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To compete successfully in today’s retail landscape, brands need to adapt, maximize opportunities with their customers and control their own destinies.
That was the theme of 24th-annual Financo CEO Forum, in partnership with MasterCard Advisors, that took place Monday at the Harmonie Club in Manhattan. More than 300 industry executives attended.
Marigay McKee, the new president of Saks Fifth Avenue, moderated the panel, which included Tommy Hilfiger, principal designer and founder of the Tommy Hilfiger Group; Aerin Lauder, founder and creative director of Aerin, and Andrew Rosen, chief executive officer and founder of Theory.
In a discussion that touched on globalization, the Millennial customer, social media and inspiration, each panelist gave his or her perspective on what it takes to create a dynamic brand in today’s marketplace. And the audience got a little insight into the new Saks president, who was the former chief merchant at Harrods.
Since all three of the brands are affiliated with a larger parent company, McKee questioned whether having this support helped break down any logistical barriers.
Rosen works with Fast Retailing Co. Ltd., which has stores and infrastructure all over the world, which has helped them expand Theory and Helmut Lang globally. He also invests in several young designers who don’t have that kind of infrastructure. “The way we’ve decided to expand our business today, it’s critically important to have a global business. It’s not possible to be in the business and be just in America,” he said. More than 50 percent of Theory and Helmut Lang’s sales are done internationally. In Europe, they do the business themselves, but in Japan and South Korea, for example, they work with regional partners.
Lauder launched Aerin two years ago in the U.S., U.K. and Canada. “My uncle Leonard [Lauder] was very instrumental. One idea he had was always ‘act global, think local.’” She said that concept was important because they wanted to build the brand in North America and England. “We did it very slowly and the success has been wonderful.” She also launched her fragrance exclusively at Harrods, which worked out well.
With international reach being such a key facet of their personal brand identities, McKee asked the panelists how they approach globalization.
Hilfiger explained that when he first signed a licensing deal with Estée Lauder in the early Nineties, Leonard Lauder, then ceo of Lauder, wanted to expand globally, and they decided to start overseas with fragrance and then follow with fashion. “We teed up the brand. Our brand is growing in Europe and Asia faster than it’s growing in the States, and our business is much larger [overseas],” he said.
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McKee noted that when one walks down Fifth Avenue in New York, the same stores that one would find on Oxford Street in London or the Rue Saint-Honoré in Paris can be seen. She asked whether globalization has stolen some the excitement of international travel and shopping.
Hilfiger noted that his design team travels around the globe looking for trends and new ideas. “It’s difficult to find new ideas because on every street corner in every major city you find the same brands. You have to be more creative, and have to look beyond shopping in other stores and looking for ideas from other designers,” he said.
Rosen welcomes the consistency. “The consumer is traveling all over the world. It’s important to have headquarters in every major city — London, Paris, Tokyo, L.A., New York — with your own stores,” he said. The Theory store in Paris is merchandised differently than the one in New York’s Meatpacking District, for example, so they take into account the local culture.
Hilfiger said his assortments in Germany are totally different from those in Spain or the Netherlands. “It’s really important that you listen to the consumer in the various regions and shape the product for them,” said Hilfiger. Lauder noted that she designs products that have a global appeal. “Estée Lauder is such a global brand. Starting a new brand within the Estée Lauder franchise, everything we develop I want to appeal globally,” she said.
Turning to social media — “which is inundating us everywhere,” McKee asked the panelists how they ensure that their brand’s online persona is authentic. Hilfiger and Lauder are both the faces of their brands, while Rosen’s brand, Theory, doesn’t have a designer face. “I think it brings benefits from our standpoint,” said Hilfiger. Through social media, he said, he can get immediate feedback from consumers about their needs, wants and desires. “They believe they’re talking to the person, rather than the brand. It’s a benefit.”
“It’s a great way to advertise the brand, and I learn a lot from the consumer — what they’re looking for. I also think it’s important to be authentic,” Lauder said.
Rosen has a different perspective. “The beauty of the fashion industry is there’s not one way to run your business. Everyone can be successful and have different platforms and ideologies. We have a strong design philosophy and a sandbox and aesthetic we play in and also a strong culture in our company. The customer connects with us through the clothing. The clothes are the star of what we do. When we started, I didn’t have the p.r.; we didn’t have the celebrities…the product comes first, and the consumer connects with us through that,” said Rosen.
McKee explained that every brand is trying to figure out how to be relevant and have that social connection. And young consumers shop in a way that’s very different “from the way we used to shop.” Rosen said people have been doing business in traditional retail for “thousands” of years. “Digital-social shopping is brand new and only a few years old. A lot of manifestations are going to happen. You have to be involved and be open minded. You have to try and experiment with different things. In terms of what’s going to happen down the road through social commerce, I wouldn’t rule out that it becomes a huge bonanza, but this is all brand new.…I’m not giving up on social commerce. The younger consumer is reacting to brands like Warby Parker and Bonobos and Nasty Gal.”
