. It’s really the best of both worlds in a sense.”

Burch — who, in 2009, sold a minority stake in her company to the Mexican private equity firm Tresalia Capital but remains its largest shareholder — sees the new brand as an “intrapreneurial” venture for which she has not sought external backers.

Two years ago, she hired industry veteran Roger Farah, who spent nearly 15 years at Ralph Lauren, as her co-CEO and, together, they have restructured the company to prepare for the launch of the new brand, upgrading vital infrastructure and laying off approximately 100 people at the end of 2015.

We want a healthy business and we’ve spent a great amount of time restructuring our company and putting in systems that we needed [from] the beginning,” Burch explains. “With such quick growth, we didn’t put in the infrastructure we needed. Now we feel that we are poised to have the right kind of growth and also protected, because we really believe in this brand.”

To be sure, Tory Sport has its own brand identity. While Tory Burch retains a mod-ish, mid-century feel washed in the sunburnt, earthy colours of that era, Tory Sport has more of a bite.

Aesthetically, Tory Sport began with 1970s tennis icons: Bjorn Borg, John McEnroe and Chris Evert, in their colour-blocked polos and terrycloth sweatbands. More specifically, “The starting point was [Wes Anderson’s film] 'The Royal Tenenbaums,’” Burch says, “Which to me, just sort of epitomised the way I grew up and looked at sport.”

And much like her ready-to-wear brand, Burch plans on embedding these original visual cues into the permanent DNA of Tory Sport. “We don’t want to lose that ‘70s inspiration,” explains Kerstin Dorst, senior director of design and development, who joined the team in 2013 from Adidas. “We feel so confident about it.”

That consistency may be her key differentiator. “What’s unique about Tory, the reason for her success when she launched her Tory line, is that she’s very attuned to her customer, very attuned to their lifestyle,” Burke says. “She also is incredibly focused and is very clear on who she is. She doesn’t deviate from her vision.”

But the design aesthetic was only one brick in a foundation Burch began laying a half decade ago. Also critical was her approach to fabric development. “I think it was probably harder for me because I started from scratch,” Burch says. “If you talk to people on our team, certainly they wouldn’t say it was easy.”

For Dorst, that meant partnering with the right yarn suppliers. “Innovation starts at the very base with raw materials,” she says. “What is the finest yarn we can get? For instance, our legging fabric is super lightweight due to the structure, but the dense interlock makes it secure so that there is no see-through-ness.”

Star materials include Tactel, but also Coolmax Everyday, a moisturewicking fibre that the company has blended into its cashmere sweaters. “You have a sweater that feels like cashmere but is super breathable, and it’s also a pretty great price point,” Burch says, referring to the $285 tag on the brand’s perennial V-neck. “We want to be as sharply priced as possible, with the highest quality and fit.”

While some joke that most yoga pants are never worn in a yoga studio, Burch is adamant that her performance gear must still perform. Tory Sport’s Coming & Going range — a collection of items that can be worn everyday but perform as well as straight-on athleticwear — is the brand’s most popular line. “That’s our number-one performing category,” Burch says. “It’s just sportswear that is functional and comfortable. I want things that are super functional that look natural and look like cotton — but also breathability and wicking properties and seam-sealing.”

While there will be a big outerwear push for autumn, other key sportswear categories include running and tennis, as well as golf. The brand’s leggings — the key to any successful activewear business — are also gaining traction. “Our leggings are doing extraordinarily well,” Isen says.

Exactly how well is difficult to ascertain, however. The company remains tight-lipped on the financial performance of Tory Sport, although Isen says, “We want it to be a company of real scale,” and the outward investment it’s making in new stores suggest the ambitions for the offshoot equal, if not surpass, that of the main line. Last autumn, the brand’s original Elizabeth Street store was converted into a Tory Sport pop up, and last spring, the company opened its first permanent Tory Sport location on lower Fifth Avenue across the street of its corporate headquarters and right in the midst of what one might call “Athleisure Row,” a cluster of activewear retailers that include Gap-owned Athleta, Lululemon, Nike, New Balance, upscale multi-brand store Bandier and Sweaty Betty. The East Hampton Tory Burch store was converted into a Tory Sport pop-up, which was made permanent this past summer. In September, a Tory Sport store opened in Dallas, which will be followed by the Mall of America in October, Honolulu in December and Las Vegas in March 2017. The designer also hosted a pop-up event in Los Angeles on the roof terrace of the Tory Burch store on Rodeo Drive from September 28 through October 1, 2016.

“The strategy is to look for geographic distribution around the country [that] this gives us,” Isen says of the plan. “And to be patient and wait for the right locations with the right adjacencies in the right areas.”

“And to also look at tourism as well,” Burch adds. “Ala Moana [a mall in Hawaii] traditionally has an incredible Japanese customer. It will be interesting to see this as we start to think about international distribution. We have a lot of interest from different department stores and partners in all countries right now.”

