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BLOOMBERG: Fashion Brands Sell Styles Still on Runway to Woo Millennials

BLOOMBERG: Fashion Brands Sell Styles Still on Runway to Woo Millennials

BLOOMBERG | STEPAHNIE HOI-NGA WONG

In a world where younger consumers can summon a car or a meal at the click of a button, fashion houses are realizing that their next generation of customers isn’t keen to wait six months for runway styles to hit store shelves.

Millennials’ impatience has brands such as Tommy Hilfiger, Ralph Lauren Corp., Coach Inc., Michael Kors Holdings Ltd. and Tom Ford turning their New York Fashion Week runway shows into a so-called see-now-buy-now format. That’s transforming the event -- previously a showcase for industry insiders and items that won’t appear until the following season -- into a source of cold, hard, immediate sales.

Global fashion brands -- struggling with economic uncertainty, declining sales to tourists and the rise of fast-fashion and online rivals -- are looking for ways to reinvigorate demand and generate buzz. The recent rough patch is forcing companies that had thrived on tradition and exclusivity to innovate and experiment with technology to woo younger shoppers.

“The fashion industry has always been a little bit slower to adapt when it came to online and social media because brands by natural are controlling of their image, and when you embrace social media, you do lose some control,” said Robert Burke, a luxury fashion consultant. “The reality is that the customer today is just as comfortable going to buy online. They expect and demand that.”

Live Streaming

Ralph Lauren live-streamed its fashion show outside of its store New York’s Upper East Side on social-media platforms including Facebook, China’s Youku and South Korea’s Kakao messaging service. The company then made the entire collection -- from an $890 western shirt to a $7,990 embroidered gown -- for sale on its website and major stores worldwide.

Ralph Lauren Chief Executive Officer Stefan Larsson said the biggest challenge for the almost 50-year-old brand is adapting to the mindset of today’s consumers, who are more informed and connected than ever.

“When we saw that consumers more and more are into what used to be an industry event -- the fashion week and the show and even behind the scenes -- then we said it doesn’t make sense to invite them to fall in love with the products and then wait six months,” he said in an interview. “So we said let’s change our way of thinking about this.”

Tommy’s Fairground

Tommy Hilfiger, owned by PVH Corp., turned a pier in Lower Manhattan into a fairground with a 40-foot Ferris wheel and a temporary tattoo parlor to showcase its navy and military collection designed with model and social-media star Gigi Hadid. For the first time, it allowed customers around the world to buy clothes online straight off the runway as the show streamed live on its website. 

It also experimented with Facebook Messenger’s chatbot, which simulates conversations with customers. Some items, including a $95 bodysuit, were sold out overnight, and its Instagram account also garnered tens of thousands of likes and comments from fans across the world.

“It wasn’t done just for the editors or magazines but for consumers and the bloggers; it was very democratic,” Burke said. “It created everything everyone is trying to do with see-now-buy-now. They created the hype and then they were able to turn it into sales.”

Elvis Collection

Coach took a similar tactic. A day after its fashion show -- which used a stake of rusted, antique cars as a backdrop -- the company made available for sale the limited edition of its collection inspired by rock legend Elvis Presley.

Michael Kors’s models, including 20-year-old Kendall Jenner, walked the runway to live music by singer Rufus Wainwright, and the brand initially filled its front page with Instagram postings of a South Korean model, a London fashion blogger and other social-media influencers. Hours later, a few of the items went on sale in limited quantities online in the U.S. and some stores.

Potential Pitfalls

While social media can drive excitement for the fashion houses, it also poses the threat that brands will become overexposed or lose control of their image. The see-now-buy-now concept presents additional challenges: Fashion houses have to plan the right inventory to avoid unsold goods ending up in discount stores, said Chris Paradysz, founder of digital marketing agency PMX Agency.

“They can sell a lot of products and be wrong, or sell a lot of products and be right, and still be wrong because they didn’t buy enough of it,” he said.

To catch the impulse of consumers who just finished watching the fashion show, Tommy Hilfiger built a pop-up shop near the runway. The buzz generated at the catwalk worked for Stefanie Dwiggins, a designer working for a bridal and evening-wear company in New York.

“A lot of the stuff is cool -- I didn’t expect it to be like this,” the 25-year-old said, carrying a shopping bag with her newly purchased shirt. “I was able to walk, eat and shop. That experience puts you in the mood and gives you the excitement to buy.”

BUSINESS OF FASHION: Could Altuzarra Become the Next Great American Brand?

BUSINESS OF FASHION: Could Altuzarra Become the Next Great American Brand?

Business of Fashion | Lauren Sherman

Designer Joseph Altuzarra has gone from being a buzzy newcomer to a major contender. How far can his label go?

NEW YORK, United States — Ralph, Calvin, Donna. Tommy, Michael, Tory. Fashion in the United States has long been dominated by superstar designers whose brands are almost synonymous with their first names.

Joseph Altuzarra, on the other hand, may never achieve this level of renown. For one, he has chosen to leave his given name off his brand, effectively allowing the label and its clothes — rather than the man — to take centre stage. “When we see new talent come to fashion, it often feels as if they come to the industry because they want to be famous,” says Neiman Marcus fashion director Ken Downing. “Joseph came to the industry because he loves the craft of creating clothes. He loves dressing women. His fame has come not because he put himself front and forward, but from his creations.”

And yet, the 33-year-old Altuzarra, who founded his business in 2008, has steadily risen up fashion’s ranks, positioning his brand in a way that astutely balances creativity with commercial savvy. Nearly a decade in, when many labels start to lose momentum financially or aesthetically, there is no question of whether Altuzarra will survive. It's more about how far the label can go.

“I think there are so many really great examples of success at different levels, and it’s about how you define it,” the designer says, sitting in his Howard Street office just a few weeks before moving his company, which now has more than 30 employees, further south to a bigger, better space in the Financial District. “Dries is incredibly successful. He’s outside Antwerp, independent and happy. That’s a wonderful example of success on a level. Same with Alaïa,” he continues. “But I have the ambition and the drive to build this into something big — I hope.”

To do that, Altuzarra has taken a measured, in-no-rush approach to everything from hiring to product development. Consider the introduction of handbags in 2015, which happened a whole seven years after he photographed his friend and muse Vanessa Traina in his first, still-recognisable collection. “Leather goods was something that he was interested in long before, as a business, we felt it was the right time to launch it,” notes Karis Durmer, who joined as chief executive in 2011. “But we wanted to make sure we had the right product, and that it was the right moment for the brand.”

While handbags are still a nascent business, it’s one that the company is willing to put muscle behind. Its first serious advertising campaign — which launched for Autumn/Winter 2016 and features still-life vignettes shot by Robin Broadbent and art directed by frequent collaborator Thomas Lenthal — was built around three of the season’s handbag styles. The campaign takes cues from the work of French artist Carmen Almon, who shapes botanical sculptures out of copper sheeting, brass tubing, steel wire and enamel.

In turn, Altuzarra commissioned Almon to create a piece for his new shop-in-shop on the recently opened fourth floor of Saks Fifth Avenue’s Manhattan flagship. Perched between Marni and Brunello Cucinelli, the 400-square-foot space is the brand’s first-ever direct retail concept, inspired by the winter gardens often found in 19th century European homes. The designer went to great lengths, in collaboration with Lenthal, to transport the client into his world, which draws heavily from his heritage. (Born and raised in Paris to a French-Basque father and Chinese-American mother, Altuzarra attended the classic liberal arts college Swarthmore outside of Philadelphia before heading back to Europe to apprentice under patternmaker Nicolas Caïto, eventually becoming Riccardo Tisci’s first assistant at Givenchy.)

Consider the begging-to-be-roughed-up Moroccan-tile flooring, laid out in a grid with the letters A-L-T-U-Z-A-R-R-A. That grid — now a brand signifier — is also woven into leather handbags, and worked into the company’s look books and fashion week invitations. “We started playing with it in bags, and it ended up being something I really liked,” the designer says. “I think what’s nice about this is that it has an interesting backstory that’s not necessarily in your face.”

To be sure, Altuzarra’s own backstory is a major part of what defines his fashion. “We have four brand pillars,” he says. “The first is the French side, and that is really a part of who I am — part of my upbringing, but also aesthetically very important. It’s where the sophistication and this slight nonchalance and seductive approach comes in; something that feels a little undone, a bit not-overthought.” The second is his American-ness: “The ease of clothing, the pragmatism, the sportswear. I think the same way that I’m half-French and half-American, so is the brand.”

The third part, he says, is sensuality. “The collection always has to feel seductive,” he reasons. “There is a sort of sexual confidence.” And finally, there is craft. “It's about looking at different communities, different areas of the world and trying to play with the idea of craft — and traditional craft especially — as a gateway to thinking about identity.”

It’s always difficult to have a brand predicated on cool, because there’s always going to be something cooler or younger and newer.

These elements serve as a rubric for every piece of Altuzarra. And it helps to explain why and how the designer has excelled in so many categories, with so many different types of clients. The business, according to Durmer, does not rely too heavily on one signature, one hit. Instead, there are several recognisable styles: The high-slit pencil skirt, the expertly tailored blazer, banker-cuff shirtdresses and most recently, the saddlebag. “It’s always difficult to have a brand predicated on cool, because there’s always going to be something cooler or younger and newer,” Altuzarra says, explaining the approach. “That’s something I think about a lot. I never wanted to be the cool kid. Because it’s very hard to evolve from it.”

By all accounts, the approach is working. “Joseph is making women feel good. We know that because we’re seeing steady growth,” Durmer says. “Not seasonal spikes.” The company, which sold a minority stake to Kering in 2013, does not disclose revenue figures, although Durmer says that sales have grown 350 percent since the deal was put in place, outperforming initial projections.

Just how far the label can grow from here is another question, however. "I think the landscape for designers in retail right now has changed dramatically and is in flux. I’m not sure we’ll ever see another wave of Ralph and Calvin and Donnas in America," says retail consultant Robert Burke. But I think what we will see are very strong, focused America brands that can be big. That moment of mega, billion-dollar brands might be over, but it doesn’t mean that someone can’t build a $500 million business." To Burke, Altuzarra is well positioned to achieve this. "I have full confidence that he’s going to be leading the pack of American designers and that he also has the understanding of the business to do it," Burke says. "I'm optimistic about Joseph, and I would say that the retailers that are very attuned to the industry feel the same. He’s really created a unique position in the market."

Right now, market sources suggest that the business is still making under $20 million a year. “We are in the range where $50 million is our next hurdle,” Durmer says. “When you’re growing a company, you look to hit your $15 million mark, then your $50 million mark, then $200 million. And then you’re trying to be, you know, half a billion dollars. Those are steps that you want to take, and we’re on a step where [$50 million] is on our horizon."

To get there, Altuzarra will have to continue turning out creatively-forward and critically-lauded collections that, at the same time, drive home his big picture message.

This is where his roots come into play. He appreciates “fashion” in the way the French do, but “clothes” in the way Americans do. “There is an instinctive awareness that makes his work very sophisticated,” Lenthal says.

But perhaps most importantly, he is not afraid of his customer. While the designer is inspired by early supporters including Carine Roitfeld and collaborator Traina — whose narrow, impossibly chic figures are unattainable for most — he understood from the beginning that this would, in general, not be the person buying his clothes. In 2011 at a Barneys New York event, he spoke of wanting to dress Meryl Streep and Diane Keaton’s characters in a Nancy Meyers movie, and that is still true today. Although now, it's less about age and more about a state of mind. The Altuzarra woman is a woman who wants to feel confident, sexy, but also appropriate. “There is a very honest lens through which Joseph looks as his customers,” Downing says. “What they’re interested in — and what they’re not interested in — informs collections season after season.”

And in the grand tradition of Michael Kors, whose talent for charming sales associates at store clinics and fitting clients at trunk shows serves as a shining example for the entire industry, Altuzarra relishes his time with customers. “I know [many] designers don’t like doing trunk shows or meeting clients, but I love it. You end up talking through the issues, whether it’s their arms or their stomach being a little soft. Or the fact that their breasts aren’t as firm as they used to be. Or they feel weird about their hips. These are real things,” he says. “When a woman goes into the dressing room with your dress on, it might be the most beautiful dress on the runway, but if it feels a little tight on the hips or she can’t wear a bra with it, she’s not going to spend $3,000.”

