Neiman Markups: Out of Fashion

The Wall Street Journal: “Once upon a time, all Neiman needed to do to lift profits was raise prices. That model has since fallen out of fashion … competition from startups like Farfetch.com and Matchesfashion.com are forcing more discounts. Over a recent 24 hours, Farfetch’s prices averaged 2% lower and Matchesfashion’s 15% lower than Neimanmarcus.com’s prices on 32 identical items, according to price-tracking firm Market Track LLC.”

“While brands still exert control, particularly over the newest and most popular items, it is harder for them to police prices that change rapidly across websites and fluctuate with shifting exchange rates, industry executives said … The explosion of discount chains, led by T.J. Maxx , that sell designer brands at cut-rate prices also made consumers rethink the need to pay full price. To compete, high-end department stores rushed in with their own off-price chains—Neiman’s Last Call, Saks Off 5th and Nordstrom Rack.”

“Neiman’s Chief Executive Karen Katz … championed a line of specialty stores called Cusp, which Neiman opened a decade ago, that feature lower-priced clothing and accessories. Neiman stores also have added relatively less expensive goods, such as $700 Prada handbags … Ms. Katz reduced snob appeal by allowing Neiman shoppers to use Visa and Mastercard … Neiman has invested heavily in e-commerce … Not all the moves have worked. After building six Cusp stores, Neiman closed two and stopped development of the chain in 2012.”

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Collective Resorts Pops-Up 5-Star Hotels

Fast Company: “With a motto of stay tonight, gone tomorrow, alternative hoteliers are investing in mobile, collapsible accommodations … Some companies are setting up camp in areas low in hotel room inventory, like music festivals, while others are pitching tents in pristine countrysides, turning temporary hotels into a new type of guest experience—emphasis on the experience … Collective Retreats “has opened five-star retreats in the mountains of Montana, the vineyards of Sonoma, and the ranch lands of Colorado, with four more planned to open by year’s end in picturesque places where permanent hotels are not permitted.”

“Guests stay in spacious tents with electricity that are outfitted with 1,500 thread-count sheets, chandeliers, and WiFi. Each tent features a full en-suite bathroom with hot showers. Chef tableside dining is included at each locally sourced gourmet meal. Before bed, you can roast bourbon-infused organic marshmallows … Peter Mack developed Collective Retreats in response to what he calls the ‘vanilla-zation’ and ‘McDonalds-zation’ of the hotel industry.”

Tents “are a relatively inexpensive investment (at least compared to the cost of constructing a traditional brick-and-mortar inn). This leaves more money to spend on decor, food, and recreation. And because the tents are collapsible, the company has the flexibility to add or subtract accommodations on demand … Collective Retreats charges between $500-$700 a night during the spring and summer high season and $400 during shoulder season. The Yellowstone and Vail locations opened in March and already have waiting lists.”

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Luxury of Silence: Cheapo Cars Mask Muffles

Wired: “In your cheapo car … blowing wind, humming tires, high-revving engines, and a hundred random vibrations conspire to make conversation a chore, exhaust the driver, and strain audio systems cranked up to mask the racket. That’s because the standard silencers—sound-absorbing insulation, pricey engineering, aerodynamic tricks, and sheer weight (heavier cars tend to be quieter)—are hard to move down market.”

“But in recent years, automakers catering to the road-going hoi polloi have found new ways to lower the volume, particularly for hybrid and electric vehicles that don’t have the benefit of an engine to mask other vehicle noises. The result: Economy cars now carry things like side mirrors that maneuver airflow away from your windows, suspensions that dial out road noise, expanding tape that plugs gaps, and frames to maneuver sound away from the car’s occupants—all developed with the help of mannequins with mics in their ears and giant spherical cameras that can ‘see’ sound.”

“It’s a perk you can neither see nor hear, but one you’ll appreciate, no matter how much you paid for your car.”

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Delta & Alessia & Why Coach Class Sucks

Wired: “Delta’s clever new wine glass belongs to an extensive new line of dishes, cutlery, glassware, ceramics, and other serviceware designed in collaboration with Alessi. The collection, which is gorgeous, will appear in the airline’s premium cabins beginning April 1. That’s great news if you can afford it. But even if you can’t, Alessi’s brilliant designs say a lot about the state of the airline industry—including why your experience at the back of the plane kind of sucks.”

“Why invest in a fancy new line of serviceware that most of your customers will never use?Simple: Airlines make more money off the premium cabins than the cheap seats. The business of flying is the difference between Revenue per Available Seat Mile—RASM—and Cost per Available Seat Mile, or CASM.” Aviation analyst Richard Aboulafia explains: “RASM in the front, CASM in the back. Basically, if your CASM is higher than your RASM you lose. Vice versa, you survive. You can even make money.”

In other words: “You maximize RASM on the seats at the front of the plane, so the blankets in first class feel like blankets; cut CASM in economy, where the blankets feel like something you peeled off a dryer’s lint screen.”

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JetBlue’s ‘Mint’ Does Not Cost One

The Wall Street Journal: “A lie-flat bed on a long flight used to be the ultimate perk, something fliers would pay up for. Now it’s a discount luxury.A new kind of business class has been pioneered by JetBlue’s Mint cabin on transcontinental routes … The affordable upgrade has been so popular, formerly all-coach JetBlue is now flying Mint seats from Boston and New York to the Caribbean as well as Los Angeles and San Francisco. It’s also announced expansion to San Diego, Seattle, Las Vegas and Fort Lauderdale.”