However, wholesale — which is currently 10 to 15 percent of the Tory Sport business — will remain secondary to direct retail. (Right now, the line is only distributed through its own channels, as well as Barneys New York.) “But I don’t think we have a set model,” Burch hedges. “I think we have great partners on our main brand, but Sport is different. We also want to see different adjacencies and how it works into their footprint and their business model. I think wholesale is changing too.”

Of course, the wholesale versus direct-to-consumer conundrum is top of mind for many brands, which are increasingly chasing a stronger connection with the spoilt-for-choice consumer. Burch was selling direct from the beginning, and that is perhaps one of the reasons she may be better poised to ride out this transition. Especially when compared to other mid-priced brands that rely on wholesalers to generate a majority of their revenues.

But it is Burch’s relationship with her consumer that gives the new venture its biggest advantage. It’s one of the things that convinced Farah to accept the position. “I thought Tory personally, and the company specifically, is somewhat uniquely positioned within the marketplace,” he says. “I’m amazed at how consumers respond to Tory and her message, how much they are rooting for her to win.”That’s not to say it won’t be a bumpy ride. While the market for activewear may be robust — Nike has said that it would like to grow its women’s business from $5.7 billion in 2015 to $11 billion by 2020 — the category is crowded and showing signs of growing pains. Nike’s international business is still growing, but its North American revenue was flat in the fourth quarter of its 2016 fiscal year, missing estimates by about $270 million. Under Armour’s profits dipped 57 percent in the second quarter of its 2016 fiscal year, even though sales were up an impressive 28 percent to $1 billion. (It was the first time the Baltimore-based company did not beat analyst estimates since 2008.) Other brands, like Theory, have suspended their activewear lines. Kit and Ace, the biggest competitor in Burch’s technical-cashmere push, laid off about 10 percent of its staff, or 35 people, in February 2016.

Farah argues that Tory Sport is a long-term play, made possible by a privately held parent company. While the 2009 Tresalia investment generated speculation that Tory Burch was heading for an initial public offering, the designer has always insisted that it was not her intention. “When you’re public and you have to announce every quarter exactly how you’re performing, it creates a certain dynamic,” Farah says. “It’s not bad, it’s just different. Being private lets us make decisions in the view toward the long term. Sport is an example of that.”

For now, Burch and Isen are singularly focused on the product.

“You don’t have the right product, the market is unforgiving at this point,” he says. “It’s a very competitive market at the moment and customers have a lot of choice, with tremendous amounts of product knowledge. Because the customer has so many choices, she is impatient if you aren’t on brand.”

To some degree, there’s only so much you can do with a legging and pullover and a t-shirt,” Burke says. “Tory has carved out a niche because of her traditional Americana colourways and styling. I think she has an opportunity, but it’s an education process with the consumer and it’s a big investment.”

Fortunately for Tory Sport, Burch is the brand. As Farah notes, “You can’t discount having a woman like Tory as the name on the door.”

NEW YORK TIMES: After Just 6 Months, Justin O’Shea Is Out at Brioni

NEW YORK TIMES | ELIZABETH PATON & VANESSA FRIEDMAN

PARIS — Brioni’s brief experiment with radical reinvention has ended. Justin O’Shea, the former buying director and rebel in a pinstripe suit who was hired with great fanfare by Brioni in March to become its creative director, despite having no design experience, has left the Italian men’s wear brand after just six months, the company confirmed on Tuesday.

The fall 2017 collection will not be shown on the runway; instead, it will be presented to buyers at the brand’s Milan showroom from mid-November, a Brioni spokesman said.

Mr. O’Shea, 37, the bearded and heavily tattooed former fashion director of the German e-commerce giant MyTheresa, who commands an avid street style following, had unveiled his debut designs for the house to just 95 guests during Paris Couture Week in July.

Despite generally positive reviews, the collection, full of slick, high-waisted suits, champagne silk shirts and large mohair or crocodile skin jackets, raised eyebrows given Brioni’s traditional C-suite client base and sky-high price tags (suits begin at $4,900 off the rack). The New York Times critic Guy Trebay characterized the new mood as “Big Pimpin’.” Members of Metallica, hired by Mr. O’Shea as the new faces of the label, sat in the front row at the show, which culminated with a full-length chinchilla greatcoat right out of “Shaft.”

News of the unorthodox appointment three months earlier had shocked the industry, given Mr. O’Shea’s lack of formal training and studio experience. But Brioni, the Roman tailoring label owned by Kering that has long suited the superrich without being particularly fashion-forward, was looking to reinvent itself, and the hiring came as brands across the luxury sector are straining for innovative approaches in an ever more competitive environment.

“The pressures today on brands are high, and the ultimate test is how you move a collection forward without completely abandoning the customer base,” said Robert Burke, the founder of the luxury consulting firm that bears his name.

Just as surprising, however, was Mr. O’Shea’s quick exit — even by the standards of an industry where three-year terms for creative directors are increasingly the rule, rather than the exception. The fashion world, in Paris for the women’s wear shows, was taken aback, not least because Mr. O’Shea has been a visible presence in the city this week, hanging out at the Ritz bar and Caviar Kaspia.