The Saks shop-in-shop is certainly a first step towards building a significant direct retail business. And while e-commerce is further down the roadmap, the company's newly-relaunched website links through to online wholesale partners. (The clever setup allows the consumer visiting the site to shop and browse everything on offer at once, and also gives the Altuzarra team insight into what is resonating commercially.)

But while connecting with the consumer one-to-one is a priority, Altuzarra is less convinced about delivering so-called fashion immediacy. “You can be ‘see now, buy now’ and show the most beautiful dress on a beautiful model, but if the client goes to the store and tries it on and doesn’t feel good, it’s not an incentive to buy it,” he says. “And vice-versa. I think if you show six months in advance, and she goes into the store and it fits beautifully, and it’s the right price — she’ll buy it. I don’t think it’s any more complicated than that, personally.”

It’s no surprise that Altuzarra’s balance of unrestricted creativity and confident pragmatism is desirable to other fashion houses: Given his partnership with Kering, rumours abounded when there were turnovers at both Gucci and Saint Laurent. Outwardly, he appeared uninterested. But to believe that Altuzarra has zero interest in taking on another role, at some point, would be naive. For now, however, he is committed to his brand, and his brand only. “One thing I really learned working with some of the designers I worked for, especially Riccardo, is the power of steadfastness and being focused on one thing,” he says. “I think it’s very easy in this industry to say yes to things, because plenty of people throw money and opportunities at you, and sometimes the hardest thing is to say no.” It’s not always easy. “Sometimes I think, ‘Am I being left behind or not doing what I should be doing?’” he admits. “But you always find your centre. I certainly have never regretted anything that I haven’t done. And I feel so happy about where I am.”

BLOOMBERG: What U.S. Retail Sales Data Says About Consumers

Robert Burke, chief executive officer at Robert Burke Associates, discusses Nordstrom earnings, the challenges facing the retail industry and his outlook for the sector. He speaks to Bloomberg's Shery Ahn and Julie Hyman on "Bloomberg Markets." (Source: Bloomberg)

WALL STREET JOUNAL: Store Wars

WALL STREET JOUNAL: Store Wars

WALL STREET JOURNAL | CHRISTINA BINKLEY

Over the next three years, New York City’s vaunted department stores are reimagining themselves for the future of luxury shopping—and will soon face stiff competition from a couple of out-of-towners: Neiman Marcus and Nordstrom

RISING ON MANHATTAN’S far West Side, New York City’s first Neiman Marcus, set to open in September 2018, will occupy 215,000 square feet in the new Hudson Yards, a $25 billion office and housing complex that claims to be the largest private real estate development in the U.S. The store will frame views of the Hudson River and the High Line, and whisk shoppers by elevator from an entrance on Tenth Avenue to a concierge on the fifth floor, where they can pick up items they have purchased online. Farther up at Columbus Circle, also on the West Side, Nordstrom is erecting a 363,000-square-foot store in part in Central Park Tower, a structure that aims to be the tallest residential building in the Western Hemisphere. With wiring for a full digital experience, the store will enable customers to use a smartphone app to send apparel to a fitting room without having to rifle through racks. A shopping suite dubbed the JWN Room (the initials of Nordstrom founder John W. Nordstrom), complete with lounge and bath, allows for privacy—and space for an entourage.

“The bar gets raised in New York. We’ve got to go into it having a different point of view about what it takes to be successful,” says Pete Nordstrom, the company’s co-president, talking about its first flagship in the city. “To a lot of people, if you’re not in Manhattan, you don’t exist.”

For more than a century, New York City has been home to a constellation of department stores, whose openings, closings and transformations have charted the fortunes and foibles of the city itself. They have represented the forefront of luxury retail: Henri Bendel brought Coco Chanel’s designs to the U.S. in 1913, while Bergdorf Goodman helped introduce America to the concept of Parisian haute couture. Saks Fifth Avenue, Bloomingdale’s and Macy’s endured the Great Depression and the world wars, while Barneys New York went from being a discount suit–seller to the place that forged markets for international designers like Giorgio Armani and Azzedine Alaïa. Along the way, some beloved institutions have been eulogized, their buildings demolished or repurposed—Bonwit Teller and B. Altman & Co. among them. The survivors, housed in aging and often awkwardly configured buildings, are now being challenged by thinly staffed fast-fashion emporiums, discount outlets and the growth of online shopping.

Yet 150 years after the department store’s first heyday in New York, a tectonic shift in shopping is taking place in the city. Over the next three years, a slate of new or newly renovated stores is aiming to make Manhattan once again a futuristic laboratory of retail science—all despite the harshest retail environment since the Great Recession. With open floor plans, art installations and locavore eateries, they are intended to be entertainment zones as much as shopping centers. In February, Barneys New York reopened its Chelsea location, complete with a barbershop, a bar and an outpost of the restaurant Fred’s.Bergdorf Goodman, which is owned by the Dallas-based Neiman Marcus Group, unveils the next stage of a rejuvenation of its Beaux-Arts building this fall. The project is dubbed BG 20/20, both for the acuity implied as well as the year it will be complete. This fall, Saks will reveal the beginning of a major $250 million renovation of its landmark Fifth Avenue flagship, due to be largely complete by 2018. And this month, Saks opens a stand-alone women’s-focused store in the sleek Brookfield Place shopping center across from Ground Zero.

“A few companies, after the 90-plus years that we’ve been here, have decided to come” to New York, says Marc Metrick, president of Saks. “Well, we’ve been here. And we’re not backing down.”

By the time the dust has settled in a few years there will be more than 1.5 million new or renovated square feet of shoes, handbags, ready-to-wear and jewelry vying for the attention of department store shoppers. Thus far, New York outposts of the major luxury department stores are nearly universally the highest-value properties in their chains, producing roughly twice the revenue per square foot of other locations, between $1,200 and $1,500 per square foot, according to industry sources. Yet, as one luxury-brand executive points out, the city isn’t growing new residents and tourists at the same rate it’s growing stores, so competition is about to get more heated.

This confrontation is taking place in the world’s largest fishbowl. “New York is the flagship location for many retailers, and it’s scrutinized more than other locations,” saysRobert Burke, a fashion and retail consultant who formerly was fashion director of Bergdorf Goodman. “If anyone is unsuccessful here, it’s a very public and very critical step.”

Neiman Marcus’s chief executive and president, Karen Katz, says she was initially leery of opening in New York City at the risk of cannibalizing existing business. “I was cynical about whether Neiman Marcus needed to be in Manhattan. We have Bergdorf there,” she says. “I was very nervous when we made the decision two and a half years ago.” The population that will be drawn to the Hudson Yards neighborhood—a mix of residences and offices that will be served by an extension of the city’s No. 7 subway line—helped convince her. “I think it’s going to bring us a U.S. customer who may not venture into Bergdorf now,” says Katz. She describes her current frame of mind as “giddy with excitement” about the store, which will overlook the Hudson River and the High Line, and feature a restaurant and potentially a spa. Neiman Marcus is also exploring cutting-edge amenities, such as mirrors that offer shoppers 360-degree views of themselves, which Katz describes as “an out-of-body experience.” Given New York’s competitive environment, she says, “Neiman Marcus needs to be a shopping mecca.”

For Nordstrom (which expects to open in 2019), the decision to open a Manhattan flagship is a swashbuckling move for the low-key company, whose core strategy has been to let others compete with lavish stores while it focuses on a plain and simple approach to shopping. Nordstrom chose its site for its central location in Manhattan and expansive column-free floors. Solid waveform glass facades along 57th and 58th streets by designerJames Carpenter are intended to wow passersby and shed abundant light onto the goods on display. Nordstrom is planning to use design and digital concepts currently being tested in smaller markets in the U.S. and Canada—for example, a multilingual staff and international payment systems. At its new Vancouver store, Nordstrom has hired employees who speak, collectively, 25 languages, including Punjabi, Arabic and Cantonese. The company expects the Manhattan outpost to be its highest-producing store, on par with its competitors, whose New York locations yield at least 2.1 times the revenue of their next-best stores, says Pete Nordstrom. “We’re building this store for the next 100 years,” says Jamie Nordstrom, the company’s president of stores.

Meanwhile, with its two new downtown stores, which will be a combined 100,000 square feet, Saks is aiming to cater to tourists as well as the Goldman Sachs and Condé Nast crowds that work near Brookfield Place. With an eye to the harried lives of New York professionals, Saks will offer conveniences such as a one-hour service dubbed Power Lunch: A client could shop in private dressing rooms staffed by one of the store’s stylists, receive on-the-spot clothing alterations and then enjoy a 30-minute Beauty in a Flash facial. “We need to be dominant in this market,” says Saks’s Metrick of New York.

From his perch uptown, Bergdorf Goodman’s president, Josh Schulman, says, “We welcome the competition.” For the first time in 30 years, the luxury retailer has embarked upon a gut renovation of its main floor, to be revealed in September. “We’re 115 years old, and we want to be thought of as a top-of-mind destination,” says Bergdorf’s senior vice president and style gatekeeper, Linda Fargo, a 20-year veteran with the store. “The stakes feel higher than ever.”

The renovation has simplified a confusing assemblage of ceiling heights and interconnected rooms that has haunted the store since the ’30s, when its co-founderEdwin Goodman bought up the surrounding stores in order to expand Bergdorf, which grew even during the Great Depression. Now the meandering layout will be streamlined, with high-margin handbags assembled centrally on the ground floor. There will also be a greater emphasis on fine jewelry, with the store’s oft-forgotten 57th Street entrance expanded into a grand new entry for the jewelry salon, which will be stocked with brands that are new to Bergdorf. There is also a new private viewing room—formerly, sales associates took big spenders to an office borrowed from an executive, often Schulman. He says, “I have to admit, we would have to clean up our desks quickly sometimes.”

With the store’s new gray paint scheme and furnishings that mix vintage finds with custom designs such as a huge glass folding screen based on Eileen Grey’s famous lacquered screens, the concept is residential–cum–Met Museum. The haute-home design has been a team effort led by Fargo, who says she wants to “break down some of the selling ceremony” to create a more touchable, friendly experience.

A similar exercise is at play in the new downtown Barneys, which opened in February in the precise building it vacated in 1993 (and which subsequently served as a Loehmann’s discount fashion outlet). The store, an ancillary arm of Barneys’s uptown flagship and, at 55,000 square feet, a fraction of its size, will be its fourth most productive store by year’s end, says Daniella Vitale, Barneys’s chief operating officer. There have been hiccups, she says. There isn’t enough room for shoes. There are too few fitting rooms for busy weekends. In menswear, classic pieces have undersold trendy items, leading to necessary tweaks in inventory and purchasing. And it turns out that services such as the Blind Barber—a barbershop and speakeasy that serves drinks like the Sweeney Ted and the Hot Heather—cosmetic makeovers, lunches at Fred’s and after-work cocktails are outstripping management expectations. So the store is in search of more bartenders, extroverts preferred.

ONCE UPON A TIME, department stores were the original lifestyle brands. From a baby’s rattle to a boy’s first suit to the wedding registry to condolence stationery, they catered to the circle of life. Customers found the store that best matched their tastes and offered up their loyalty. “It never was only about the shopping aspect,” says Michael Lisicky, a department store historian and lecturer. “It was the social aspect. You spent the day—these places kind of owned you.”

The department store itself was a product of the Industrial Revolution, which created mass-produced goods and shopaholics. In 1825, Arnold Constable & Co. opened a small dry-goods shop on Front Street at the southernmost tip of Manhattan. A few decades later, A.T. Stewart flung open the doors to his white “marble palace” on Broadway and Chambers. Over the next hundred years or so, stores followed New York’s wealthy shoppers from the Lower East Side up to 34th Street (though Macy’s had to transport shoppers north to its Herald Square location in the early days), and eventually to the famous Fifth Avenue corridor and the Upper East Side.

