The annual two-day CEO Summit convened in New York on Monday with a robust lineup of speakers. From courting the Millennial to sustainability to the genesis of a brand, topics ranged wide and deep. Here, highlights from the first day.
Neiman’s Getting ‘Emotional’
Geoffroy van Raemdonck, chief executive officer of the Neiman Marcus Group kicked off the Summit: “As a leader of a large retail group, I think a lot about do we need to romance our customers again. Do we need to do something different to win their hearts. Have our customers fallen out of love with us.…We need to go back to the magic of emotions — the magic of experiences. It’s been eight months for me as the new leader of the Neiman Marcus Group. We have not become “lost in transaction.” We aim to leverage the assets that we have to drive what I call “the Neiman Marcus Group transformation. The transformation of Neiman Marcus is about scaling love. It’s about taking that emotion which technology now allows us to scale and we are going to scale it in three different ways,” including leveraging technology to personalize communications with customers, arming sales associates with information to help them make better product recommendations to shoppers, and sharing information with brands about best-selling categories, margins and where the “white space” is.
“We need to make it magical for our customer,” van Raemdonck said. “We are about experiences. We are about theater. When I look at the future, I see endless possibilities. We have a plan with 15 initiatives. Seven of them, we are very, very focused on right now.” — David Moin
Arnault Defines the New Consumer
Antoine Arnault, chief executive officer of Berluti and chairman of Loro Piana, spoke about the respect that is growing in new generations, specifically among Millennials.
They are asking luxury brands to be more accessible and easier to understand.
“As ceo of a luxury brand and as a privileged observer of trends for almost 20 years, I’m happy to see the main demand drivers remain the same: Millennials want creative, durable, desirable products. But they add a new criteria: respect.”
According to Arnault, who is the son of LVMH Moët Hennessy Louis Vuitton chairman Bernard Arnault, new consumers want respect of humanity, the environment, the heritage of craftsmanship, of aesthetics, of taste and identity. They also respect the quality and “honest value” of the product, transparency and respect of their personality as a whole, their culture, their creativity, their entrepreneurship, their social and environmental commitments, their wishes for the planet or society as a whole.
He said Millennials aren’t that radically different from those who came before. “I wouldn’t shake our traditions too soon, dispose of all our stores, stop advertising in print magazines, and design only T-shirts or sneakers, just because we have to attract Millennials,” said Arnault. — Lisa Lockwood
In her early 30s, Heidi Zak needed a bra for a holiday party so she went to Victoria’s Secret. She found herself in an environment that didn’t make her feel comfortable and a bra that didn’t fit. This led her to cofounding ThirdLove, a bra brand meant to empower women of all shapes, shades and sizes. The main product is a T-shirt bra that Zak said echoed its importance to be comfortable but look beautiful.
Zak believes the next stage of apparel is personalization, and women are able to figure out their bra size with ThirdLove’s Fit Finder, made up of 600 million data points to help women get to their correct size. ThirdLove offers 70 bra sizes in comparison to Victoria’s Secret, which offers 36.
ThirdLove introduced its first out-of-home campaign this year called “To Each, Her Own,” which showcased a range of women not attempting to be sexy, but just living their lives. Zak is committed to being a digital company and believes she can build a multibillion company without opening stores. — Aria Hughes
Eileen Fisher, Yael Aflalo and Cara Smyth on Sustainability, Profitability
Eileen Fisher and Yael Aflalo, chief executive officer and founder of Reformation, have made sustainability core to their businesses and seen considerable growth as a benefit. In addition to her Vision2020 commitment to make her company completely sustainable in the next two years, Eileen Fisher has created a $4 million subbusiness out of reusing and upcycling old Eileen Fisher clothes, leading to artwork and a collaboration with Public School. She’s also a founding member of Alante Capital, a venture capital fund that invests in sustainability innovation in the apparel industry.
The results of a survey conducted by Reformation showed that the company’s sustainability mission leads to customer loyalty. “Businesses are customer-centric, and as more customers demand sustainable practices, I think more businesses will follow suit,” said Aflalo. Smyth noted that Wall Street is tracking the company’s sustainability practices, citing a recent Harvard study that found that sustainable companies are trading 4.5 percent higher than other companies. She also called out what Bloomberg has deemed “chase the waste,” wherein environmental impact — the amount of packaging, water, chemicals, etc., a company wastes — directly correlates to profit loss. “Wherever you chase the waste, you’ll find money,” said Smyth. — Jessica Iredale
Kohl’s Dares to Be Different
Kohl’s is approaching the future with a blend of traditional and modern influences; large and small retail formats, and a focus on national brands and private labels. No, the company is not schizophrenic, it’s simply embracing the dualities that exist in its business.
Michelle Gass, chief executive officer, said the retailer has succeeded by being contrary, for example, eschewing shopping centers in the early years.
