What Does Luxury E-Tail Look Like?

The New York Times: “High-end e-commerce remains a bright spot in the shopping landscape: flooded with more cash than ever before and with bubblelike sky-high valuations to boot. It’s a world dominated by two behemoth competitors … Yoox Net-a-Porter, the largest luxury e-tailer by sales, is one of them. It owns the e-tailers Net-a-Porter, the Outnet, Mr Porter and Yoox; it also operates the e-commerce sites for over 30 luxury brands including Stella McCartney, Dolce & Gabbana and Chloé.”

“Farfetch, the other big name, is an online marketplace for 500 independent luxury boutiques and 200 brands as well as the owner of the bricks-and-mortar store Browns in London … Little wonder that during the past year barely a month went by without Yoox Net-a-Porter or Farfetch unveiling a snazzy new strategy or service in a thinly veiled bid to outmaneuver the other. In April, for example, Yoox Net-a-Porter introduced ‘You Try, We Wait’: a same-day try-on-and-wait premium delivery service with at-home shopping consultations. Six days later, Farfetch started a ‘store-to-door service’ in 90 minutes with Gucci in 10 cities worldwide.”

“Then Farfetch revealed a suite of technologies based on responding to consumers in the ‘Store of the Future.’ Yoox Net-a-Porter promptly responded with ‘Next Era’: a partnership with brands that debuted with Valentino giving customers access to Valentino products wherever they are, and however they want them.”

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What’s Next in Luxury Ecommerce?

According to The New York Times, here are three “next wave” luxury e-retailers: “Secondhand luxury (often known as the “recommerce market”) is fast becoming big business. The RealReal, an online marketplace that sells pre-owned and authenticated luxury items, was founded by the former Pets.com C.E.O. Julie Wainwright in 2011 and is expected to generate $500 million in revenue for 2017. It has raised $173 million in funding, and last month it opened its first store, in SoHo.”

Depop: “A mobile marketplace that says it has 350,000 active daily users, Depop has been described as “part Instagram and part eBay.” It is particularly popular with teenagers, who like the way users can personalize their digital storefronts.”

The Modist: “The so-called modest fashion market is booming, with the global Muslim clothing market forecast to be worth $368 billion by 2021, according to the latest Global Islamic Economy report. The Modist, poised to take advantage of the wave, started earlier this year.”

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Retailers Miss Mark With ‘Targeted’ Emails

The Wall Street Journal: “Traditional retailers were once pioneers of using data to zero in on what customers want. But as the importance of their catalogs and mailings have been overtaken by email and other online media, they have struggled—sometimes to the frustration of their customers.”

Brendan Witcher of Forrester comments: “Nearly 90% of organizations say they are focused on personalizing customer experiences, yet only 40% of shoppers say that information they get from retailers is relevant to their tastes and interests. The ugly truth is that most retailers haven’t done the (hard) work of understanding how to use the data.”

“At no time is that more evident than during the year-end shopping bonanza, when retailers deluge customers with messages. During last year’s holiday season, retail emails increased 15% compared with the rest of the year, but shoppers opened 15% fewer of them, according to a study of eight billion messages by marketing-services firm Yes Lifecycle Marketing.”

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Everlane Experiments with Community & Commerce

The Washington Post: Everlane founder Michael Preysman “has spent the past two years experimenting with different types of formats … to find the right approach for Everlane stores. One concept, called Shoe Park, required customers to take off their shoes at the door … Shoppers were encouraged to try on a pair while they grabbed coffee or sipped a cocktail. It turned out to be fun, Preysman said, but not very practical.” He adds: “We turned it into such a playground that at the end of the month, we ended up with all sorts of damaged shoes.”

“Last winter’s ‘Cashmere Cabin,’ a six-week pop-up in New York’s West Village, allowed shoppers to browse sweaters while they drank mulled wine and hot chocolate. Cozy and enjoyable, sure. But a long-term business model? No. Other experiments, which the company called open houses, were built around Everlane’s mission to be as transparent as possible. Evening events showed customers where products were sourced and how they were made but didn’t offer many items for sale. That didn’t work, either, Preysman said.”

“That just confused everybody,” he said. “We learned that while people want experiences, they also want to shop. It’s got to be a mix of both community and commerce.”

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Real-Time Retail: Fanatics Seizes Micro-Moments

The New York Times: Micro-moments “happen all the time in sports: A player reaches a milestone, has a breakout performance or is traded to a new team. Apparel companies have traditionally been poorly positioned to meet the accompanying fan demand as it surges. Fanatics … a sports merchandise company … is changing that and, in the process, carving out a lucrative niche in a fiercely competitive online-retail industry largely dominated by Amazon.”

“The company is similar to fast-fashion retailers like H&M, Uniqlo and Zara, integrating design and manufacturing with distribution to fulfill orders within hours. After the Chicago Cubs won the World Series last year, Fanatics used Uber to deliver championship gear to some fans within minutes … As a result, Fanatics has more than doubled its revenue in just a few years.”

“Among the micro-moments that highlighted the new need for speed was Jeremy Lin’s emergence as a sudden star for the New York Knicks in 2012 amid the so-called Linsanity phenomenon.” Fanatics chairman Michael Rubin comments: “When Linsanity happened, within 12 hours to 24 hours, there were no jerseys to get. So you had this huge demand, and there’s no jerseys available. Then you order them like crazy, and by the time they get in, the moment’s over.”