In Hilfiger’s opinion, you can’t quantify social media, but in the world of marketing, you have to be in front of the consumer at all times, in many different ways. “It’s not just one way of speaking to them, or one way of advertising and marketing. It has to be a blend, and it has to be a mutlipronged attack. Ultimately, we will be able to quantify it, but at this point in time it’s premature. We believe the social way is the new way. We don’t know enough about it yet to say we’re going to abandon traditional magazines or put all our eggs in one basket,” he said.
In citing a personal example of how social media is changing lives, McKee noted that her children haven’t moved from London to New York yet, but she has her phone set up with an app to track their every move. “I know every time my son is ordering pizza. He did it three times last week. I know every time they get in a taxi. When they’re starting their journey, when they’re ending, who their driver is. I’m still connected to the family,” said McKee, to which Hilfiger added, “I’m glad you’re not my mother.”
During the Q&A period, one question via Financo’s Twitter feed was: Who are some of the hottest up-and-coming designers you’re watching right now in the market?
“All of Andrew’s brands,” said Hilfiger.
Rosen said he’s inspired by what’s going on in downtown Los Angeles, with a lot of these young, creative brands. “Department stores have to find new, innovative young brands. They just can’t buy the same old brands that have retail stores and Web sites that compete with them,” said Rosen. “I think there’s a big opportunity for these young, creative brands, which are maybe more in touch with what’s going on in the world today.”
Tom Florio, ceo of Advanstar Fashion Group, asked how retailers are protecting their customers from security breaches and making sure there’s no backlash. McKee said, from her perspective, they are putting in measures to prevent that from happening and to be as safe as they can. “Every single retailer in the country, I’m sure, is putting as much emphasis and as much importance as they can. It’s priority number one. If I were the President, I’d say this was an Air Force One emergency,” she said.
Another audience member asked whether Amazon will be a credible player in the fashion space in 10 years.
“I would hope for them that they are. I think that online is growing at a faster rate than brick and mortar and is appealing to a wide audience,” said McKee. “The successful companies in the future online will be ones who understand how to engage with the consumer, how to talk to them and how to give them what they want. You can’t possibly be living in the world of discounts. It’s not what makes the magic happen. Amazon has been extremely successful. They’ve done a fantastic job. Getting into the branded space online is tricky. And Net-a-porter has the advantage of being the first to market.”
Rosen said he sells Amazon a certain segment of the line. “I hope they figure it out and hope they do a great job, and that will make all of us better,” he said.
Asked how do you introduce your brands to cash-strapped twentysomethings, Hilfiger said at the end of the day, it’s all about the product. “If you have a great product, they will find it,” he said.
Wrapping up, Gilbert Harrison, founder and chairman of Financo Inc., asked McKee about her insights of the American consumer versus the European counterpart.
“America is such a huge country. You’re talking about 350 million people. From the background I come from, some of the things I was working on wouldn’t be relevant,” she said. “The European designer consumer is very, very sophisticated and very discerning, and is a dream investment shopper. If something is a dream investment, they’ll spend whatever it costs to get that piece. It doesn’t date, go out of style, it’s an iconic thing.”
She believes the American consumer seems to be more experimental and willing to try new things. “I’m a designer girl during the week, but I’m a Rag & Bone, Vince and James Perse girl every weekend.…The American consumer is more sporty, more casual and will spend more money,” she said.
Prior to the panel, Sarah Quinlan, senior vice president for Market Insights at MasterCard, gave highlights from this past holiday season. She cited some spending patterns from early in the year, such as when prices to fill the gas tank went up, discretionary income went down. And spending also took a hit in June when rumblings circulated that the Fed might start tapering.
As for this past holiday, Quinlan said the season was up 3.5 percent for November and December combined. What did hurt sales was the six fewer shopping days, which Quinlan said was “impactful.” She also said of patterns MasterCard saw via card usage was, “The first two places [shoppers] go on Black Friday is 70 percent of their budget.”
With fewer days to shop, that left the last Saturday before Christmas as the big sales day for procrastinators. On that day, jewelry was the top-selling category. Jewelry sales online averaged between $500 and $2,000. Luxury was up 9 percent overall for the season, with shoppers focusing on a few brands.
Men’s and women’s apparel was the least preferred category, but family apparel was up. According to Quinlan, that meant children’s apparel saw sales, but that also represented purchases not done during the back-to-school season.
John Berg, Financo ceo, also offered some insights into 2013 and the year ahead: “2013 started off very slow in the consumer world from a transaction perspective, from a consumer confidence perspective.” He said as the year progressed, not only did deal activity picked up, but there was a renewed interest in consumer stocks and brands, and the year ended up extremely strong from a stock perspective.
He noted that e-commerce continues to outperform any broad-based indexes. “They continue to take significant market share,” he said. He also noted that apparel and footwear wholesalers did “surprisingly well. Those have been laggards over the prior couple of years.”