Five years after Andrew Saks’s store was incorporated as Saks & Co. in New York in 1902 (the same year Macy’s moved to 34th Street), Neiman Marcus was founded in Dallas. American retail was vibrant, fueled by New York’s commercial wealth and the Texan oil boom. Saks merged with Gimbel Brothers in 1923 and, as Saks Fifth Avenue, has occupied its current building since 1924. In 1928, Bergdorf moved to Fifth Avenue and 58th Street, on the site of Cornelius Vanderbilt’s mansion, where it still sits today. Then came the Great Depression, with winners and losers. Some of the survivors saw national expansion in mid-century, with single stores adding location after location. Nordstrom—which began as a Seattle shoe store called Wallin & Nordstrom in 1901—grew to include eight stores in the region by the 1950s and made the leap to include apparel in 1963. It is still run by the extensive Nordstrom family, and it is publicly traded on the New York Stock Exchange. Saks also expanded around the country, surviving the 1970s era of corporate consolidation as it was sold, then sold twice again in the 1990s. Canadian conglomerateHudson’s Bay Co., which also owns the New York–based chain Lord & Taylor, bought Saks nearly three years ago, launching another round of expansion. Meanwhile, Barneys, which was founded in 1923, moved uptown in 1993, the year after it opened a location in Chicago. Today, it has 15 stores nationwide, and since 2012, a controlling interest has been owned by Richard Perry’s hedge fund, Perry Capital. This summer, Perry Capital was said to have begun talks to sell a minority interest in the stores. Barneys has been outperforming expectations in the first half of 2016, according to people familiar with the company. (A Perry Capital spokesman didn’t respond to requests for comment.)

TODAY, WHAT IS OLD is new again. By piling on cafes, bars and hair salons, department stores are hoping to attract customers by returning to the full service that made them beloved in the first place. And service and experience are taking on heightened importance in a market that’s being aggressively rushed by online sales. Net-a-Porter, for example, has been offering same-day delivery to New Yorkers for 10 years. Saks is launching a service, dubbed Saks Save Me, that will send a sprinter van and stylist to deliver solutions for fashion emergencies such as little black dresses for unexpected events and replacements for broken heels—all within 30 minutes when the store is open. Other department stores are doing the same—creating convenient mechanisms to pick up or return goods in store.

“We have to work harder all the time,” says Alison Loehnis, president of Net-a-Porter Group. “New York is an incredibly, incredibly valuable market. The size of business there is comparable to some countries.”

Therein lies the rub: The essence of a luxury brand’s charisma—and its most guarded asset—is its scarcity. Yet today there are already myriad places in New York to buy a Givenchy handbag or Gucci loafers, from the department stores and specialty shops to the brands’ own boutiques. Given the existing plethora of luxury products, today’s sudden rush of development can smack of corporate hubris.

“It does make you question how much is too much,” says Robert Burke, the fashion and retail consultant.

“There’s only going to be so many points of sale we can have in New York,” agrees Daniella Vitale at Barneys. “There is some point where it gets saturated.”

In fact, U.S. consumers are showing signs of shopping fatigue. Clothing and accessory sales grew an anemic 1.8 percent in 2015, according to the U.S. Department of Commerce. In the first five months of 2016, sales barely grew at all—just a paltry 0.2 percent. The aftermath has played out in boardrooms from London to San Francisco. At Burberry this year, Christopher Bailey was replaced as CEO and handed a 75 percent pay cut after the company’s disappointing financial results; Ralph Lauren announced a restructuring and layoffs in June; Scoop—a high-end specialty retailer that once helped launch new fashion labels—shut down its stores this summer after 20 years. Gap shares plunged after a promised turnaround failed to materialize this spring. Potential scapegoats for the retail downturn include an election year’s distractions and millennials’ purported lack of interest in saving money to buy “It” handbags. The question is, Is this a blip or a new reality?

“It’s not a pretty world for retail right now,” says Saks’s Metrick. But, he adds, “we’re in this for the long run.”

Either way, fashion brands require convincing of the need for more products in the city, according to several people close to their discussions. Meeting the demands of all the new stores will require careful “divvying up” of products among stores, says one luxury-brand executive. Another says many brands often prefer to sell via their own stores and online channels, where it is easier to control pricing and discounting.

“You have to make a choice. You can’t be everywhere,” says Laurent Claquin, head of Kering Americas, who oversees brands including Saint Laurent, Gucci and Balenciaga in the U.S. Decisions about which Kering products to distribute where—for instance, Alexander McQueen womenswear at Bergdorf but Balenciaga menswear at Barneys—are made after careful negotiations. Other companies have already aligned with certain stores: Bergdorf will sell Chanel fine jewelry in its renovated salon, while Chanel apparel will go to Neiman Marcus at Hudson Yards, according to people familiar with the stores’ plans.

Enlisting brands is a ticklish subject, particularly years before a store opening, and neither Neiman Marcus nor Nordstrom would discuss brand strategies. Related Cos., the development company behind Hudson Yards, sweetened Neiman’s deal as an anchor tenant with incentives including a break on the first three years of its lease, Related’s chief executive, Kenneth Himmel, told WWD, saying he expects that Neiman Marcus will see revenues of $200 million a year initially. (A Neiman spokeswoman said the company cannot comment on “rumors.”) The mall at Hudson Yards, meanwhile, hasn’t yet convinced many luxury brands to sign leases.

According to the model now emerging in New York, the future of department stores is actually an anti-department store. Most are doing away with the units that once segregated designers and price points in favor of open-floor plans that give customers a seamless experience and more closely match the way they live. “We have de-departmentalized the department store,” says Metrick of Saks, which will mingle womenswear across price points together on one floor, the better to encourage browsing. Men’s shoes—the hero of men’s fashion these days—will be front and center, not off in a corner or upstairs. At Nordstrom the aim is to make the store easy to navigate, with open views so no merchandise is hidden behind corners, and no separated silos for lingerie, shoes or other items that traditionally occupy separate departments. “We want to be the most convenient place to shop in Manhattan,” says Jamie Nordstrom. Even the term department store has itself become anathema. Both Vitale and Barneys’s chief executive,Mark Lee, say they prefer specialty store.

Ultimately, Saks’s Metrick says, success will require making the brick-and-mortar experience as compelling for 21st-century shoppers as it was a hundred years ago, while simultaneously serving customers online and off.

“We look at Saks Fifth Avenue in New York City as an ecosystem,” he says. “Why would they even leave home if they can shop on Saks.com?”

Dior Is Expected to Name Maria Grazia Chiuri as Artistic Director

Dior Is Expected to Name Maria Grazia Chiuri as Artistic Director

NEW YORK TIMES | VANESSA FREIDMAN

Christian Dior has finally found its designer.

In a move that will break up one of the most feted design teams in fashion, Maria Grazia Chiuri of Valentino is expected to be named artistic director of Dior, becoming the first woman to lead the brand in its 70-year history.

The move, which is expected to be announced next month, has the potential to disrupt the luxury fashion landscape as Ms. Chiuri, now co-creative director at Valentino, parts ways with her longtime collaborator, Pierpaolo Piccioli.

The news, reported earlier by Reuters, broke just a day after the Valentino men’s wear show in Paris and hours after Ms. Chiuri hosted a dinner in the city at Caviar Kaspia, on Place de la Madeleine, with Mr. Piccioli in celebration of the collection.

Both Dior and Valentino declined to comment, but a person briefed on the negotiations confirmed the appointment.

“I think it’s nothing short of a brilliant appointment,” said Robert Burke, founder of his own luxury consultancy. “It makes perfect sense from both an aesthetic standpoint and a consumer standpoint. There are few brands that compete with Dior, but Valentino is one.”

Ms. Chiuri and Mr. Piccioli were appointed co-creative directors at Valentino in 2008, staying at the Italian fashion house when it was sold by the private equity group Permira to the Qatari-controlled Mayhoola for Investments in 2012. Together they brought Valentino to billion-dollar status, making it a darling of both the fashion and celebrity worlds in the process.

Annual sales have more than quadrupled, to 987 million euros, since 2009 as Ms. Chiuri, Mr. Piccioli and Stefano Sassi, Valentino’s chief executive, led an expansion of the brand’s product range and distribution. And after it nearly doubled its profit on revenue of more than $1 billion in 2015, there has been growing speculation in the luxury industry about an initial public offering of stock.

The fashion house said this year that it expected revenue to grow at a double-digit pace in 2016, and it has plans to open about 25 stores globally. The company now operates 130 shops directly and is aiming for about 200 in the next two to three years.

The Dior appointment will be Ms. Chiuri’s first solo design post and will leave Mr. Piccioli alone at the creative helm of Valentino.

Ms. Chiuri originally hired Mr. Piccioli to work with her in the accessories department of Fendi in 1992, and the two have moved in tandem since then. They have been professionally so intertwined that they often finish each other’s sentences, co-sign handwritten letters, send emails from the same account and dress alike in matching black trouser suits.

“I always thought of them as a team, not as individuals. The big question is whether they can do separately what they did together,” said Mr. Burke. “That’s the risk.”

Scott Schuman, a photographer known as “The Sartorialist” who worked in a wholesale showroom that sold Valentino early in his career, said, “I am interested to see how they play on their own.”

He continued: “A lot of the high-end couture labels seem like golden cages. The sensibility I understand for her, she’ll create clothes you can buy and wear — not just accessories.”

Ms. Chiuri will be joining Dior at a delicate time. The luxury market is expected to grow only 2 percent this year, according to a study from Bain & Company and Altagamma, the Italian trade association.

Dior has been designer-less since October, when its artistic director, Raf Simons, left the company after three years. Mr. Simons had been appointed after the firing of John Galliano, who had been accused of a drunken anti-Semitic rant. Mr. Simons was credited with not only modernizing the Dior aesthetic, but also restoring an internal calm to the fashion house. His departure threw it into limbo once again.

Rumors that Ms. Chiuri was being considered for the artistic director position had been circulating in the fashion world since the beginning of the year. However, the job has traditionally involved only women’s wear and not men’s wear, designed by Kris Van Assche; jewelry, designed by Victoire de Castellane; or retail, designed by Peter Marino, and it was viewed as difficult to fill. This had to do with both its demands — six collections a year, including Cruise collections in exotic locations — and its limitations, including the involvement of celebrity ambassadors.

Mr. Simons, for example, was said to be particularly upset to discover he had not been consulted on the signing of Rihanna as a Dior face, given the gulf between the aesthetic he had established for the brand and that of the pop star.

The parent company of Moët Hennessy Louis Vuitton, Dior is the cornerstone of the luxury empire built by Bernard Arnault, its chairman and chief executive. Though it reported more than €5 billion in sales last year and has 195 stores worldwide, three-fifths of its revenue came from perfumes and cosmetics. Christian Dior Couture, which includes all the clothing lines, contributed €1.8 billion to sales in 2015.

Recent shows created by the internal design team led by Serge Ruffieux and Lucie Meier have been met with tepid applause, and Dior’s fashion sales growth has fallen in the last 18 months, going from double-digit growth to flat in the first quarter of 2016. A dip in tourist numbers to Europe after terror attacks in Paris and Brussels and sales declines in several crucial Asian markets contributed to the losses. Ms. Chiuri will be charged with reversing that trend.

In Paris, Pamela Golbin, chief curator of fashion and textiles at the Musée des Arts Décoratifs, noted Ms. Chiuri’s long successful track record and willingness to grow.

“She does have an incredible knowledge of haute couture, and that’s going to be a very important aspect of her job,” Ms. Golbin said. “There aren’t that many people who have shown over a long period of time that they could take it to the next level and have it evolve. She’s done that over the years at Valentino. What will happen at Dior is a big question.”

The next couture season, scheduled for the week of July 4, will herald Ms. Chiuri’s final show with Mr. Piccioli. A new era for Dior, Valentino and their designers will begin in September with the women’s ready-to-wear shows.

WASHINGTON POST: Does Rodarte actually exist? The vaporous business plan of a fashion industry darling.

WASHINGTON POST: Does Rodarte actually exist? The vaporous business plan of a fashion industry darling.

WASHINGTON POST | ROBIN GIVHAN

Does the fashion brand Rodarte — winner of industry awards, darling of museum curators, stylistic lodestar of eccentric actresses — actually exist?

It’s an existential question as much as a practical one. The label is sold online, after all, at Shopbop andModa Operandi. Buyers for high-end boutiques sit front-row at Rodarte runway shows with admiring smiles. And celebrities love its idiosyncratic, dark, bohemian aesthetic. Brie Larson wore a Rodarte hand-painted dress to the Tokyo premiere of “Room.” Gugu Mbatha-Raw was dressed in Rodarte during April’s White House Correspondents’ Association dinner weekend. Taylor Swift wore Rodarte on the cover of Vogue.