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Tiffany’s & The ‘Tin Can’ Gambit

The New York Times: “Since joining Tiffany & Co. in January as chief artistic officer, Reed Krakoff has undertaken to freshen the image of the 180-year-old jewelry company. His first major footprint is on the fourth-floor home and accessories floor of Tiffany’s Fifth Avenue flagship, where the sacred and the profane are now commingling cheerfully … Which is how the world came to know the Tiffany Tin Can (actually sterling silver and vermeil, $1,000) … (‘When panhandling before the big riot, don’t be caught without this stunning $1,000 tin can from Tiffany’s.’)”

“Mr. Krakoff’s injection of levity is not an unwelcome twist on the usual gilded or silvered theme … Old luxury: Founder’s portrait. New luxury: Founder’s portrait in Sheetrock screws and plywood … Tiffany’s entry-level dog bowls read, merely, ‘dog.’ — bone china, $125 for a small version and $175 for a large — but on display is a sterling silver option that Joan Rivers had engraved for her dog, Spike, for those inspired to go bigger ($1,800 for a small version, $2,500 for a large) … Not recommended for cat play: Tiffany’s sterling silver ball of yarn, $9,000.”

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Ogilvy on Letterman: It’s All in the Eye Patch

Fast Company: “‘What was going through your mind to think that a man missing an eye would be a good way to sell dress shirts?’ That’s what David Letterman once asked David Ogilvy when the legendary ad exec was on Late Night in the early 1980s to promote his book Ogilvy on Advertising. He was referring to a 1951 ad campaign for Hathaway shirts that was the ’50s equivalent of a viral success.”

Ogilvy’s reply: “I’d seen some research which showed that if you can inject into the ad an element of story appeal, you do well, people read the ad. They look at that and say, ‘Who is this man with an eye patch? That takes about a tenth of a second, and their curiosity’s piqued, so then they go under the picture and read the copy, and that’s how you sell the shirts.”

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The Huarache: When Weird is Beautiful

Quartz: “The Nike Huarache almost never existed. The shoe, made of a sock-like bootie encased in a supportive exoskeleton, was definitely unusual when Nike began showing around the prototypes in the early 1990s. Practically nobody placed orders, and Nike seemed to have little choice but to kill the idea. Lucky for Nike, one product manager didn’t listen … the Huarache has become Nike’s top-seller globally.”

“The shoe dispensed with a number of conventional ideas in sneaker design. It had no heel counter—the firm backing of the shoe that wraps around your heel to support it—opting instead for the distinctive, harness-like strap, similar to a sandal. (A ‘huarache’ is a kind of Mexican sandal.) It also used neoprene, which had never before been done in a running shoe … when no one placed orders after seeing the prototypes, Nike decided not to make the shoe for release.”

Tinker Hatfield, who designed the shoe picks up on the rest of the story in his new book, called Sneakers: “But one of our product managers actually thought it was awesome, and without proper authorization, he signed an order to build five thousand pairs even though there were no orders. He stuck his neck way out there. He saw what I saw. And he took those five thousand pairs to the New York Marathon, not a place you typically went to sell shoes, and he sold them all in like three days at the exhibition hall right there near Times Square. Word got out. They went like hotcakes. In a month, we went from zero orders to orders for half a million pairs.”

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Burberry & The Death of Aesthetic Alchemy

The New York Times: “Christopher Bailey’s decision to step away from Burberry, a brand with which he was almost synonymous, underscores a new belief in the fashion world that it is no longer expected, or even desirable, for a designer to remain at a house for a long period of time. And it further redefines that role as less of an aesthetic alchemist and more of an employee with a transferable skill set.”

Luca Solca, an analyst, writes: “We believe this is a necessary move to make Burberry exciting again. Creative directors — like all artists (painters, composers, singers) — tend to produce variations on a theme. Most brands that have gone through a revival had to first find new creative resources.”

“Like Karl Lagerfeld at Chanel, Mr. Bailey’s skill lay in taking the major ingredients of a heritage brand — in Burberry’s case, the checks, the trench coat and its roots in the British countryside — and continually moving them toward the abstract and into a cooler, more contemporary aesthetic. He was among the first designers to embrace the digital age.” However: “Aesthetic inspiration seemed to have been traded for strategic change: under Mr. Bailey, Burberry was among the first brands to merge multiple lines at different price points into a single offering, combine the men’s and women’s shows into one, and move to a see now-buy now system in which clothes became available as soon as they were shown.”

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Gucci Cracks The Millennial Code

The Wall Street Journal: “Classic brands often blame millennials for sales downturns, but the younger generation is giving Gucci a sensational boost. This could assure the luxury goods maker years of growth, or leave it grumbling like everyone else about that fickle group … Gucci’s success comes from a new look under creative director Alessandro Michele … It draws eclectically on a wide range of colors, patterns and periods, often in the same garment. It could hardly be further removed from the classic, business-friendly vibe favored by previous top designer Frida Giannini.”

“Millennial luxury consumers value experimentation and self-expression more than their seniors … Mr. Michele seems to have hit on a brand identity that reflects this spirit. Gucci has done a good job getting the word out: The brand is very active on the digital media millennials grew up with. Last year Gucci moved to top place in research company L2’s Digital IQ index, replacing longtime leader Burberry.”

“Resonating with the consumers of the future is something many brands aspire to. There is just one snag: As big consumer groups have discovered, experimental consumers make more fickle consumers.”

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