“Kohl’s took the opposite path,” Gass said. “In the Sixties, Kohl’s designed its stores differently. The moves we made are helping us and 95 percent of the U.S. population has one of our stores in close proximity.”
Gass, in May, was elevated to ceo. She joined Kohl’s in 2013 as chief customer officer after spending almost 17 years at Starbucks.
The ceo was referring to “new competitive entrants nipping at our heels. The biggest disruptive force was the digital transformation that was occurring in the retail industry. In some ways, we were a little behind,” she said. “The headwinds were pretty fierce. It wasn’t going to be an incremental [change] that got us there. It had to be transformative.”
Gass said she set goals for Kohl’s, including striving for operational excellence.
Identifying the online and digital revolution, Gass decided to have Kohl’s redeploy $250 million to customer-facing initiatives and developed a strategy to “surgically manage inventory.”
The retailer embraced a middle-market consumer base, which Gass described as middle-income and living in middle America. But she reached out to a very different cohort — Millennials, an underrepresented consumer group.
“We’re beginning to put a massive focus on reaching younger customers,” Gass said. — Sharon Edelson
Looking Ahead at Ermenegildo Zegna
Ermenegildo Zegna Group is working to continue its thread of family ownership as the fourth generation of Zegnas move into place at the Trivero, Italy-based luxury brand.
Chief executive officer Ermenegildo Zegna said his son Edoardo is now firmly entrenched as its head of omnichannel initiatives and is responsible for content for the 108-year-old company. “My mind is on succession planning,” he said.
Zegna was founded as a textile business in Trivero by the current ceo’s grandfather and now operates both a dynamic fabric and luxury apparel brand with a reach that spans tailored clothing and high-end sportswear.
The more casual offering is intended to better target younger customers, he said, as well as older shoppers who may not fit the age demographic but have a “Millennial mind-set.”
Zegna also addressed the recent acquisition of a majority stake in Thom Browne, a business the company sees as a major opportunity and one that the “fourth generation is very much for.” — Jean E. Palmieri
Outdoor Voices Builds a Community
Outdoor Voices has created a successful business centered around the concept of having fun.
Founder Tyler Haney, who grew up as a competitive athlete in Boulder, Colo., started the business nearly five years ago with the idea of offering activewear targeted to women who enjoyed being outside and re-creating but are not necessarily competitive.
Today, Outdoor Voices has nine stores around the country, with three more in the pipeline for this year, as well as a thriving e-commerce business and a rabid community of customers who seek out the adventures the company offers.
Those range from dog walks and group Pilates classes to hikes and yoga — all within the nonjudgmental confines of the Outdoor Voices community.
Haney said her customers “don’t view themselves as athletes, but incorporate exercise into their daily lives” and are seeking realness and authenticity. — Jean E. Palmieri
McNamara Bullish on Spending
Retailers are on track for a strong year, according to Michael McNamara, who runs SpendingPulse at MasterCard Advisors. He is predicting that sales, excluding auto and gas, will jump more than 5 percent in 2018 as a whole. If this materializes, it will be the fastest pace of growth since 2012.
That was not the only good news he had for the retail audience, as it’s not just the wealthy who are buying more. Spending is up across the board. In particular, the sales-growth rate for those who make less than $50,000 doubled from 2 to 4 percent. That’s important because they account for 40 percent of retail sales.
As for specialty apparel, sales were up 5.6 percent in the year ended September, with online making up 30 percent of total sales in the segment.
The only damp spot was that September luxury retail sales came in a little softer than expected, but McNamara believes a strong labor market, signs that wages are finally rising and resilient consumer confidence should be enough to fuel sales and in turn boost the economy.
He noted, however, that only time will tell if ongoing turbulence in the stock market affects the luxury market. — Kathryn Hopkins
Abloh on Working Across Mediums
Virgil Abloh isn’t trying to disrupt fashion as much as he’s trying to evolve it. And he’s using his education in architecture, engineering and his obsession with culture to do that.
As the designer of Off White and now the creative director of Louis Vuitton Men’s, Abloh has been identified as a streetwear designer. While he understands that categorization, he views it as a trap. He defies these silos by participating in a variety of mediums, whether that’s DJ-ing, which gives him a chance to directly interact with consumers; curating art exhibitions; building furniture, or creating a dress and matching trousers for Sigourney Weaver to wear to a film festival in Rome.
Ultimately he attributes his success to being a workaholic, having a direct dialogue with his customers and making decisions based on inspiring the 17-year-old kid he used to be. Abloh believes brands taking a stand — he referenced Nike’s endorsement of Colin Kaepernick — is what younger shoppers want from companies. This will create an opportunity to form a loyal connection that goes beyond product. — Aria Hughes
Macy’s Staying Flexible
There’s room for Macy’s to bring a bigger upscale component to its assortment and range of services, according to Jeff Gennette, chairman and chief executive officer, who outlined several growth plans and initiatives for the $25 billion business.