But fashion brands can sometimes be akin to a shadow, to smoke or fog. You see something, but what? Is it a real business — one that turns a profit from what it promotes, that can grow beyond a notion and have an actual impact?

This is a fine time to ask these questions because the designers of Rodarte, sisters Kate and Laura Mulleavy, have been nominated as womenswear designers of the year by the Council of Fashion Designers of America, a prize they previously won in 2009. The winners will be announced June 6 in New York. But what exactly is the industry honoring?

Rodarte is the work of two wildly imaginative designers who dream up impractical clothes. They have a forceful point of view, but there is slight evidence of their commercial growth. Their garments are aspirational and admirable, but for all the plaudits — museum exhibits, a cache of awards, an honorary doctorate for the designers — they have not yet proved particularly influential.

To the extent it exists, Rodarte is a grudging fashion business. The emperor isn’t exactly naked, but he is very scantily attired.

In the glossy universe of fashion, acclaimed companies can bob along for a decade deep in the red. Magazines are filled with ghost garments whose prices are listed as “on demand.” Starlets are dubbed fashion icons based on the free clothes their stylists pick out for them.

And in many cases, critics (yes, me, too) wax rhapsodically about runway productions that often turn out to be just an interesting notion. “We’re looking at clothes that will more or less never get produced,” says Cameron Silver, a Los Angeles fashion expert.

In this world, Rodarte thrives.

But Rodarte is not readily accessible. It is possible for an ordinary but well-heeled consumer to walk into a store or log into a website and make a Rodarte purchase — but doing so will be easier if that shopper is no larger than a size 4.

Rodarte tends to be sold by special order or through trunk shows. Nordstrom sells it only in its Seattle store. Neiman Marcus sells it solely in Beverly Hills. And instead of delivering four or more collections a year, as other brands do, Rodarte delivers two.

The designers have talked of building a business of global proportions but have held fast to independence and, according to a spokesman, shunned investors. It remains a private, independent company — with no CEO.

The Mulleavy sisters declined to be interviewed for this story.

“I admire their creativity and commitment to their vision,” says Robert Burke, a retail consultant who met with the designers when the brand was in its infancy. “But to be relevant and sustainable and large enough to make an impact on the industry, there has to be some business structure.” Rodarte does not have a scalable business plan, Burke says — which is akin to saying that it doesn’t really have a plan at all.
“They value the creative expression more so than the business,” he says.

The companies with whom Rodarte came of age have surpassed it by most measures of maturity — without their inventiveness suffering. Jason Wu now has a lower-cost secondary line, and Proenza Schouler has branched out with a lucrative line of handbags and shoes, a free-standing store and a comprehensive e-commerce platform.

The Mulleavys, meanwhile, have thrown themselves into a variety of side projects — designing the costumes for “Black Swan,” directing their own film — that have nothing to do with building the core business. “Fashion is one way to express ourselves,” Kate Mulleavy said in a videotaped Vogue interview, an “interesting amalgamation of all the things we’re interested in.”

The Mulleavys, who founded the company in 2005 while living in their parents’ Pasadena home, emerged seemingly fully formed, out of nowhere. Neither attended design school. At the University of California at Berkeley, Kate majored in art history and Laura in English.

When they brought their debut collection to New York, it was their first trip to the city, and their work ended up on the Feb. 3, 2005, cover of Women’s Wear Daily under the headline, “Starlet Chic.” The Rodarte creation story casts the designers as outsiders and idiot savants who made an entire industry swoon to their imagination.

“I thought the clothes were beautifully made,” recalls Silver, founder of Decades, the Los Angeles vintage haute couture boutique. The sisters sent him handmade paper dolls “dressed” in their collection, along with a request to meet with him. “There were these feather treatments on coats. They evoked what L.A. originally exported in the 1940s and 1950s. . . . They weren’t doing sweatpants or retro knockoffs. They were fresh clothes.”

He was impressed enough to introduce them to friends in the fashion industry, including Susan Foslien, whose Susan of San Francisco boutique became one of the brand’s earliest retail supporters, though she has since dropped it.

“They didn’t have access to great manufacturing,” Foslien recalls. “A lot of it happened on their kitchen table.”

Rodarte clothes are often beautiful and occasionally jarring. But they are always fascinating and most definitely labor-intensive. The designers are fond of hand-beading, hand-painting, distressing and even burning their garments.

The quintessential Rodarte dress is a collage of eclectic materials assembled in an impressionistic manner to tell a story that only the designers fully comprehend. If they were on “Project Runway,” they’d win every unconventional-materials challenge.

Some of their most accessible work was in their fall 2014 show, which the Los Angeles Times described as “the strongest collection of their career.” The pièce de résistance was a group of silk charmeuse gowns featuring artwork from “Star Wars” — images of R2-D2, Luke Skywalker and Yoda.

But these dresses were never intended for sale — just magazine fashion shoots, museum collections and, perhaps, a walk down the red carpet.

Is the company profitable? The designers’ longtime spokesman, Brian Phillips, says that it is. But $10,000 coats, $15,000 dresses and $2,000 blouses — the garments that have made Rodarte’s reputation — typically do not form the foundation of a business.

Indeed, during a 2010 talk at the Smithsonian’s Cooper Hewitt Design Museum, Laura Mulleavy noted that after pricing a complex leather jacket “fairly” — at least in the parallel universe of high-end frocks — it became impossible to recoup the cost of materials and labor. More than a decade after launching their company with their mother’s maiden name, they are still not much beyond “garments you make personally,” as Laura noted in a recent interview on Vogue.com.

Their most widely available and successful products are the “Radarte” T-shirts and hoodies that sell for about $150. The designers have also done one-off projects for Target and H&M.

Laura and Kate Mulleavy are not the first designers to have buzz and acclaim far beyond their financial footprint. Isaac Mizrahi’s fame exploded with his starring role in the documentary “Unzipped,” though the very business it chronicled was not profitable. Reed Krakoff left a successful career as the creative director of Coach to launch a high-end brand under his own name — but dissolved the endeavor after he could find no way forward financially.

Still, Rodarte is different. As one New York-based stylist noted, it did not come out of the American sportswear template. The clothes function as artistic currency, meant to inspire and transport viewers to an alternative reality.

“How does one measure success?” muses Bergdorf Goodman executive Linda Fargo. “Is it the volume of your business, or your depth and degree of creative reach and satisfaction?”

Yet, Rodarte’s imprint has been contained. Other designers have had limited sales — but made up for it in influence. Thom Browne’s shrunken men’s suits have made aesthetic ripples throughout fashion that far outpace his financial growth. And despite the confounding aesthetics of Comme des Garcons, countless designers cite its influence.

Rodarte, though, has existed within its own universe. “What appealed to me was their obsession with a few particular things” such as redwoods, California condors or Japanese horror films, says Caroline Baumann, director of the Cooper Hewitt. The museum’s 2010 Rodarte exhibition plunged visitors into the designers’ “brains and the way they think and work,” Baumann says. “We’re all about process, and that’s what was unveiled.”

Like many high-profile designers of their generation, the Mulleavys cycled through contests aimed at supporting up-and-comers. As runners-up in the CFDA-Vogue Fashion Fund, they were assigned James McArthur, then an executive with Gucci Group, as a mentor.

“We spent some really good time together in Paris and by phone, making sure they were laying the right foundations for their business,” McArthur says. The sisters were “very hungry to learn, super attentive and. . . absolutely keen to develop their business in a way that would offer strong growth prospects while protecting, importantly, their independence and clarity of vision. That’s not always an easy balance to strike.”

“I know they had their sights set on being, someday, big like Chanel,” Foslien says. But prices aside, “there are very few people who can wear those clothes.”

Not even the Mulleavys. “I don’t want to wear my own clothes,” Laura Mulleavy said during her Cooper Hewitt talk. “I like simple clothes, but I don’t like to make simple clothes.”

Meanwhile, with their two idiosyncratic collections a year, the sisters seem to have achieved creative satisfaction at a time when many other designers are lamenting the hamster wheel of their professional lives, pressured to churn out four or five collections annually. “Fast fashion has leapt over into luxury; [the industry is] trying to create fast-luxury,” says Foslien. “No one is going to be able to work at that horrible pace.”

A fairy-tale beginning took the Rodarte designers from obscurity to center stage virtually overnight. Now, they shun expansion in favor of control.

But should the industry offer the top CFDA honor to a label that aims to be more of a personal creative outlet than a scalable business? Rodarte is nominated this year alongside Joseph Altuzarra, Marc Jacobs, Proenza Schouler and the Row (helmed by another sister duo, Ashley and Mary-Kate Olsen) — which are all decidedly more attentive to sales.

Is the best womenswear designer the visionary who works in isolation or the one who alters the business landscape and touches even those consumers who never walk down a red carpet?

“You have to answer to the point of the industry,” Silver says. “That it’s a business.”

BUSINESS OF FASHION: Why Americans Aren't Shopping

BUSINESS OF FASHION: Why Americans Aren't Shopping

BUSINESS OF FASHION | LAUREN SHERMAN

NEW YORK, United States — The US economy hasn’t looked as bright since before the dark days of the Great Recession. In April 2016, the unemployment rate held steady at 5 percent. The same month, 160,000 new jobs were created. (Less than projected and slower than in recent cycles, but still double than what is needed to keep up with population growth, according to economists.)

Gas is also delightfully cheap. As of May 11th, the average price for a gallon of petrol was $2.20, down from $2.70 a year ago. The US housing market is up as well, according to the National Association of Realtors. In March 2016, contracts to buy previously owned homes were the highest they’ve been since May 2015.

And while Federal interest rates rose in December 2015 — from a range of 0 percent to 0.25 percent to a range of 0.25 percent to 0.5 percent — in March 2016, the Federal Reserve announced that it would halt plans to raise rates further, due to overall weakness in the global economy, a move that would be expected to boost borrowing — and spending.

But while personal income and disposable income increased by 0.4 percent in March, consumer spending inched up just 0.1 percent, according to the Bureau of Economic Analysis. In fact, consumer spending has been decelerating, ever so slightly, for the last three quarters.

In April 2016, retail sales were up 1.3 percent, the largest increase in more than a year, according to the Commerce Department, prompting some to see evidence of a ‘comeback.’ But US consumers remain skittish.

There is an eery stillness in American retail that doesn’t quite add up with the relative stability of the country’s economy.

Fashion retailers have certainly been feeling the squeeze. The sluggish momentum is illustrated in the individual earnings reports of brands and retailers. Comparable store sales at Saks Fifth Avenue were down 1.2 percent in the quarter ending January 31, 2016. For the Neiman Marcus Group, comparable store sales were down 2.4 percent during that same period. Gap Inc.’s comps were down 5 percent year-over-year for the quarter ending April 2016. And Macy’sweak first-quarter 2016 report — which included a 5.6 percent drop in comps —sent ripples through the stock market, as the S&P 500 dropped for a third week in a row, with apparel stocks falling to a three-month low. “We are seeing continued weakness in consumer spending levels for apparel and related categories,” said chief executive Terry Lundgren in a note to executives. “In particular, our sales trend relative to expectations meaningfully slowed beginning in mid-March, and first quarter results are below our original outlook.”

There is an eery stillness in American retail that doesn’t quite add up with the relative stability of the country’s economy. In the past year, the US has been viewed globally as a place of opportunity. A still-weak Chinese economy, a turndown in European tourism related to terrorism fears, and an overall uncertainty in the global marketplace made the US feel like a safer bet. But the American shopper remains wary. In fact, the Consumer Confidence Index dropped to 94.2 in April from 96.1 in March.

The whys of these circumstances are wide ranging, and have broader implications than a few months of weak sales. They suggest that retail as we know it is forever altered.

“When oil prices, unemployment, and gas prices are low — and interest rates aren’t necessarily high — generally people want to go shopping,” says retail and fashion consultant Robert Burke. “I think that there are some factors that did not exist to the degree that they do today that have changed the patterns and the way in which people shop.”

One such factor is the increasingly unpredictable weather. The majority of the US experienced an unseasonably warm winter and an unseasonably cool spring, meaning many retailers have already begun marking down their warm-weather product long before the peak of swimsuit season. While some nimble retailers can adjust inventory to an extent to better serve the conditions outside, most are wedded to the merchandise they ordered six months ago.

