Buyers, brand owners, and sales professionals spend a good amount of time on the road (and in the air). While most in-flight experiences are far from luxury, even in first class, we should all be working to make them a bit more bearable on ourselves.Read More
Delivering profit plans while executing company strategy requires a talented planning individual. It requires a thorough understanding of how each business metric interacts with one another. Add in cross-functional team buy-in, customer perception, and loyalty, and a master merchandise planner is more than a number cruncher.
To be a great retail buyer, you need to be a master of three skill sets:
- Product selection
- Business management
Connecting the creative aspects of buying with strong business acumen and relationship building skills is key to a successful buying career. It is the buyer’s responsibility to drive sales and profit while simultaneously identifying trends that will be important for the customer.
Uber's head of Economic Research and former economist at Yale, Keith Chen sat with NPR's Shankar Vedantam to talk about dynamic pricing and behavioral economics. This is a must listen for every merchant, buyer and product / brand manager who touches or thinks about pricing.
Addressing how they are supporting Bangladesh development, H&M produced a fairly well-rounded video. With all of the coverage on the much needed improvements to working conditions, the economic and developmental impact is often left untouched. It is this development and international investment in the country which is why organizations should continue to push for improvement in the lives of their workers.
It is a one-sided perspective, but it includes a variety of initiatives:
- Wage growth
- Skills training and upgrades
- Improved employee - management relations
What is missing, but perhaps not within the context of this video, is the environmental working conditions - exposure to toxic materials, chronic pain and ergonomic initiatives, etc. But overall, it was nice to see an organization addressing specific measures in a fuller way - not simply speaking about the cheque they cut in light of the tragedies.
Forbes Staff Writer Katia Savchuk recently wrote about the rewards of pursuing that art school degree you've thought about. It may be worth it for career progression and financial gain.
“There’s a ton of evidence that prospects for graduates from art schools today are better than they’ve ever been before in terms of income, their ability to survive economic turbulence and their preparedness for the job market of the 2020s,” says Columbia University professor Jennifer Lena
The globe's favorite (American) public broadcaster, NPR, launched a Kickstarter campaign and made 25,000 t-shirts to follow it's journey. An increasingly popular notion (see H&M's efforts, and Patagonia's transparency about their supply chain), NPR's report paints a very clear, visual picture. Videos, charts and graphs, and even photos of how different threads are spun are interesting to browse.
Whether or not you have an interest in apparel product management or product development - it's is an interesting series of videos and supporting podcasts. Visit npr.org/shirts
A week from today, Bloomingdale’s will open a three level ‘re-imagined’ store in the Stanford Shopping Center in Palo Alto. At 125,000 square feet, not only will it be smaller than the unit it is replacing (220,000) but it will also be the retailer’s smallest full-line store.
The customer demanded the same experience and assortment as their well-traveled clientele know and love from their flagship locations. The retailer, taking advantage of the rare opportunity to make a second impression, is rolling out 100 brands and 68 designer shops that were not showcased at the previous location.
Sharper editing, shop ‘tightening’, and efficient floor plans enable the retailer to offer a strong assortment of women’s, men’s, children’s, and home products. “The new building in Stanford feels bigger though it’s smaller,” added Jack Hruska, EVP of creative services. About a quarter of the exterior is designed in glass, allowing for significant amounts of natural light.
TECHNOLOGY AND SERVICE
The Palo Alto store will also serve to showcase and test the company’s latest technology-enabled service philosophy.
- Smart fitting rooms have charging stations and mirrors with touch-screen lighting options.
- Wall-mounted iPads in fitting rooms allowing customers to look up product information, message associates, and forward pictures.
- Same day delivery guarantee within 15 miles.
- Order online, pick-up in-store, which has been boosting traffic, sales and lowering return rates. Hopefully it is also allowing for customer – associate relationship maintenance.
- Touchscreen tablets allowing for product previews and information sharing with associates and friends.
- Handhelds for mobile transactions, and digital customer service (emails and texts to customers without leaving the sales floor).
BLOOMINGDALE’S QUICK FACTS
- 34-unit department store chain
- $3.2 billion in sales annually
- California’s 10 stores drive about 25 percent of the company’s total sales
- The 59th Street flagship in Manhattan also generates about a quarter of the company’s sales
Product drives most into fashion and retail – it inspires and serves a need. What supports that product, from production to sales, is retail math. Dive into our LA Retail Math sessions for a deeper understanding of the fundamentals.
