Art Peck on Gap’s Sustainability Story
Gap Inc. president and chief executive officer Art Peck could have talked about many things at the WWD Apparel & Retail CEO Summit on Wednesday, but given the company’s performance — the retailer suffered another period of poor financial results in the recent second quarter when earnings practically halved — sustainability was a shrewd choice of topics.
The Gap Inc. ceo said the company has embraced sustainability, and in doing so, discovered that doing good is also good business. “When we push real, substantial and authentic values to the forefront of our brands, it manifests itself in our profitability, a couple of unit points at least,” he said. “Market share change is going to accelerate as brands push their values to the forefront. The customer will migrate relatively quickly, and the younger the customer, the more aligned they are with those values.”
Peck’s interest in sustainability and climate change has been fueled by altruism and the implications for The Gap’s performance. “And it’s personal,” he said. “I live in California. At the end of last week and over the weekend, I spent 72 hours without power, half of the time breathing smoke and surrounded by fire. We can deny this, but we’re stupid if we do.”
Peck made only a passing reference to Old Navy, which has its sights on becoming a $10 billion business, “We’re splitting the company up. We’re letting Old Navy run on its own and allowing it to really fulfill its destiny.”
Addressing the other ceo’s in attendance, Peck said, “If you feel that incessant nibbling at your ankles, it’s ankle biting by small competitors. They’re leading the way today, and if you’re a big company like us — a $16 billion global company — if you’re not moving, then the customer is leaving you behind.
“We know what this industry is good at, but being good to the planet and good to the environment and pulling our values to the forefront of our customer value proposition hasn’t been a forte,” Peck said, noting that “85 percent of apparel ends up in landfills. Cotton is a tough crop for the world. It’s water-intensive and herbicide- and pesticide-intensive.”
Gap apparel is 65 percent made from cotton, and the retailer consumes 1 percent of the world’s cotton crop. Peck said the company is addressing sustainability through new technology for commercial agriculture that slows carbon dioxide bursts into the atmosphere, and new water-saving technology for mills “that’s absolutely scalable across the industry.” — SHARON EDELSON
The Rise of Stadium Goods
So much can happen in four years, and for Stadium Goods that includes a major investment from LVMH Luxury Ventures, partnerships with Tmall, Sotheby’s and Fred Segal, and an acquisition by Farfetch.
The premium sneaker and streetwear marketplace had a humbling beginning in October 2015. The company’s Howard Street location saw little to no foot traffic, but this pushed cofounders and co-ceo’s John McPheters and Jed Stiller to think outside of the box.
McPheters said he and Stiller put their focus on online to grow the brand and created photo and video content with their vast inventory of sneakers, which is unique for the secondary market that usually sees worn and used products, and retrofitted its space into a studio. As business boomed, Stadium Goods caught the attention of LVMH Luxury Ventures, which invested in the company, and later an acquisition by Farfetch for $250 million.
“LVMH is obviously one that we really hang our hat on,” McPheters said. “It’s been very exciting and game-changing for us when they got behind us in 2018 and really speaks to a lot of the change that’s happening in the aftermarket both from sneakers and streetwear standpoints, but also general public perceptions of the aftermarket.”
The Farfetch acquisition built on a relationship that began in 2018. McPheters said sneakers and streetwear had great synergy with high-end fashion pieces on Farfetch and “that’s something that’s very indicative of where we are today.” He added, “We’re at a point now where all of these tastes have melded together in a way that’s more of a soup of interests as opposed to having these different buckets.”
Today, the business is more focused on international expansion, with sights set on Europe and Asia, especially China which is “a big market for us,” said McPheters. — OBI ANYANWU
Patterns of Consumption
Trade wars with China, Millennials living in their parents’ basements and mid-level managers who have not seen a pay raise in two years might not seem connected at first blush, but through the lens of an economist, each has an impact on how much consumers spend and what products they buy, according to Bricklin Dwyer, senior vice president of economic and market insights from Mastercard.