Another component is the presidential race. While retail is traditionally soft in an election year, the presence of a polarising candidate like Donald Trump has intensified the effect. “I’m in the malls three-to-four times a week, and all we hear about is the uncertainty around the election,” says Gabriella Santaniello, retail analyst at A Line Partners. “Sales associates are talking about it in the stores, and that’s unprecedented. I do think that it’s touching consumers at all socioeconomic levels.”

What’s more, consumers are still recovering — if not financially, but emotionally — from the Great Recession, which wiped out many retirement accounts and sent millions of homeowners into foreclosure. “A lot of people have post-traumatic stress disorder when it comes to spending,” says Todd Knoop, an economist at Cornell College. “The economy has evolved more quickly than people’s [thoughts] on how the economy is doing.”

But the recession also trained consumers to think differently about pricing. Thanks to season-end fire sales, near-continual markdowns and an increase in off-price retail channels, consumers expect virtually everything to eventually go on sale. “The increase in promotions has had a ripple effect,” Burke says. “The luxury shopper used to be embarrassed to compare price or ask about price, and it’s commonplace today.”

Skittish customers equal skittish retailers, who have been more conservative in their merchandising approach since the Recession. The resilience of skinny jeans — which remain the core of many denim collections — speaks to this. “Retailers are afraid of making a statement,” Santaniello says. “We’ve been looking at relatively the same trends for the past five years.” When retailers do a adopt a new look — such as the off-the-shoulder blouse — they tend push every brand to offer their own version, creating more homogeneity within the store.

There has been a shift in values as well. A certain set of consumers — perhaps those with more expendable income — are wedded to buying fewer items of higher quality, turned off by conspicuous consumption. Many have also shifted their spending from things to experiences. “As a whole, the customer is more discerning about how she spends,” Burke says.

However, post-recession conservatism is only one part of the equation. The breakdown of the economy happened to coincide with the rise of digital commerce, which has not only allowed consumers to easily comparison shop, but also encourages them to be more brand agnostic. “All of the sudden your consideration set is much bigger when you’re searching via the web,” says Lauren Kaufman Witten, head of retail at research firm L2. “For example, if you’re searching for a Christian Louboutin shoe, three quarters of the first page of Google real estate goes to paid search.” That means a consumer will not only see those glossy red soles, but also paid advertisements for often-like-minded brands.

That increase in options has created less loyalty among consumers, who are driven more by pricing and styling and less by the mythology around a name. “When was the last time brand was important, really?” Santaniello asks. “It might have been right before the recession when aspirational luxury was on the rise.”

To be sure, brands and retailers alike shouldn’t expect a post-recession boom any time soon. “Overall, consumers do seem more cautious than a decade earlier, but that is good news,” argues Barry P. Bosworth, senior fellow of economic studies at the Brookings Institute, noting that, over the past three years, the saving rate has remained stable at about five percent of disposable income. “Certainly that is a more conservative pattern of behaviour than in the boom years of the late 1990s and the period before the financial crisis, but it strikes me a quite normal or sustainable type of behaviour.”

BLOOMBERG: Meet the Man Who Makes the Perfect Dress Shirt

BLOOMBERG: Meet the Man Who Makes the Perfect Dress Shirt

BLOOMBERG | DRAKE BENNETT

One of the first things fashion designer Tomas Maier produced when he started his own label 19 years ago was a bikini.

It was a natural choice. The line focused on “time off”—something very much on Maier’s mind after 20 years with the punishing travel schedule of an in-demand freelance designer. At the time, he was in the process of moving to Miami, and the inherent challenges of the garment appealed to him: A swimsuit has to function both wet and dry, and it has to flatter with a bare minimum of material.

And for the wearer, swimsuits can be stressful. “For people to get undressed is not easy,” Maier says. Stripping down to a bathing suit is, as he puts it, “an uncomfortable time.” The job of its designer is to reassure.

Today, the German-born Maier is one of the most important designers in luxury fashion—but not because of his bikinis. In 2001 he was hired as creative director of Bottega Veneta, an Italian fashion house best known for leather goods made with an artisanal weaving process called intrecciato. The company had fallen into obscurity and debt when Tom Ford, then creative director of its owner, the Gucci Group, asked Maier to run it. Within a few months, Maier introduced the Cabat, a simple, logo-less intrecciato tote. It set off a feeding frenzy among high-end handbag enthusiasts that continues today. In 2012, Bottega passed $1 billion in sales; the Gucci Group is now called Kering, and its brands include Yves Saint Laurent, Balenciaga, Stella McCartney, and Alexander McQueen. Bottega is the second-largest of them, after Gucci itself.

All along, Maier has continued to run his eponymous label, like a chef splitting his time between a grand palace of gastronomy and a neighborhood bistro (albeit one that happens to be in a very nice neighborhood). Over the years, Tomas Maier—or TM, as it’s informally known inside the company—has expanded from a single store in Miami to locations in Palm Beach, Fla., the Hamptons, and New York City. It sells at Bergdorf Goodman and Barneys and online through Net-a-Porter and Mr Porter. In November 2013, Kering announced a joint venture with the label, investing an undisclosed amount, and a year later, the brand got a new CEO in Giuseppe Giovannetti, formerly an executive with Bottega Veneta. Last year, Maier opened a second New York store and one in Bal Harbour, Fla., and in February he rolled out his first line of sunglasses.

Unlike Bottega, with its 3,400 employees and its ethos of Venetian craftsmanship, Tomas Maier was created from scratch. Maier and his longtime companion, Andrew Preston, wanted to sell the kinds of clothes Maier himself wears: luxurious but functional, cool and comfortable. The brand reflects his temperament, his values, and his remarkably productive love-hate relationship with fashion. “It’s in many ways how the sophisticated fashion consumer dresses,” says Robert Burke, a luxury retail consultant and the former fashion director at Bergdorf Goodman. “There’s a casualness to it. It’s not complicated, and it’s extremely versatile.”

Just after Christmas, I went shirt shopping at the Tomas Maier store on Madison Avenue in Manhattan. I have issues with every button-down I own. Either the tail is too short or the sleeves too long; the chest is too tight, the collar too big. I have pants and shoes I like, and I’m pretty happy with my watch. But a shirt that stays tucked in, that doesn’t need to be pressed, that looks good with or without a sportcoat or over a T-shirt? I’ve been looking for that for a while. If I lived in L.A., I might obsess over cars; if I lived in ancient Egypt, I might have fixated on tomb design. But I live in New York, so I think a lot about things like shirts.

So does Maier, of course. Even among fashion designers, he’s famously meticulous. Walking through his Palm Beach store, he takes a cashmere sweater off the rack and turns it inside out to show me how it was knitted without seams down the arms, using a special machine so nothing will interrupt the wearer’s feeling of arm-encircling softness.

The clothes are expensive—men’s cashmere sweaters are $875, cotton shirts $295, chinos $485—yet Maier says he’s aiming for “the lower spectrum of the design world.” The term industry analysts use is “accessible luxury.” The prices, Maier says, reflect that his clothing is made not in the Third World but in Italy, in the sort of workshops that have special seam-obviating knitting machines. The prices would be even higher if he didn’t eschew runway shows and ad campaigns, and they are at least within the same realm as mass-market brands. You can, after all, spend $150 on a shirt at J.Crew. Maier says you should just wear your Tomas Maier shirt twice as often.

Maier himself does something like this, though not for financial reasons. He wants to limit how much he thinks about the clothes he wears, something that at first sounds odd coming from someone who makes clothes for a living. But Maier doesn’t want to worry about fashion when he doesn’t have to. “I would rather sit and read the paper for 10 minutes longer than figure out some elaborate outfit in my closet,” he says. He buys multiples of the same few garments: dark jeans or chinos; white or light blue shirts; navy, dark gray, or black sweaters. “And that’s it.” He pauses. “Occasionally there’s an army green.”

The day we meet in his design studio in Delray Beach, Fla., is one of those occasions. He’s wearing an army green fatigue jacket over a charcoal tank top and dark, slightly faded chinos—all from his own line—and black Nike running shoes. Delray Beach is an unlikely place to find Maier. Twenty miles south of Palm Beach, it’s full of wealthy retirees, but it’s also home to dozens of halfway houses, making it the rehab capital of the U.S.

Maier ended up here somewhat by accident. At 19 he’d fled Pforzheim, the small southwestern German city where he grew up, to study fashion in Paris at the Chambre Syndicale de la Haute Couture. He worked for fashion houses such as Hermès, Sonia Rykiel, Guy Laroche, and Revillon, but it was exhausting. “I would fly to Italy on Sunday night, work in Italy Monday and Tuesday, come back, work in Paris at one place on Wednesdays, work at another place in Paris on Thursday, work at another place in Paris on Fridays,” he says. The following Monday it would be off to central France to work in a client’s factory. “At some point I said, ‘I have to change my life,’ ” he recalls. “And that’s when I started to think about doing my own thing, very small.”

Maier had already been talking with Preston—an American who had worked in Paris for the U.S. Department of State—about starting a fashion line. With Preston handling the business side, they showed their first collection in Paris and Milan in 1998. The Venezuelan entrepreneur Carmen Busquets, a founding investor in Net-a-Porter, met Maier and Preston at the apartment that doubled as their showroom in Paris. She fell in love with the bathing suits and the cashmere wraps Maier was making to go with them. “I spend a lot of time in the Caribbean, I love to be in nature and I live in Verbier,” she said via e-mail. “If I go for a 7 a.m. or 6 p.m. swim, you don’t want a dress; you want a towel and cashmere! Nobody mixes luxury and lifestyle like Tomas.”

In 1999, Maier and Preston moved full-time to Florida. Miami had always fascinated the designer—the architecture and chaos and seediness. “It was a danger zone,” he says. “I liked the geography of it, and I liked the mix of different people that had to get along. I found it very cosmopolitan in a way, like the future.” Miami’s actual future was mostly garish hotel towers and condo developments, however. When it arrived, Maier retreated to Palm Beach County, which was far enough away from Miami for his sensibilities but close enough that he could still get quickly to an international airport.

He lives a hermetic life when he’s in Florida. He’s either in the Delray Beach studio or at the home he and Preston own nearby—he also has houses in Montauk, N.Y., and on an island off the coast of Maine. Maier bought the studio, originally an industrial bakery, from the Cuban artist Enrique Martínez Celaya, and the concrete floor is still gridded with paint. In the kitchen there’s a Julian Opie print of a woman stripping off her clothes, her face a blank circle. “I love to retreat to this space, because there’s no distraction,” Maier says of the studio, where he will bring creative teams from both Bottega and Tomas Maier. “They love to come here, because once we’re in here, the door is closed and we’re in this big space and we just work. We order lunch in, a salad or whatever. It’s very focused,” he says.

Maier is dismissive of designers who rely on recognizable flourishes. “I never do collections that have themes. I hate that,” he says. “ ‘Oh, it’s a movie,’ you know. ‘It’s inspired by a trip to Bhutan.’ Some crap like that.” Against one wall in his studio are two giant “mood boards,” the starting point for every collection. In mid-December they’re pinned full of photos: a 1920s skier, a Scottish lord in his tartan, a gamin in penny loafers, an old burgundy-plaid car interior, a young Asian man with a close-shaved scalp and a baggy sweater, an art-cluttered room with a blazing hearth.

The boards, Maier believes, allow him and his team to pick out the currents in his clients’ ever-shifting taste. “It’s mostly very abstract,” he says. Do people want rounded shapes or angular ones? Are they thinking about nature or the urban jungle? How adventurous are they feeling? “Would people rather stay home? Or is it more like they want to explore, because they haven’t been traveling for too long?” he asks.

Maier is, at heart, a preservationist. He isn’t afraid to revisit clothes from previous collections and build off them. “To his credit, he is unaffected, he is the same Tomas I met years ago,” writes Busquets. “We often meet up in Miami, Paris, Milan, New York, and Capri. I tell him, ‘Tomas you need to do Tomas Maier hotels, they would be amazing!’ ”

Maier’s Madison Avenue store occupies the bottom two floors of a 19th century town house with a 1920s art deco facade. The floor is pale oak, and light floods in through a quartet of two-story-tall front windows. Between the racks, in bronze vitrines and on dark wood shelves Maier designed, are books on the architect Louis Kahn, limited-edition Diptyque candles meant to evoke the scents of Montauk and Maine, and earrings from the Milanese jeweler Osanna Visconti di Modrone. Near the door are two Stone Age-style fertility statues, each the size of a child, that French furniture designer Christian Astuguevieille made from coiled rope. There isn’t actually much clothing on display.