Advance session attendees understanding of how retail math affects both the commerce and customer-facing side of the business. Develop skills to impact key metrics by planning for and manipulating the various factors impacting profit and sales.
One-day session facilitated by RETAIL ASSEMBLY in either Foundational or Advanced Retail Math skills. Includes participant materials and online access to covered materials until Saturday October 25.
FOUNDATIONAL RETAIL MATH SESSION
- Costing and mark-up
- Sales reporting metrics, reading and uncovering risks and opportunities
- Foundational profit, and markdown basics
ADVANCED RETAIL MATH SKILLS SESSION
- Inventory and the basics of merchandise planning metrics
- Driving profit and productivity
TWO - DAY SESSION
- Day 1 Foundational
- Day 2 Advanced Skills
A week ago we had the pleasure of attending an event hosted by the Art of Fashion and Fresh Collective – aptly titled “The Retailer’s Point of View”. Laura Bernhardson, CEO and founder of Fresh Collective gave an inspiring and passion-packed presentation that armed designers with great information about the business of retail, and the importance of building strong relationships.
Fresh Collective has an interesting model that has been fine-tuned over the years. Truly built in the spirit of growth and collaboration, the retailer has expanded to multiple locations, and all with a consignment model. Typically ‘consignment’ does not elicit a positive reaction from either retailers or suppliers, but Fresh Collection makes it work.
WHY CONSIGNMENT WORKS FOR THE RETAILER
“The bottom line is it allows us to work with emerging designers.”
Fresh Collective has a customer who appreciates and wants to support unique, local artists and designers. But any retailer (and designer) will tell you that an emerging designer business is never easy. Despite high-levels of design training, it can take years for a designer to perfect the fit, fabric selection, assortments, marketing, and even sourcing. Most retailers will wait until a brand is more established before jumping into business together – for all of the reasons above and more.
Through a consignment partnership, Fresh Collective is able to protect its profit, and provide their customers with the new, saleable, local designs they desire. The designers walk away with customer and retailer feedback and guidance, continuous cash flow, and the opportunity to develop their business.
CUSTOMER APPROPRIATE PRODUCT
Maintaining assortment integrity and merchandising can be difficult for a retailer with a consignment supplier. Often the supplier considers the space in-store to be ‘rented’ instead of part of the retailer’s own. Many large retailers, like Hudson’s Bay prefer this type of agreement. However, in a smaller store, the retailer will still want to maintain control over their environment and product selection.
Ms Bernhardson does this extremely well – not a single product reaches the hanger or shelves in-store without first being chosen. Fresh Collective’s mission really guides each product choice, “to inspire joyful living and self-expression, one relationship at a time”. Colour and print with the practical aspects required (the customer must be able to ride her bike in each day piece, and it must cover her bra straps) are all evident on the sales floor.
Working closely with designers by providing feedback on the design, and clearly articulating what her customer is looking for ensures success for both Ms Bernhardson and the designer.
PARTNERSHIP IS A LEARNING TOOL
Consignment has the effect of putting a higher level of ownership back on the designer to ensure sales plan are met. After all, they will only be paid for what they sell. The feedback from the buying team early on in the development process is the first way in which the retailer is able to ensure a high quality product which meets the customers’ wants.
Even more important is the direct interaction with the customer Fresh Collective affords its designers. Events, and even in-store communication is invaluable and often something designers receive primarily post-season, after the next collection is already designed and produced.
Smaller runs and in-season repeats are a lean and effective way to learn what resonates with customers – without huge financial mistakes in inventory buying. And the direct sales feedback means the designer can make quick changes, swapping out merchandise that isn’t selling and correcting any mistakes. This fast action keeps the retailer’s sales floor fresh, and gives the opportunity for the designer to increase his/her sales.
POWER OF AN EARLY OPPORTUNITY
Whereas a retailer like Holt Renfrew will require a cohesive, high quality line with perfected fit and capacity to create monthly collections, an emerging designer with Fresh Collective has a bit of time to work with the retailer to perfect all aspects of their brand. Because their customer is looking for novel ideas, the designer can test and try new things.
The experience, with a growing customer and sales base is ideal for a new designer. And a stable yet unique brand matrix is perfect for Fresh Collective. It’s a model that works for the retailer, their collection, and supplier base – an ideal retailing scenario.
