Kenneth Cole was among the pioneers in designer retailing, but the retail rollout has slowed for now.
Long before designers flocked to open their own freestanding stores, Kenneth Cole had his own place. His first store opened on Columbus Avenue between 76th and 77th Streets in 1984.
There are currently 83 stores operating, most under the Kenneth Cole New York banner; 50 are full priced, the others are outlets. Included in the count are two Reaction stores. While Kenneth Cole’s retail growth has slowed to about three or four locations a year, retail maturity is not in the vernacular. For a public company, such talk wouldn’t go over well on Wall Street.
“There is room for a significant number of more Kenneth Cole New York stores, but there is also room for a lot more Reaction stores,” said Paul Blum, president of Kenneth Cole Productions, during an interview on the future of Kenneth Cole retailing.
With the expansion of Kenneth Cole New York stores, the company must be “careful and thoughtful” about how many to open, Blum said. “A lot of retailers have ‘overstored’ their concepts. Too many have too many of the wrong doors. As other people close and vacate space, that could open up some retail opportunities for us. There are parts of the country where we are underexposed, pretty much all over the country.”
Opening additional Kenneth Cole New York stores, Blum acknowledged, is a big issue. “Our stores are profitable and they are a good business model. At the point we are now, we don’t feel ready to roll out in a more significant way.”
The Kenneth Cole New York collection offers a relaxed urban look with core basics and fashion-forward styles for 25- to 60-year-olds. The Reaction stores feature contemporary styling and targets a narrower audience of women ages 18 to 35.
The two Reaction stores are on Lexington Avenue and 57th Street and in the Millenium mall in Orlando. The label could blossom into a chain, perhaps with even more doors than Kenneth Cole, according to Blum. For now, however, Reaction remains more of a retail experiment. “We don’t feel we have the formula right to roll out,” Blum said. “It’s hard to know now, but as the retail climate improves, we’ll get a better idea.”
There are no plans to develop a chain for the company’s Unlisted collection, which appeals to 12- to 35-year-olds, with younger, trendier products at more moderate prices. “We want to get Reaction going and will look at Unlisted after that,” Blum said.
The Kenneth Cole retail business overall, he added, has improved for the last three months in a row, in terms of both profit and sales per square foot. “All of the indicators have been improving in our retail operation over the last three months, after a two-year lag,” Blum said. “Before, we had to hit the customer over the head” with different marketing techniques, promotions or products to encourage them to buy. “Now, I am finding the market to be much more responsive. When we mail a catalog or do an e-mail, the customer comes in. They are not going to just come for the entertainment value of shopping.” He declined to specify how much retailing accounts for the company’s total volume of $433 million last year.
The next Kenneth Cole New York opening will be in the Aventura mall in north Miami in November. Two others also will open this year. Their locations will be disclosed later.
The average store is about 3,500 square feet, though the four-year-old Rockefeller Center flagship has 17,000 square feet.
“The way we look at it, retailing has two major functions,” Blum explained. “Retail is a channel to do business and a marketing opportunity. Others may look at it as purely a volume opportunity. If you look at other designer retail operations — the percentage of retail stores to outlets — that is the key to what they are trying to get out of it.
“The most important thing about retailing is that it allows the company to portray the brand, the marketing and visual message in our environment. The store acts as a laboratory or a showcase of what the brand stands for.”
In addition, he said, “When we open a retail store in a market, our brand awareness, as a designer brand, goes up, and our business increases in wholesale doors. Our best-performing Nordstrom door, for example, is almost invariably where we have a store.”
Macy’s, Bloomingdale’s, Marshall Field’s and Nordstrom are Kenneth Cole’s top four retail accounts.
“Our stores act not only as a brand enhancer, but as a catalyst,” Blum said. “The retailers in the malls where we have stores make sure they have the right visuals and the right assortment, in a sense to make sure they can compete with our stores.”
It’s not always easy for the retail accounts to keep up with how the Kenneth Cole stores are presented, and it’s probably going to get tougher. The designer’s freestanding stores will carve out about 20 percent of their spaces to feature a special 20th anniversary collection and special merchandise displays, hitting the stores in October. The new collection is geared for an edgier, urban customer.
“This collection, which is really iconic Kenneth Cole product, will probably evolve into a permanent part of how we merchandise the Kenneth Cole line,” Blum said. “There is always the customer who wants a little bit edgier product. It will have a separate area in most of our larger doors, and a new label with Kenneth’s signature.”
Also for the 20th anniversary celebration, the windows will feature a special ad campaign with photographs by Richard Avedon. “They’re classic portrait-type shots of our aspirational customer. They’re models, but they don’t look like models. It shows different types of customers and the depth of our brand appeal.
“We constantly update our visual concept,” said Blum. “We [change] our windows pretty much every three to four weeks, and try to put messages in them that give the customer something to think about. The windows are a marketing vehicle that coordinate with advertising, point-of-sale marketing and our wholesale accounts. We want the customer to feel comfortable and familiar at each point where we sell the brand.”
Blum said over the last six months, the company has really been investing in “visual standards,” as well as infrastructure and systems. “We have also hired some key retail people over the last couple of years to really help from a planning, visual merchandising, as well as store-management perspective. We feel retail is such an important channel. We are also looking at significant systems improvement on the POS and planning sides. We keep enhancing what we have.”
Over the last 10 years, more clothing has been added to the stores. Currently, about 40 percent of the business is with shoes, 60 percent other products. But as Blum said, “We’re still more of a shoe store than most other specialty retailers.”