Creativity for Maier is a matter of time management. He divides his schedule into weeklong chunks—a week for an upcoming Tomas Maier men’s show, a week for an upcoming women’s show, a week for the furniture line or fragrance he’s developing for Bottega. He does this both to allow time to immerse himself in a project and to give the employees working on it his undivided attention.

For Maier, luxury, too, is a matter of time. He hoards spare hours. “I have to be very organized, to know ahead that, ‘OK, Saturday, I can go to a museum,’ ” he says. The son of an architect, he plans trips around buildings he wants to see. He’s been trying to get to New Haven to see the ice rink and art galleries Eero Saarinen and Kahn built at Yale. He hired the Japanese architect Toshiko Mori, whose spare style matches his own, to build his house in Maine.

In photographs, Maier can look stern, but in person he comes across instead as shy. His clothes are for people who, like him, would prefer not to be the center of attention. “If you don’t feel comfortable around yourself, you don’t come over right, either,” he says. “I like to give men—and women—just that little extra something, that thoughtfulness. The proportions are right, the coloring. It’s the right silhouette but without looking like they want to make a statement through their clothes. You make a statement through who you are and what you’ve got in your brain, right? That’s how you make a statement.”

There’s a character in an Alice Munro short story who, feeling her age, decides to freshen up her look. But she warns herself, “You have to watch out, even in these garish times; you have to watch for the point at which the splendor collapses into absurdity.”

That line sticks with me in the Madison Avenue Tomas Maier store—the unspoken contract he makes with his clients is that they will never look like they are trying too hard. Although his current collection does include a few pieces—a zip-front green-and-purple velvet sweatshirt, for example—that could make a pretty loud statement, for the most part the clothes exude a muted richness. To keep the racks uncrowded, the shirts are kept in wide oak drawers. Customers are encouraged to pull them out on their own, imagining they’re at home deciding which of their many artfully rumpled shirts to wear. I try on a blue oxford. The back is darted so it doesn’t blouse. It doesn’t cling. It is, as promised, the right silhouette. The only flourish is the Tomas Maier logo, a salmon-colored palm tree near the front hem. When I tuck the shirt in, it disappears.

BUSINESS OF FASHION: Will subscription services work for fashion?

BUSINESS OF FASHION: Will subscription services work for fashion?

“It’s a very different mindset to say I will try or sample skincare, versus I will wear a piece of clothing or fashion that’s been selected for me,” adds retail consultant Robert Burke.

BUSINESS OF FASHION | HELENA PIKE

LONDON, United Kingdom — Monthly subscription isn’t exactly a new concept.  Wine-of-the-month-club memberships have been around for decades, and who can forget the Columbia House mail order CD club?

But today, subscription services have become an integral part of the way modern consumers shop, with companies such as Netflix and Spotify leading the charge. Consumers “are very comfortable with buying online, with buying unknown commodities, with buying products and then letting someone else select it for you,” says Marshall Cohen, chief industry analyst at the NPD Group, who predicts that subscriptions will become an additional retail channel, alongside e-commerce and bricks-and-mortar.

Subscription box companies charge customers a recurring fee to receive boxes of products — from fresh fruit and vegetables, to dog treats, to disposable razor blades — on a regular basis. Since 2012, the number of companies registered through My Subscription Addiction, an online directory for the market, has sky-rocketed from just 200 to over 2,000. In 2014, the subscription commerce industry generated $5 billion in revenue, according to Cratejoy, an online platform that helps users build their own subscription businesses.

Subscription box businesses enjoy a few advantages over other retail models. Subscription businesses operate a recurring revenue model, which requires consumers to pay a regular fee — once a customer commits, they are a guaranteed source of income for at least a month, and usually longer. Because of this, the company can predict its revenue stream, allowing management to plan and invest accordingly.

As a result, subscription services can invest heavily in growth and are often quick to gain momentum. Birchbox, a beauty subscription business that sends customers a selection of makeup samples every month, launched in September 2010 and acquired 1,200 subscribers in the fourth quarter of that year. Today, Birchbox has over a million subscribers, according to the company.

So it’s no surprise that dozens of fashion companies have also tried their hand at the subscription game. In the last six months alone, the subscription-based fashion and jewellery rental services Le Tote and RocksBox have raised $15 million and $8.7 million, respectively. Start-ups in the space include Golden Tote (which sends customers a monthly selection of clothing, costing upwards of $49), Elizabeth & Clarke (quarterly deliveries of white shirts, costing $60), Adore Me (a monthly lingerie selection for $39.95) and Avenue A, Adidas’ subscription service for women’s sportswear, which launched last month and costs $150 a quarter.

But for each of these, there are several more subscription start-ups that have faded into oblivion. Clothing companies CakeStyle, Wardrobe Wake Up and Swag of the Month, activewear brand Ellie and underwear suppliers Ditsies and the Knicker Issue are just a few of the fashion subscription services to have closed in the last few years. BeachMint, the parent company of six fashion subscription brands, raised over $70 million in funding but was quietly shuttered after being acquired by Condé Nast’s now-defunct Lucky Group in 2014.

Indeed, unlike beauty or accessories subscription boxes — or subscription streaming services like Netflix and Spotify — fashion companies trying to tap this business model face a unique set of challenges, related to sizing, personal taste and product accumulation.

Too much stuff

Thus far, the most successful subscription companies don’t require the customer to handle a physical product. In 2014, music-streaming service Spotify’s annual revenues reached €1.08 billion (about $1.21 billion), up 45 percent on the year before. Netflix has grown dramatically since adding digital services to its DVD rental programme. Today, the company (which reported $6.78 billion in sales in 2015) has over 75 million users, compared to just 7.5 million in 2007, the year it launched online streaming.

Streaming services allow users to listen and watch whatever they want, whenever they want, without touching a single product. Fashion services, on the other hand, can easily fall into the trap of overloading their customers with too much stuff — there are only so many new t-shirts or ties a customer can receive before fatigue kicks in. “After the fourth or fifth or six month… they usually just check out,” says Robin Lewis, chief executive officer of the Robin Report, a retail strategy publication. “They don’t want another box of clothes every month.” 

To combat the “accumulation trap,” some fashion subscription start-ups offer monthly memberships that allow the customer to borrow clothing instead of purchasing it outright. This week, Rent the Runway, which previously focussed on one-off rentals of high-end fashion products, launched a new “Unlimited” service, which allows customers to borrow as many pieces as they want each month through a rolling subscription.

At Gwynnie Bee, a subscription-based rental service for plus-size clothing, subscribers borrow an average of eight to nine pieces per cycle and pay upwards of $49 a month. The company adds new styles to its website every other day. “You have to constantly bring the customer newness and freshness and provide them with things that they feel they need to try,” says Christine Hunsicker, chief executive officer of Gwynnie Bee. Since launching in 2012, the company has delivered more than three million boxes across the US, becoming the largest buyer of plus-sized clothing in the country. The company declined to disclose revenues but says sales grew, on average, 15 percent per month for the last 12 months.

This is less of a problem in the beauty subscription market, where companies send customers boxes of samples, which are disposable, cheap and allow customers to try new products before deciding to buy the ones they want. As well as its subscription business, Birchbox operates an e-commerce store, which accounts for 35 percent of the company’s revenue and is the fastest-growing part of the business. “[It’s] really an industry about discovery,” says Birchbox founder and chief executive officer Katia Beauchamp. “The subscription helps you discover and then be able to purchase in a really easy, efficient and delightful way.”

Sizing and personal style

While most subscription boxes across categories such as beauty or food are non-refundable, for fashion companies, sizing issues present an additional hurdle: refunds. “If you’re sending clothes, then you have to allow some way for consumers to exchange, if not return, those items,” explains Liz Cory, founder of My Subscription Addiction.

“You have a high chance of getting things wrong — that the customer won’t like it, that it won’t be the right size, that the colour is not exactly what they want,” says Hana Ben-Shabat, a partner in the retail practice of management consultancy firm A.T. Kearney. This can dramatically impact the profitability of the business, especially if it offers free shipping and returns, she adds.

Indeed, another issue is personal taste. “Clothing is super personal,” says Hunsicker. “Everybody has their specific taste and preferences — much more so than for a make up or beauty service.”

“It’s a very different mindset to say I will try or sample skincare, versus I will wear a piece of clothing or fashion that’s been selected for me,” adds retail consultant Robert Burke.

One way around this is to let customers pick out the items they receive through their subscription. For $39.95, subscribers to JustFab, the fashion retailer that also owns the sportswear and shoe subscription services Fabletics and ShoeDazzle, receive a credit each month to spend on the site. To opt out of the charge, subscribers have to come back to the site at the start of the month. “Our customers are obligated to come back once a month,” says Adam Goldenberg, co-founder and chief executive of the company. On average, customers only make three to four purchases a year, but visit the site two-and-a-half times a month. “We don’t have to pay to reacquire customers through advertising… it’s allowed us to sell amazing product at a much better price than you can find with the competition,” he explains.

Other start-ups are attempting to personalise their subscription boxes, based on information they have about their consumers. Personal shopping service StitchFix lets customers schedule how often they want to receive its boxes of clothing, the contents of which are selected through a combination of human stylists and algorithms. “Certainly we have the biggest data science teams in retail, with over 50 data scientists… to provide really, really accurate recommendations,” says Katrina Lake, founder and chief executive of StitchFix. An algorithm suggests styles for an individual customer, which stylists can make a selection from, based on data and conversations they have had with the customer. “The algorithm is able to say probabilistically what is most like to be kept,” she explains. The method seems to be working: over 80 percent of users return for a second “fix” within three months. The company declined to disclose revenues.

But investing in building complex algorithms, large data science divisions and teams of personal stylists is a costly investment for a young business. It’s also an investment that beauty and jewellery subscription services don’t have to make: these businesses can send subscribers a selection of similar products, allowing them to buy the contents of their boxes in bulk and benefit from economies of scale — a saving that translates into larger profit margins for the company and better value for the customer.

“We’re in the midst of a massive shift in consumer demand… the traditional retail model is fading away. In its place, the companies that are thriving provide convenience, personalisation and the ability to try new things without commitment or large risk, ” says Brett Northatt, who founded subscription-based fashion rental service Le Tote in 2012. In the last two years, the company has experienced a compound annual growth rate of 450 percent.

However, many remain sceptical about the scalability of subscription services in fashion. The subscription box model works with “products that are consumable, that [customers] use on a daily or weekly basis,” says Robin Lewis. “When it comes to fashion… there just aren’t enough people that want to keep getting this stuff shoved at them every month that would allow the business to make a profit.”

WALL STREET JOURNAL: For Tory Burch, the Store Is Her Clubhouse

WALL STREET JOURNAL: For Tory Burch, the Store Is Her Clubhouse

WALL STREET JOURNAL | ELIZABETH HOLMES

In the age of e-commerce, is an expensive, flashy store really necessary?

Tory Burch made the case for yes on a tour of the designer’s new Tory Sport store in New York City. It is the first permanent retail outpost for a fledgling brand in the world of athleisure, the fast-growing, still-confusing mode of dressing that has overtaken the apparel industry.

At Tory Sport, tennis dresses and sports bras hang alongside wide-leg sweatpants and knit midi skirts. Ms. Burch stretched the knee of a pair of yoga leggings to show the thickness of the fabric. She turned a running jacket inside out to reveal its seamless construction. She stroked the sleeve of a cashmere sweater with “Coolmax” fibers, designed to wick moisture and be cool to the touch.

It was the kind of hands-on experience that even the sleekest website can’t reproduce. “People are still tactile. They want to feel the product,” says Ms. Burch, the designer, chairman and co-CEO at Tory Burch LLC.

Among the more popular items at the Tory Sport store are a $395 tennis tote, right; a tennis sweater, left, with Coolmax fibers costs $325 and a laser-cut tennis skirt costs $395. 

Tory Sport has been available online and at a single small store (the brand calls it a “pop up” location) since last fall. The big new store, which opened March 18 on Fifth Avenue, is a significant investment for the brand and a potential launching pad for stores to come.