Dwyer’s presentation during the summit focused on “patterns of consumption” and revealed notable trends as well as some startling data points. “Did you know there are a record number of 30th birthdays this year?” he said.
Citing various metrics, Dwyer said “population waves” as well as the number of people moving, getting married and having children affects consumer expenditures. He pointed to the “Basement Generation,” which are Millennials who have graduated college, went out on their own, and then having struggled, move back home to live with their parents.
“So, they may have no rent to pay,” Dwyer said. “Which means more disposable income.” He noted that the number of Millennials who live with their parents is increasing year to year, and it is a global phenomenon that “is becoming normalized.”
Other trends impacting consumer spending is the “gig economy” where more and more workers are working from home. These workers end up spending closer to home, which impacts expenditures from a regional perspective.
In regard to products, Dwyer said the overall spending picture is bright for retail. However, apparel sales may be flat year over year as the headwinds from last year’s tax plan – which generated more household cash – has diminished. — ARTHUR ZACZKIEWICZ
Guram Gvasalia on the Big Picture
Guram Gvasalia, cofounder and chief executive officer of the Zurich-based fashion house Vetements, is on a mission to help foster young talent.
In a talk with Miles Socha, he spoke of creating a platform that will support young designers. His plans include setting up a coworking space within his company’s offices, traveling to schools to speak with students about the realities of working in the fashion industry and offering scholarships.
Emphasizing the importance of how success is a collective effort, Gvasalia addressed the misconception that a brand is defined by one talented designer. “Most of the time it’s probably not one person who is designing the brand. No, at the big brands, they have 60 people under the designer,” he said.
From his point of view what makes a brand involves putting everything together. “You need to have the designers, the developers — it’s a job that nobody really teaches about. But it is extremely important. There is hierarchy in my company that is more than a design job. It’s commercial people, financial people, the supply chain, warehousing, it’s the origins certificate, it’s the Customs people — there is so much that comes together to create the brand. It’s the deliveries, the window displays — it’s making everything work in the company,” Gvasalia said.
If all goes according to plan, this new platform will be introduced next year, Gvasalia said. The new talent will not be owned by Vetements. Gvasalia said he and his team “will be like a big brother” looking out for the young talent and protecting them. (His own brother Demna stepped down from the company last month.)
In addition, Vetements will be growing the company in different directions. With a big ready-to-wear business, the plan is to start separate businesses around that such as ones for shoes, underwear and sunglasses that each will have different distribution channels, Gvasalia said. — ROSEMARY FEITELBERG
Stella McCartney Continues to Push the Boundaries
Standing shoulder-to-shoulder with her industry counterparts, Stella McCartney has more than proven her sustainable ethos, but even now she works to shake the labels.
McCartney made it clear that she is first a woman designing for women — and the clothes she is designing just so happen to be cruelty-free and sustainable.
Since day one, her label has been free of leathers, feathers, furs, animal glue and has ingrained an effortless aesthetic all while making the more responsible choice, (e.g. sustainably sourced viscose).
“You shouldn’t sacrifice any style for sustainability,” she said, and too, despite trade-offs and steps of progress inherent for any brand, there is still much more impact to be made.
Take her recent Paris runway show for example, of which 78 percent of it was sustainable, it’s clear the designer and creative director of her eponymous label is measuring her own impact, but as for the rest of the industry?
“I don’t feel like any of us really get it,” said McCartney, when speaking about sustainability broadly. Taking back control over her label, joining LVMH Moët Hennessy Louis Vuitton on top of lending an ear to LVMH’s Bernard Arnault as special adviser, McCartney is focused on solutions.
Finding these solutions is possible with discipline and action. While McCartney is, as she stated, “a yes person in a ‘no’ kind of way,” she’s still accomplishing what the industry hotly discusses every single day, “not only creatively but in how we source.”
The difference is she’s leading — not following. — KALEY ROSHITSH
Teaming Up to Take On the Tech Giants
Barry Libert, cofounder of strategy firm AIMatters, offered both a splash of cold water and a new way forward for fashion executives gathered at the summit.
