After years of remerchandising and ownership changes, the new age of Lord & Taylor will come together this fall.
Lord & Taylor is wrapping up plans for its pivotal fall-holiday season, including exclusives from brands and designers, a campaign to rebrand the company and an overall assortment that store executives say has been carefully edited and updated with an eye for more contemporary offerings. The store is seeking a new generation of shoppers, while still addressing the Baby Boomer crowd that historically has been the bread and butter of the business.
For decades, Lord & Taylor under May Department Store Co.'s ownership was stifled by a formulaic merchandising matrix and an image cheapened by couponing and price promoting. The chain was further disrupted by two ownership changes, first when Federated Department Stores Inc. bought May in 2005 and last year when Federated sold the business to NRDC Equity Partners for $1.1 billion.
NRDC remains encouraged by Lord & Taylor's recent performance, and has been investing in talent, marketing and the stores. The fourth quarter will mark a very visible turning point.
"Now that we are out from under the shadow of Federated and May, and have moved past the uncertainty of the sale, we are really able to devote 100 percent of our time to continue to upgrade merchandise assortments," said Jane Elfers, president and chief executive officer of the 47-unit, $1.4 billion specialty chain, which was founded in 1826.
"Since last November, we've been working with the vendor community to develop an extensive assortment of exclusive items across all categories of business. There's been a dramatic increase in the amount of exclusive styles, accessories, dresses, sportswear and shoes." It's "easily triple" what the company had a year ago, she added.
Providing exclusive collections and more modern styles, particularly American ones, to Lord & Taylor, is a huge part of the NRDC strategy. The store has been hauling in young design talent through arrangements such as licensing and ownership interests to change its image. Bryan Bradley of Tuleh is creating a collection for Lord & Taylor, and Cynthia Steffe has signed on as well. Charles Nolan and Peter Som are among the designers said to be in talks with NRDC and could be next in the growing stable.Demonstrating confidence in its holiday offering, Lord & Taylor for the first time set up a 3,100-square-foot showroom inside the Fifth Avenue flagship. The space displays a broad sampling of the exclusive items, key looks and important labels for the season, and is set up for staff and media to understand the store's elevated merchandise approach. In past years, Lord & Taylor typically arranged a smaller-scale holiday preview to address a handful of editors.
Overall, the fashion attitude is contemporary and modern. On display are exclusives from MK Michael Kors, Oleg Cassini, Badgley Mischka, Kate Spade and Cole Haan, to name a few. There is a large presentation for Uggs, and another for private label cashmeres that go beyond the cardigans and sweater sets for which Lord & Taylor was known. Now there are funnel-neck dresses with big buttons, long luxurious robes and stone-trimmed flyaway cardigans, with a lot more detailing and distinction to the products on view.
Lord & Taylor expects to generate $40 million in cashmere sales this holiday season, which accounts for about 70 percent of the annual cashmere volume. The store also projects a $28 million dress season. Dresses generate about $100 million in sales annually.
In accessories, there is an emphasis on metallics, patent leather and bright colors. The chain is hoping for a big handbag season as well, though perhaps relatively not as big as its major competitors.
Aside from the accelerated drive for exclusives, the fourth-quarter offerings reflect more than three years of work to overhaul the merchandise. According to Elfers, 85 percent of the merchandise has been reworked to establish a sharper identity in a retail landscape that is ever-more competitive. Lord & Taylor is focused on better, bridge and contemporary products and prices, and seeks to fill a niche between Macy's and Saks Fifth Avenue on the fashion and price spectrum, although the positioning appears to put the specialty chain in direct competition with Nordstrom. The Lord & Taylor remerchandising is ongoing, Elfers stressed.
"We continue to dramatically reduce the number of [stockkeeping units] and work very hard to focus on increasing the average sale," she said.
In addition, the focus is on rolling out less distributed vendors. In accessories and jewelry, they include Uggs, Kate Spade, Louis Hill, Cole Haan, John Hardy, Lagos and Judith Ripka, and in contemporary sportswear and dresses, Searle, BCBG, MK Michael Kors, Jill Stuart and 12th Street by Cynthia Vincent. Lacoste is also "a big rollout," Elfers said."It's an edited, focused assortment, with higher average retail [prices] and more differentiated brands," she said. "We have had double-digit increases in our average sales the last three years in a row. Three years ago, we did zero contemporary business. Now it's 20 percent of our total."
The private Context contemporary line could play a bigger role, as well as the Kate Hill bridge sportswear line.
While the outlook for Lord & Taylor certainly seems brighter than a few seasons ago, it's still a fight to secure the future. Nordstrom and Bloomingdale's have been expanding and performing well, and Saks Fifth Avenue is gaining momentum in its turnaround efforts. Executives from Lord & Taylor and other stores say their businesses have been able to capitalize off Federated's conversion of May doors to Macy's, and the many shoppers who have been turned off by the strategy. Macy's sales have been weak this year.
Meanwhile, there's been a talent buildup at Lord & Taylor, ranging from a new chief operating officer and second-in-command Mark Weikel, to advertising guru David Lipman, to create a branding campaign, with new advertising, shopping bags and boxes, and a new credit card. The rebranding will launch in September, right after Labor Day. Lord & Taylor has also hired Y&R's Brand Buzz; Randall Ridless, a designer of store interiors, and Mancini Duffy, an architectural and design firm, to handle assignments ranging from developing a fall-holiday branding campaign to spotlighting ongoing merchandise changes. The new merchandise direction will be evident at the 650,000-square-foot flagship in Manhattan, which generates only about $140 million in annual volume, as well as the suburban stores, which have been strong performers for the chain for years.
In addition, a customer relationship management system went live last week. It's a database management system that helps the store target market.
Asked if the remerchandising runs the risk of putting off long-time, loyal customers, Elfers replied: "I wouldn't call it riskier. Lord & Taylor is continuing to be relevant to the next generation, reaching down [in age] and keeping the core customer. Our business has been good, and the vendor community has been very supportive on the repositioning."
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