Stores are changing, Ms. Burch says. Their purpose is to engage customers and to build a community. They also can be a place where the online and offline worlds merge. A big cube in the middle of the Tory Sport store has an interactive tabletop where customers can view projected images from the Tory Sport lookbook.

Does anyone need a $350 navy ponte blazer with a white, hooded, zipped-in nylon dickey? Probably no. But when you are in the store, can you imagine throwing it over a sleeveless white piqué tunic dress ($225) after a tennis match? Or pairing it with cropped flared pants ($185) for a business lunch? Somehow, yes.

With just one or two sizes of most styles on display, the Tory Sport store isn’t meant to be shopped the way mass-market flagship stores are. Those behemoths, chock full of product, have a stack-’em-high-and-watch-’em-fly approach. (A Tory Sport spokeswoman says the store carries the full size range.)

Swimwear at Tory Sport is designed for performance, with built-in sun protection, while the swimwear sold in the Tory Burch line is fashion first. 

Instead, a designer store is a place to immerse and entertain shoppers in the fictitious, tightly controlled world the brand creates. It’s a chance to show and explain all that a brand stands for—and to seduce a shopper into buying something.

Such stores are an effective form of advertising. They are a good way to introduce customers to a new fashion concept, says Robert Burke, a luxury retail consultant. He points to a spate of new store openings in New York City, including the new uptown store for bohemian label Isabel Marant, and Sonia Rykiel’s library-like boutique. Menswear label Todd Snyder is opening its first U.S. store this fall in New York, with a tailor shop and a whiskey bar.

“The major statement and purpose is to make the announcement: ‘This is who I am, this is my brand,’” says Arnold Aronson, managing director, retail strategies, at Kurt Salmon and former chief executive of Saks Fifth Avenue.

Many designers see their own stores as a direct line to the consumer, more controlled (if also more costly) than selling through crowded department stores. It isn’t an either-or situation, Mr. Aronson notes. Tory Sport also began selling at select Barneys New York stores this week.

Ms. Burch’s persona and reputation will draw shoppers in; in return, she will get direct feedback from them. “It’s an opportunity for [Ms. Burch] to get a pure unadulterated, unvarnished reaction to what she’s doing,” Mr. Aronson says.

 

Both Ms. Burch and Roger Farah, Ms. Burch’s co-chief executive, insist the Tory Sport store remains very much about sales, though. “We’ve built the store to make money,” Mr. Farah says.

“We definitely want it to be profitable but we also want the experience to be one that people really like and get to know,” Ms. Burch says.

U.S. sales of sports-inspired, performance and outdoor apparel reached $67.4 billion last year, according to market research firm Euromonitor, which projects sales will top $82 billion by 2020.

Tory Sport also comprises golf wear, displayed near Jean Royére chairs that can be moved out to clear space for a yoga class. 

No wonder Tory Burch, like so many brands, is betting big on athleisure. (Ms. Burch and her team don’t use the term, instead calling the in-between apparel “Coming and Going.”) Late last year, Tory Burch laid off about 100 employees, or roughly 3% of its workforce. Mr. Farah says the company shifted resources to its digital team and to Tory Sport. “It’s a very high priority,” he says of the new brand.

Tory Sport appeals to the Tory Burch customer and also to a younger shopper, Ms. Burch says. Price points range from $25 for a knit wristband set to $495 for a laser-cut tennis dress--slightly lower than the Tory Burch line. Around 40% of Tory Sport shoppers online are crossing over from the Tory Burch brand; the remaining 60% are new customers, Mr. Farah says.

With 3,900 square feet of selling space, the Tory Sport store is situated in the Flatiron neighborhood, the hub of athleisure retailing in New York City, near big stores from LululemonNike and Athleta. The shiny-orange lacquer that is a hallmark of the Tory Burch brand has been recast as bright white for Tory Sport.

But that’s where the similarities end. The Tory Sport store evokes a kind of lodge where Scandinavian ski meets ’70s surf, Ms. Burch says. The original Tory Burch stores, in contrast, were inspired by the designer’s own Upper East Side home.

Blue lines along the floor in the front of the store are meant to evoke lap lanes in a swimming pool. Leather railings mimic the handle of a tennis racket. Nickel-plated trim in the entryway to the store’s rear section is etched with a diamond pattern, much like a net. “Every sport has nets,” Renée Viola, vice president of global store design.

Silver beams suspended from the ceiling are mobile displays for hanging clothes. Four Jean Royére chairs and wooden ottomans can be moved out to clear space for a yoga class.

Ms. Burch’s decade in retailing shows: Everything in the new Tory Sport store is mobile and entirely interchangeable—unlike the permanent, heavy fixtures of her first stores. “Our visual team is over the moon. They can move anything they want,” Ms. Burch says.

BUSINESS OF FASHION: Beyond Basics: How Joseph’s Private Label Became Its Secret Weapon

BUSINESS OF FASHION: Beyond Basics: How Joseph’s Private Label Became Its Secret Weapon

LONDON, United Kingdom — When smart Londoners of a certain age think of Joseph, the British retailer’s iconic founder Joseph Ettedgui and his inimitable eye come to mind. From humble beginnings — the Moroccan-born Anglophile started his fashion empire in the 1960s, selling sweaters by the then-little-known Japanese designer Kenzo Takada out of the hair salon he ran with his brother on London’s King’s Road — Ettedgui had, by the time of his death in 2010, built an influential network of Joseph stores spanning London, Paris and New York.

His shops, with their slick, monochromatic palettes and chrome and glass architecture (first designed by Norman Foster), are seen as predecessors to the modern concept store, laying the foundations for Colette in Paris and Milan’s 10 Corso Como. He introduced Chelsea to the likes of Azzedine Alaïa and Helmut Lang and was the first British retailer to stock Prada.

But Ettedgui was a designer in his own right, launching Joseph’s own-brand label in 1972 to provide women with beautifully-made basics alongside his imported designer wares. After all, “An entire wardrobe can’t be made up only of designer clothes,” he explained. Today, the accessibly-priced Joseph brand is the beating heart of the business, accounting for 87 percent of the company’s worldwide sales in 2015.

Indeed, many a London-based fashion editor or luxury industry professional swears by Joseph garments.  “I grew up in London and all the girls at school lusted after a Joseph jumper,” says Lara Mingay of luxury PR firm LM Communications. “It always makes you feel well-dressed. It’s easy to move in, easy to travel in. It’s never loud and always looks chic. It’s like an old friend because it’s always been consistently good.”

A private label is not a novel business strategy among multi-brand retailers. From 2010 to 2015, the global market for private label apparel and footwear grew at a steady compound annual growth rate of 1.9 percent, according to data from Euromonitor. Department stores such as Barneys, Saks Fifth Avenue and Harrods have long produced own-brand collections. Typically consisting of basic pieces at more affordable price points than the designer brands they sit alongside, these lines can be a way for stores to fill in the gaps in their designer offering. Because they are designed and manufactured in-house, private labels have a number of financial and logistical advantages. "You're able to get a very strong margin on these items — you can control markdowns, you can control sales periods," explains Robert Burke, chairman and chief executive of consulting firm Robert Burke Associates.

But while some retailers produce private labels as a way to cover the cost of selling designer brands at low margins, Joseph’s private label has been a vehicle for international expansion. “When I joined the company four years ago [in 2012], I felt that everybody believed that Joseph had the potential to grow itself — not only mixed in with the international brands,” says Takehiro Shiraishi, managing director of Joseph.

For Shiraishi, growing the business through its private label makes more sense than trying to grow the network of multi-brand shops that made the retailer famous. Its mono-brand stores make up the vast majority of Joseph’s retail network (today, of the company’s 100-plus stores, only seven are multi-brand) and in Japan — where Onward Kashiyama, the company that bought Joseph in 2005, is based — only Joseph own-brand stores exist.

Expanding into new markets through multi-brand stores is also problematic. Last year, the business opened its first two Chinese mono-brand outposts in Beijing through a franchise partner and plans to roll out a further 13 in the next four years. “The local knowledge our franchise partners have of their markets is essential to growth when we’re establishing Joseph in a new region,” Shiraishi says. However, “We don’t do mixed branded stores with partners because it is so difficult to control what they buy… We would have to check every brand name they proposed to market under Joseph’s name.”

Concentrating on Joseph’s private label also allows the company to expand its wholesale distribution — a channel Shiraishi sees as “crucial” for exploring new markets, such as Asia and the Middle East.

But pursuing global expansion through the Joseph private label posed two key challenges for the business: competing in the contemporary market, and winning wholesale stockists, which often have large shoe and accessories departments. “We needed to propose a product mix that would complete the Joseph lifestyle,” Shiraishi says. “Other contemporary market designers do 60 percent of their sales from the accessories business. They survive with the accessories line.”

To round out its product offering, this year, the Joseph brand is expanding into two new categories. Shoes, which were launched as part of its Pre-Fall 2016 collection, will arrive in stores in June, while handbags will be introduced for Spring/Summer 2017. Shiraishi hopes to build up accessories to account for 15 to 20 percent of the Joseph brand’s sales.

For businesses looking to make their private labels more relevant, having a greater focus on fashion trends is a way forward, advises Robert Burke. “[Own brands] used to do a big business with v-neck and crew-neck cashmere sweaters. Today, those basics have been filled by the Uniqlos and the J Crews,” explains Burke, who says today’s successful private labels are producing “more of a fashion basic.”

It’s a trajectory that the Joseph label has been following. Under Louise Trotter, its creative director since 2009, the line has become more fashion forward, offering its interpretation of recent trends alongside the classic silhouettes that made Ettedgui successful. Today, while customers might “buy a simple pant from us to wear with a designer piece, they’re also buying Joseph head-to-toe,” she continues. “That’s the advancement.”

But despite its evolving collection, Shiraishi says the brand still lacked awareness amongst international consumers. For retailers trying to transition their private labels into bona fide brands, perception can be their biggest problem, concurs Bernadette Kissane, apparel and footwear analyst at Euromonitor. “Flipping their business models around — going from buying wholesale, to developing a brand, to then being a wholesaler,” poses challenges, she says, but “the biggest catch is to gain the credibility as a brand… It takes a lot to establish and create demand for it.”

“Joseph has always been well known in the UK and the French market,” Shiraishi explains. In February 2014, to put the brand on the map, Joseph made its London Fashion Week debut, holding a catwalk show to celebrate the 25th anniversary of Joseph’s 77 Fulham Road store. The business had already been under pressure from existing wholesale distributors to develop a show collection, says Trotter, who adds that the “incredible” response to the show prompted the company to create a fashion-focused show collection for Joseph every season. The impact of this decision on Joseph’s wholesale business has been tangible. Since 2014, wholesale has grown 10 percent year-on-year, and now accounts (along with franchising) for 37 percent of the Joseph brand’s annual sales.

Other specialist retailers have also benefited from making their in-house labels more fashion-focussed. The Outnet’s Iris & Ink, which launched in 2012 as a 35-piece capsule collection of basics, has since quadrupled in size and added more directional designs that have helped make it one of the site’s top five brands in terms of sales, says Shira Suveyke, executive vice president and chief merchant of The Outnet. Likewise, last year luxury e-tailer MatchesFashion.com launched Raey, a trend-driven private label that “now accounts for substantial numbers in revenue and is always on the bestseller list,” says Ruth Chapman, co-founder and co-chairman of Matches. “The brand is successful because of its strong fashion DNA, rather than being basics or essentials,” she says.

When it comes to creating a successful own-brand collection, according to Robert Burke, specialist retailers like Matches and Joseph have an advantage over larger department stores. “They’re smaller operations, usually dealing with fewer total stores… so the ability for them to be in touch with their customer is greater. [When] you know your customer, you’re able to address their needs,” Burke says.

Department stores, however, are following suit. Last year, Nordstrom — which already had a range of private labels across apparel, accessories, homeware and beauty that aim to “compliment and round out existing national and international brands,” says Mark Tritton, executive vice president of Nordstrom and president of Nordstrom Product Group — launched a private label designed by Caroline Issa, chief executive officer of Tank magazine. This February, the department store debuted another collection in collaboration with street-style star Olivia Palermo.