Libert said five companies — Amazon, Apple, Google-parent Alphabet, Facebook and Microsoft — own every customer in the world.
“The physical world lost a long time ago in your industry and in every industry,” he said. “They have won. Game over. And we in this room made that happen, we turned over all of ourselves, our complete selves to them.”
Tech has become so dominate because, where physical players making something like less than a dollar for each dollar of sales, tech platforms make $6 dollars for each dollar of sales. He described platforms, like Amazon, as a “multi-sided model where there are many people paying the toll keeper to keep track of the dollars of sales.”
To counter this, he suggested fashion as an industry band together with the help of artificial intelligence to create a counterpoint.
“AI is empathy at scale, it allows me to know you better than you know yourself,” he said. “It allows me to make available to you when you want, when you want it.
“Change the silos among yourselves, come together as an organizing body to take on the other platforms, create your own Uber, Airbnb,” Libert said.
The industry needs to appreciate the power of working together and data and create its own network effect and then to measure engagement, which he said was the “core of humanity.” — EVAN CLARK
Nordstrom Talks Transformation
“I don’t have a crystal ball,” admitted Jamie Nordstrom, president of stores, Nordstrom Inc., though he gave a glimmer of what lies ahead for the Seattle-based retailer. “Over 30 percent of our business now is purely digital…I think that’s going to 50 percent,” Nordstrom said, a week after the big Nordstrom women’s flagship opening in Manhattan.
That’s sparking some reengineering of the stores, though wholesale changes to the fleet aren’t anticipated. “We are creating express service hubs for alterations, order pickups, returns and we are putting them in the most convenient space on the first floors of highly productive stores,” Nordstrom said. “It’s a struggle. It throws all of our metrics out the window. If our stores five years from now look like they do right now, we will be failing. It’s expensive to reallocate space in the store. But it’s absolutely necessary… It’s not about the product that’s sitting there. It might be about service. It might be about food and beverage. It might be about other things o create a different kind of environment we’re not used to seeing.”
Rethinking gifting is also a priority. “There are lot of customers can be better serviced during that peak time, mid-November all the way through Christmas. There are some simple things we can do. It’s about gifts at the right price point. Its’ about gift-wrapping services. It’s about navigation in the store to make what is a typically super stressful annoying process a lot more fun, whether it’s in stores or nordstrom.com. We are going after gifting in a way we have never done before.”
Sustainability is also “a big subject for us,” Nordstrom said. “We’re excited about what it unlocks for us in attracting new customers, If we can figure out how to create some compelling experiences.” And re-commerce and rentals are “big opportunities,” Nordstrom said, though he added, “How somebody is going to be making money on that stuff is still to be determined.” — DAVID MOIN
Kim Jones Makes His Unassuming Mark
Kim Jones has the uncanny ability to respect the tradition of the venerable fashion houses where he works while still managing to infuse them with his own distinct mark.
Over the course of his career, the men’s artistic director of Dior spent seven years in the same role at two other legendary brands, Louis Vuitton and Dunhill. Jones also had his own eponymous collection for eight years.
“I work for the house,” the designer said. “So my brief to myself is to respect the house and what the legacy of the house will be in the future. There are designers that do their own thing for the house, but for me, I think the house is first and I’m second for the time I’m doing it.”
He said that when he was interviewing for the creative director role at Dunhill, there were a lot of candidates, but he was the only one who actually took the time to research the brand’s archives and reveal how he would take inspiration from the golden years of men’s wear in the Twenties and Thirties — “Things I love,” he said — and make them applicable to a modern wardrobe. He got the job.
“I look at the brand first and then look at what to do with the brand,” he said. At Dior, he saw a brand steeped in “tailoring, elegance and couture.”
But when it came to his own collection, Jones bristles at the idea that he was a streetwear designer. “That’s a stupid word,” he said. “Clothes are clothes and the way people wear clothes nowadays is to mix things up. That’s what men do.” — JEAN E. PALMIERI