“One minute you’re sitting in Caviar Kaspia with Metallica and rivers of vodka; next minute there’s this curt news release,” said Ashley Heath, editorial director at the magazine Arena Homme+, who received an email with the news while at Vanessa Seward’s show. “It’s certainly bewildering.”

Mr. Burke agreed. “Radical changes are high risk,” he said. “Brioni was a very established brand, and may have needed some dusting off and updating, but this was a major overhaul. The speed at which this one came to an end suggests something wasn’t working.”

As to what might happen now — whether Brioni will retreat to the world of quiet good taste without a high-profile designer, or double down with another name — Mr. Burke said, “your guess is as good as mine.”

Gianluca Flore, the brand’s chief executive, was not available to comment, and Mr. O’Shea texted, “No comment.”

Luxury Stores Add More Amenities in a Tougher Market

NEW YORK, United States — Buying some suits at Ralph Lauren might mean being offered a chauffeured ride home in a BMW. New clothes from Saks could lead to a Mercedes-Benz van carrying a customised wardrobe pulling up to a home, hotel or office.

With designer goods available online anytime, luxury retailers are adding more amenities and personal touches for in-person shopping. Stores overall are facing slower sales amid more restrained luxury spending, and some brands' flagship locations in major cities have seen a drop in shopping by international tourists because of the stronger US dollar.

That makes it even more important for retailers to keep the customers they have feeling valued and pampered.

Robert Burke, president of his namesake New York-based luxury consulting business, said he was surprised when the Ralph Lauren sales staff sent him back to his office with a uniformed driver after he came in to buy two suits. He was offered the same chauffeured treatment for the fitting. And he was so pleased with the service he bought a coat and blazer on the visit to do the alterations, and penned a note to the founder's chief of staff with thanks.

"It made you feel they really appreciated my business, and it made me want to shop. It was a nice perk to have a driver come and pick you up," he said.

What Burke had not realised was that the Ralph Lauren store in Manhattan earlier this year began picking up and dropping off customers in a BMW sporting a small company logo. It is expected to serve as a model for the kind of service the company wants to offer customers at its top stores. At the soon-to-open Beverly Hills store, a full-time concierge will offer services beyond shopping, like making dinner reservations or recommending art galleries.

Lafayette 148 New York, a clothing brand that sells to Saks, Neiman Marcus and other upscale retailers, also offers a pick-up and drop-off service for customers at two Manhattan stores. Neiman Marcus Group's Bergdorf Goodman has expanded the number of translators at its New York store for international shoppers. Credit card holders for both retailers can access a 24-hour concierge service to book travel or theatre tickets.

And the Americana Manhasset Mall on Long Island, which offers a free personal shopping service for the open-air centre that includes stores such as Louis Vuitton and Chanel, is working to provide more service. The personal shoppers, who used to work just with the stores at the mall, now go for training at the corporate offices or meet with the brand's corporate staff at the shopping mall so they can better serve the customer.

Saks Fifth Avenue, under new President Marc Metrick, is offering what he calls "more high-touch" experiences. At the lower Manhattan store, that can be "power lunch" packages for wardrobe styling and makeup application in less than 60 minutes. A "Saks Save Me" service lets shoppers call a dedicated number to resolve fashion emergencies within 24 hours. And in 15 US markets it can send the wardrobe van.

Metrick says it is about building a better relationship. "Saks is transforming because the customer is changing," he said. "If people want to buy and transact, they can do it in so many ways."

In the most recent quarter, Saks Fifth Avenue, whose parent is Hudson's Bay Co., saw sales at stores opened at least a year slip 1.3 percent. Overall, global luxury buying is expected to be flat to up 2 percent this year to €253 billion to €258 billion ($282 billion to $288 billion), with a dip of up to 2 percent expected in the Americas region, according to Bain & Co.'s luxury study.

But with the average income for the top 1 percent of US households soaring 7.7 percent to $1.36 million last year, retailers still see potential growth. Income for the richest slice rose twice as fast as it did for the remaining 99 percent, according to an analysis of tax data by economics professor Emmanuel Saez, at the University of California, Berkeley.

Faith Hope Consolo, chairman of Prudential Douglas Elliman's retail group and who has brought such luxury names as Giorgio Armani and Jimmy Choo to the US, says luxury stores are taking a page from small tony boutiques but will need to keep offering more.

"Saks is taking the most aggressive lead, and I think that everyone else will have to follow," she said. "The thing that changed is that luxury became accessible to everyone, everywhere in the world because of the internet."

BLOOMBERG: Robert Burke: NY, Paris Set the Bar for Luxury Fashion

James Fallon, editor at Women's Wear Daily, and Robert Burke, chief executive officer at Robert Burke Associates, examine the state of women's fashion and luxury brands. They speak on "Bloomberg Surveillance." (Source: Bloomberg)