“With particular stores, where you have a very high-end customer in the Macy’s portfolio, you are absolutely going to see that from a leased model or from an aggressive owned (merchandise) model, to get in the best products to serve the high-end Macy’s customer,” Gennette said. With the Macy’s division, “We have the opportunity to reach down or reach up,” depending on where the store is located and its customer profile.”
In other moves to elevate the Macy’s experience, Gennette said the company should have an announcement soon on “what Story means in Macy’s to really help with the experience in a number of stores in 2019.” Story, situated in the Chelsea section of Manhattan, was acquired by Macy’s in May, and has a unique format whereby the look, theme and merchandise of site changes every six to eight weeks.
“We are getting back to what department stores were known for — special events, trunk shows — and doing that online or in stores. We are now looking at events across our entire store portfolio.”
On rolling out leased shops, an ongoing for strategy for Macy’s, Gennette said more than 10 percent of the space at Bloomingdale’s is leased and Macy’s is less than 10 percent. “So Macy’s is going to grow. Bloomingdale’s is probably going to grow a little bit, depending on the business and the store and where it is in what part of the country.” — David Moin
Petro Highlights the Retail Disconnect
As speakers reiterated the need to connect with consumers in an intimate and personal way to better meet their needs, Greg Petro, chief executive officer and founder of First Insight Inc. presented data that showed a disconnect between retail executives and the preferences of shoppers. Petro said this disconnect is likely due to the rapid changes occurring in the industry. And he noted the key challenges impacting business centers on three main areas: people, product; and process (technology).
This disconnect plays out especially in regard to adopting — or not adopting — various technologies. Fifty-four percent of consumers surveyed by First Insight, for example, are using smart speakers for researching products while it is not a priority of many companies. There are also gaps between consumers and retail executives when it comes to pricing perceptions — online and in stores.
To mitigate these issues, Petro stressed the need for companies to “listen to the consumer” as well as invest in new technologies. “Retailers need to embrace a new skill set today,” he noted. “And they need to use technology in a way that keeps up with consumers.” — Arthur Zaczkiewicz
Matches’ ‘Experiential’ Home
Ulric Jerome, chief executive officer of Matchesfashion.com, told the audience his presentation would offer insight into how the web and digital retailer views retail and commerce overall in the waning days of 2018.
His message was summed up in three words: 5 Carlos Place, the experiential Victorian house that’s more than a physical shopping space.
Jerome described how 5 Carlos Place has become entwined with its upper-crust neighborhood, which borders on Mount Street, and enthusiastically embraced by consumers, who act as ambassadors for the address, posting photos on social media.
“The customers really love not only fashion, but retail and the physical space where they’re going to shop,” said Jerome. “We hired an architect who understood and wanted to create history. Don’t forget, we have a dot-com after our name.”
Matchesfashion.com uses 5 Carlos Place for next-generation global events. Prior to opening the five-story former residence, Jerome said the e-tailer would take over clients’ homes and penthouses. “We said, ‘Why can’t we create events in a modular way,'” he said.
Matchesfashion.com has amortized the cost of operating the location by “using the space to reach millions of people,” Jerome said, referring to mobile and digital.
The most important metric is that consumers who visit 5 Carlos Place’s content have orders that are 33 percent larger, Jerome said, adding that 77 percent of those who engage with the content are returning visitors.
“We created the web site and created the app so that everyone can watch and listen to everything happening in the house,” Jerome said. “The idea is to democratize luxury.” — Sharon Edelson
All About the Customer at Qurate
Mike George, president and chief executive officer of Qurate Retail Inc., boiled his message down to three key points.
The company is a big believer in conversational commerce. Qurate said Tuesday it is in the early stage of integrating voice-activated technology into video shopping. One feature planned for next year will allow consumers to order products during a live broadcast using devices such as Alexa and her tech cousins.
The company is also more open to taking risks to learn what it is the consumer wants in terms of customer engagement, whether that’s testing voice commerce or learning what type of content will engage her.
Ultimately, George said regardless of how the company engages her and in what device format, it is still about having “a great product, a great brand and a great story to tell.” — Vicki M. Young
Sir Paul Smith Stands by Independence
Sir Paul Smith has a distinct point of view — he’s colorful, quirky and self-depreciating — traits that not only shine through in his personality, but in his clothes as well.
That point of view is what’s afforded him success over the years as his “classic with a twist” aesthetic has expanded beyond apparel to home, gifts and even bicycle designs.
He gleefully said he purposely remains independent and decades after launching his brand, still needs only answer to “the guy in the mirror.” And instead of turbo-charging his brand to generate volume, to Smith, “it’s about nudging your business, not shoving it.”
And while he acknowledged that his brand could be larger if he’d taken on partners, he wouldn’t change a thing. “I’m fine, I’m very content. I don’t need anything,” he said. “Life is short and it’s about friendship, love and health as well as cash.” — Jean E. Palmieri