For Joseph, developing its own brand has contributed to a 20 percent growth in retail sales in the last two years. But while the fashion collections “send our message to the market,” says Shiraishi, it is still the brand’s pre-collection — more in keeping with Joseph’s luxury essentials origin — that makes up the bulk of the private label business. The breakdown between the pre- and show collections “is probably 80/20 or 85/15,” he says.

“Joseph has grown into something much bigger than a private label,” says Trotter. The fashion week stalwarts in London this weekend would agree.

QUARTZ: Coach is now a full-fledged American fashion house

QUARTZ: Coach is now a full-fledged American fashion house

“It has the potential to drive sales and really make [Coach] a total brand, as opposed to just a handbag brand,” says Robert Burke, CEO of retail consultancy Robert Burke Associates, of Coach 1941. “They’ve made a real push with specialty store retailers to be represented there and be sold there.”

QUARTZ | MARC BAIN

Since at least 2013, Coach has been in a sales slump, suffering from its reputation as a peddler of nice but unremarkable handbags, and the fact that Coach bags could often be had at a discount—the kiss of death for any “premium” brand. But now, a look around fashion’s best storefronts suggests that’s about to change.

As of this month, you’ll find clothes by Coach amid the racks of cool, forward-thinking labels at New York’s Opening Ceremony. At Colette in Paris, which buys some of the best European labels, Coach will be there, as it will be at luxury retailers Jeffrey and Saks Fifth Avenue in New York, Luisaviaroma in Florence, and Lane Crawford in Hong Kong, among others. And while some of these shops already carried Coach’s bags, it’s just as much the apparel—patchworked leather jackets and vests, as well as tops, dresses, and skirts printed with bustling, colorful prairie florals, with the label Coach 1941—that are finally steering the “affordable luxury” brand back toward the high-end.

Coach 1941 showed its latest collection at New York Fashion Week yesterday (Feb. 16), after an enthusiastic response to Coach’s first major runway presentation last September. That this line is simultaneously debuting at some of the top fashion retailers around the world could offer Coach’s image a much-needed boost.

There are indications that a turnaround is already taking hold. While the brand’s recent earnings report was far from stellar, it did show improvement. The company has been cutting way back on its promotions while introducing new designs, and CEO Victor Luis remarked in a call with analysts that Coach’s handbag sales in the above-$400 bracket grew to 35% of bag sales, up from around 30% last year. “The increases showed continued progress of our elevation strategy, with higher price points and more fashion-forward products,” he said.

Coach even expects to return to positive same-store sales growth by the fourth fiscal quarter this year.

The designer behind Coach 1941 is Stuart Vevers, a well-respected fashion veteran who previously reinvigorated accessories-driven brands Mulberry and Loewe. The English designer’s clothes and bags for Coach 1941 are cool, easy, and fun, and they have a broad appeal, in keeping with Coach’s accessible “affordable luxury” position in the market. They’ve already added some much needed energy to a brand that had become stagnant.

“There’s a nice, youthful spirit to the ready-to-wear,” says Jeffrey Kalinsky, founder of Jeffrey, which also bought Vevers’s work for Mulberry and Loewe. “It’s not just about a floral dress. It’s about a biker jacket. But the biker jacket is not in black leather. It’s in a shot of color.”

 Kalinsky is also an executive vice president at Nordstrom, which will carry Coach 1941, too. He says even though Coach’s main business is bags, clothing is critical in turning Coach into a complete fashion house. “In an accessory business, ready-to-wear gets to spin the fantasy about who the woman is,” he says.

Some of the clothes are selling well, Vevers has said, but Burke believes they’re more about image than sales. “It’s really meant to help in repositioning the brand and elevating it,” he says.
It’s hard to restore the luster of a brand that been overexposed in the mass-market, but there are noteworthy precedents, including Gucci and Burberry. As Burke points out, Gucci was mostly known as a mass-market handbag and accessories brand before Tom Ford took over as creative director, and made it supremely sexy, in the 1990s. And Burberry was a coat resource until Rose Marie Bravo helped it develop into a complete luxury house.

Whether this year will prove a similar turning point for Coach remains to be seen, but 2016 is important regardless. It’s the 75th anniversary of the company, which started as a family-run workshop in New York—in 1941, of course—making leather goods.

In 1996, Coach hired Reed Krakoff as creative director. He was instrumental in reworking the brand’s image and expanding the business into what it is today. Coach became ubiquitous in American malls and grew internationally, pioneering the affordable-luxury space now filled with American brands such as Michael Kors and Kate Spade. But the shine faded, and Vevers replaced Krakoff in 2014, the same year Luis took over as CEO.

It makes sense in that context that Kalinsky calls Coach 1941 a “natural evolution” of the brand rather than a change of course. It’s more than just a pivot away from recent history—it’s laying groundwork for the future, and it’s making Coach a brand to watch.

  

WWD: Handbag Brands Brace for More Market Challenges

WWD: Handbag Brands Brace for More Market Challenges

“Handbags have been a hot, call-to-action-type purchase, but now customers are looking for versatility and it’s resulted in very subtle trend and branding, which makes it less urgent to update your bag,” said Robert Burke, chief executive officer of fashion industry consulting firm Robert Burke Associates. “What happens when retail is shaky is that customers go back and shop their closet and see what they have.”

WWD | MISTY WHITE SIDELL AND DEBRA BORCHARDT

The handbag market’s been, well, a mixed bag.

Retailers are seeing a swelling inventory of sameness that lacks a “call-to-action” for the consumer to buy, yet investors have turned bullish on a few key players, such asCoach and Kate Spade, viewing these brands as relative bright spots. Stalling the market is the more cautious consumer-spending environment — and shoppers’ seeming unwillingness to buy fashion products — which could trigger even more promotions this spring and further pinch the bottom line of major brands.

Handbag stocks got a much-welcomed lift last week when Coach’s fiscal second-quarter earnings beat analysts’ expectations and gave investors hope that the other accessories brands would have similarly good results. In the two days following Coach’s earnings last Tuesday, Michael Kors Holdings’ stock leaped 6 percent while Kate Spade added 3.5 percent in value and Vera Bradley jumped more than 4 percent.

While Coach’s earnings per share of 68 cents were 2 cents better than consensus estimates, North American comparable-store sales dropped 4 percent, the eleventh quarter of decline, although the best performance in 24 months. So in traditional Wall Street fashion, not terribly bad results was cause for celebration. Most analysts were pleased that Coach’s turnaround efforts seemed to be taking hold and that the company was moving in the right direction under chief executive officer Victor Luis and executive creative director Stuart Vevers.

This week will provide a further temperature reading of the accessories market when Kors weighs in with its results on Tuesday. Kate Spade’s numbers will be out next month.

Regardless of whether those companies show stronger performances, the overall sense of the market is that accessories aren’t the surefire revenue generator they used to be. Gone are the days when shoppers would rush to stores to buy the latest “It” bag or shoe and accessories, like apparel, have suffered from the overall consumer ennui toward fashion.

At least one industry observer says the Internet has thwarted the shelf life of the segment.

For the high-end sector, there seems to be a somewhat confused and “oversaturated” market of designs that evoke the minimalism of Céline and the more-is-more aesthetic now signature to designs by Gucci under creative director Alessandro Michele and Fendi — giving the consumer no clear trend-driven incentive to buy.

“Handbags have been a hot, call-to-action-type purchase, but now customers are looking for versatility and it’s resulted in very subtle trend and branding, which makes it less urgent to update your bag,” said Robert Burke, chief executive officer of fashion industry consulting firm Robert Burke Associates. “What happens when retail is shaky is that customers go back and shop their closet and see what they have.”

“There is definitely a glut of merchandise without a point of view,” agreed Sarah Blair, Barneys New York’s senior vice president, divisional merchandise manager for shoes and bags. “Consumers are looking for newness and something with a good price value. This is not the days when they would buy the same bag in a new color. It used to be that brands were driven by an iconic bag in a plethora of colors, but that trend has plateaued.”

Neiman Marcus’ fashion director for women’s accessories, Ana Maria Pimentel, said: “I think sometimes when the economy fluctuates, designers think it’s easier to be safe, but it’s always best to step it up.”

Pimentel said there is still a “hunger” for accessories, though. “I think where we have seen success is when there is newness; she is not holding back if the product is new and emotional — I don’t think she is even being price-conscious if we are giving her a reason to buy.

“We have seen her slow in things that are stagnant and haven’t changed,” Pimentel added.

In an effort to stir emotion and design persona, labels like Fendi have stepped away from more classic, pared-down styles in favor of novelty bags fabricated in bright colors, with interchangeable straps and charms. “It’s so emotional and cute — people are really responding to that cheerfulness,” said Blair.

She also pointed to Altuzarra’s new collection of saddle bags, Loewe’s small elephant-shaped pouches, and Chloé as strong performers. Heritage labels including Delvaux and Mark Cross continue to entice consumers, she said.

But Burke said the novelty, accessory-for-your-accessory model that Fendi and others is promoting has done the larger market a disservice.
“What worries me about these novelty styles and the ability to accessorize your bag with a strap or ornament, is it means that customers are using an existing purchase…so it may be a reality from a retail perspective that these accessories mean that they don’t have to buy another bag,” he said.
Burke, like many others in the industry, said designs’ overexposure on social media often smothers a design’s success before it hits retail shelves. “Customers are looking at bags prior to delivery and are tired of it [by the time it gets to the store]. It tarnishes in some ways the impulse of a bag purchase,” he said.
“Bags had a lot more longevity before the Internet,” Burke continued. “If you think of the Fendi Baguette bag, it had a very long run. The shelf life for bags today is extremely short because of their exposure online.” He said a cocktail of “design, trendiness and exclusivity” is what now drives a bag’s success.

According to Blair: “It’s a volume business with high margins. I think a lot of people and designers are trying to get involved in this type of business.”

Just a few years ago, the launch of an accessories collection seemed like the surest way to bolster a designer’s bottom line — resulting in an explosion of merchandise. Now analysts are taking more of a wait-and-see approach — even for blockbuster brands like Kors.

Oliver Chen at Cowan & Co. wrote, “We note a cautious read-through for [Michael Kors] and Kate Spade, given Coach’s estimates that the North American premium women’s handbag and accessories market was essentially flat in the December quarter, with unit growth remaining positive, offset by lower [average unit retail]s due to heightened discounting activity.”

Chen said he has “concerns that [Michael Kors] could be under promotional risk, given management’s commentary on competition intensifying and driving higher levels of promotions than anticipated, notably in the outlet and wholesale channels.”

The consensus from FactSet for Kors’ third-quarter results is for $1.46 in earnings and sales of $1.35 billion. That would be lower than the earnings for the third quarter of 2015 of $1.48, but sales would be higher than last year’s third quarter, which came in at $1.31 billion. The average price target amongst analysts is $49.26. Unlike Coach, Kors is very promotional on its Web site, with many handbags marked down 50 percent.

David Schick of Stifel expects a challenging quarter from Kors, and is below Street estimates for earnings. “Our comp estimate reflects our concern that [Michael Kors] is reaching a saturation point in North America handbags,” wrote Schick. His survey told him that more shoppers intended to purchase from Coach than at Kors. It could be because Kors’ handbag line is mostly on the large size, whereas women’s preference is trending to smaller sizes.

Kate Spade is set to report its fourth-quarter results on March 1 before the market opens and analysts are expecting earnings of 32 cents a share on sales of $441 million. Both of those estimates are higher than the numbers delivered for the fourth quarter of 2014. The average price target on the stock is $28.06. Chen wrote, “We continue to view [Coach] as our favorite handbag name, but we still like Kate Spade, as we feel the brand is best prepared to weather a tough sector backdrop on elastic category expansion, prudent promos and controlled distribution.”

Wedbush Securities was also bullish on Kate Spade. At the end of December, the analysts wrote, “Our checks have consistently noted [Kate Spade] as the least promotional and best merchandised handbag brand compared to peers.” Kate Spade’s shareholders need for the company’s fortunes to change — the stock has fallen 46 percent over the past year, although in the last five days it has gained 6 percent. Most of that increase has come after Coach’s earnings.

Vera Bradley doesn’t report earnings until March 9, but that isn’t keeping investors from hoping for the best. The company has had very good success with its leather bags and the company guided the Street higher with its fiscal-year estimates. Gross margins were guided higher as well. Chen wrote, “We’re encouraged by solid third-quarter performance given better-than-planned revenues on reduced promo activity and disciplined expense management.”