“This is not aviation’s version of a knockoff handbag. With Mint, the prices are lower but the recline remains fully flat, the pillows and duvets still soft. Service may lack some frills, but the airline still offers amenity kits with eyeshades and lemon towelettes … What’s most prized among savvy fliers are the Mint suites. On each side of the A321, JetBlue puts two seats in a row, then a row behind with just a single seat on each side. When seats fold down, the legs of the single passenger are tucked between the two passengers in front. The single passenger has a sliding door, creating an enclosed suite. The four suites cost the same as the 12 other business-class seats and usually get booked first.”

JetBlue EVP Marty St. George comments: “The biggest complaint is the single seat sells so fast.” Meanwhile, Mint’s success has forced other airlines to lower their business-class fares.

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Gucci & Groceries: The Malling of Supermarkets

The Wall Street Journal: As the internet reshapes the way Americans shop, landlords of mid- and low-quality mall properties are adapting to stay relevant, trying everything from restaurants to indoor skydiving. Now a few are bringing in supermarkets … The goal for landlords of covered malls is to provide one-stop destinations where consumers can pick up a broad array of items and, ideally, visit multiple times a week. These massive rectangular structures surrounded by vast parking lots are usually built to serve shoppers up to 25 miles away.”

Tom McGee of of the International Council of Shopping Centers, comments:”Consumers, particularly millennials, are placing a high priority on experiences while also valuing convenience. As a result, among other things, we are seeing more restaurants, movie theaters, health clubs and grocery stores serve as anchors.”

“But supermarkets might not do much to lift other retailers in struggling malls, analysts said. Grocery shoppers, especially seniors, often are sensitive to the distance between their car and the store, and might not want to navigate busy malls with grocery bags in tow, or supermarkets with mall purchases in hand.” Jeff Edison, a mall grocery-store operator, observes: “You’re not going to buy a Louis Vuitton bag or a dress when you’re carrying your groceries.”

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Bulgari, Baccarat & The Hoteling of Retail

The New York Times: “The convergence of hotels and merchandise started, perhaps unsurprisingly, at luxury properties. Almost two years ago, Baccarat, a French crystal manufacturer, opened a 50-story building with a hotel and apartments across the street from the Museum of Modern Art, six blocks from its Manhattan flagship store. Crystal designs are displayed in public areas. Guests can order from the display and have their purchases shipped to their homes, saving time and a trip to the retail store. Select guest room entrances exhibit art inspired by crystal pieces.”

“Bulgari, an Italian designer of jewelry, watches and leather goods, has properties in Bali, Milan and London. Hotels in Shanghai, Beijing and Dubai are expected to open by the end of the year. The hotel website links to an online store … Tommy Hilfiger, whose designs include apparel, luggage and linens sold at Macy’s, Kohl’s and online, purchased the Raleigh Hotel in Miami Beach in 2014 and is developing it in conjunction with the Dogus Group, a Turkish conglomerate.”

“West Elm, a division of Williams-Sonoma that sells modern furniture and accessories online and in nearly 90 stores nationwide, has created model hotel rooms.” Stephani Robson of Cornell “said she expected that West Elm was hoping to reach beyond existing customers.” She observes: “A brand like West Elm can signal ‘our brand is experiential’ — reinforce positioning for customers not familiar with the brand.”

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Book Capella: Library as Luxury Showroom

The Guardian: “Tapestries, leather armchairs, candelabras, sculpted woodwork and figures of the apostles: Book Capella, a newly built, gothic-inspired library in central St Petersburg, is complete with all the expected luxuries of an ancient athenaeum – and a price tag to match. To enjoy the library’s collection and atmosphere, you have to pay a ticket of just under £100 for a four-hour reading session – a markedly different experience to the free access readers can enjoy in Russia’s public libraries.”

“All the books date from between the 16th and 19th centuries and are displayed in thematic rooms with names including The Book of Wars and The Book of Travels. Its motto is a phrase from Jorge Luis Borges: ‘I have always imagined paradise as a library’.”

“However, while Book Capella proclaims its motto to be Borges’s heavenly vision, the space appears to be less library, and something more akin to a luxury showroom.” Project director Irina Khoteshova comments: “One hundred pounds per visit is certainly not a low price, but it is less expensive than tickets to the opera or ballet. People aren’t really surprised by the price itself. They are surprised that it’s the price for a visit to a library … Book Capella is not a library in the traditional sense, and it is not a museum, although elements of the museum are presented. It’s also not the bookstore, although you can buy our books here. [It] is a new way for people to communicate with rare books.”

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Footwear: How Saks Attracts Men

The New York Times: “Next week, Saks will open its first free-standing store specially for men, in Brookfield Place, the retail, office and dining complex in Lower Manhattan … The 16,000-square-foot Saks Fifth Avenue Men’s Store will include leather and shoe repair services, made-to-measure suits and a tech bar selling the latest gadgets … In the spring, an in-house Sharps barbershop and Fika coffee shop will be added. And a monthly rotating pop-up shop will feature, in the opening weeks, 200 styles of sneakers, 40 of which are Saks exclusives.”

Saks President Marc Metrick explains: “Footwear is a gateway drug.”

“Saks is luring the stylish new man with a palette of whites, taupes and silvers and chevron-patterned porcelain flooring. Gone is the brown-wood, Morton’s steakhouse look of the uptown men’s department. The vibe is not unlike the Saks women’s store at the opposite end of the complex.”

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