Streetwear and its codes have become so integrated into the fashion vocabulary, it is no longer considered to be a separate category by many of the globe’s top designers. Consider the long-standing collaborations between Stella McCartney, Yohjo Yamamoto, and adidas, Erin Wassen x RVCA.
What shouldn’t be happening right now is a decline in the surf brand industry. The big 3 brands are no longer part of a subculture. Surf and board sport style have never been more important to the boarder fashion and consumer market.
Many have pointed to the supply chain inefficiencies – and Quiksilver and Billabong are certainly making some positive moves here. But what I don’t see happening is a conversation about where these brands fit within the larger apparel market. They still consider themselves to be subculture, perhaps it’s a crisis of identity.
Customers are looking for surf, more specifically they are looking for surf fashion.
“There’s definitely a bigger dialogue happening right now beyond the pieces themselves. I think fashion today is a way for people to create a community. It’s a conversation. That’s where the individuality of people takes it to another level. It takes it back to a point in time when clothing meant something. It’s important to speak back to that time. “ – Humberto Leon in conversation with Carole Lim and Shayne Oliver of Hood by Air at Selfridges
Authenticity is a significant part of any fashion experience. If the big 3 surf brands were offering the right style, it would be the ideal purchasing decision, and a better alternative to buying the fashion from retailers who are not grounded in the sport of it.
The Board Room at Selfridges
Last month luxury department store Selfridges introduced The Board room, featuring street sport classic brands Stussy and Eastpak, alongside Hood by Air, Y-3, Oak NY. Reinforcing the blurring lines between ‘street’ and fashion, the retailer also sought out it’s designers to create decks, including Jil Sander, Dries van Noten, and Rick Owens.
Slam City Skates have opened a pop-up to help with the technical aspects (i.e. hardware) of skating. It’s a nice introduction into the sport for the fashion-set. The retailer has a skate park & is offering 1-hour lessons to ensure that new Christian Louboutin boards doesn’t remain as wall art.
Taking a closer look at the influence skate and surf has had on the fashion landscape, Dazed & Confused produced a special issue of the magazine for Selfridges. What is so great about The Board Room is it pays proper homage to both street and fashion, and encourages the growth of both.
The big 3 surf brands should take a look. The market is increasing, the demand for their product should be at least keeping pace.
“A lot of what we do speaks back to this feeling: to really want to be part of something, and relating to brands.” – Humberto Leon in conversation with Carole Lim and Shayne Oliver of Hood by Air at Selfridges
Last week it was announced that Kelly Slater’s relationship with Quiksilver would be coming to an end after over 23 years. The athlete had a 100% sponsorship deal with the brand initiated April 1,1990. Slater is partnering up with Luxury group Kering, which is one of the more interesting moves we’ve seen from the action sports world in some time.
Launching his own apparel brand, Slater will be supported by Kering along the way in development and execution. Kering is expected to be a great partner with Slater operationally, helping with sourcing, logistics and e-commerce.
Kelly has once again chosen a fantastic strategic partner who can help him see his vision through. His long relationship with Quiksilver allowed him to develop fully in his sport. Slater was competitive throughout, surfing the best waves around the globe, filming documentaries and films, and travelling to remote places. With Kering, Slater is moving on to his next long-term partnership.
“For years I’ve dreamt of developing a brand that combines my love of clean living, responsibility and style.” – Kelly Slater
A MUTUALLY BENEFICIAL PARTNERSHIP
While Kering will be an incredible partner for Slater, Slater is also expected to be a strong partner for Kering. The surfer, who actively advocates on behalf of marine conservation, will serve as an ambassador. Sustainability (economic, social and environmental) is a key value at the company, which also includes Stella McCartney, Gucci, and Puma.
“Because quality is the quintessence of our brands, the challenge of sustainability stimulates us to create products that are more imaginative, longer lasting.”
Kering is pioneering a Group Environmental Profit & Loss Measure that will be considered for each brand. The EP&L measures the environmental impact across the organization’s operations and supply chain, attaching a monetary valuation to each. Many companies are speaking about responsibility, but Kering is perhaps the first to attach a profit figure to it. This will almost certainly drive different and better sustainability-related decisions.
Slater is joining a nice portfolio that will compliment his brand nicely. Kering has a proven track record of nurturing and building new talent – Alexander McQueen, Stella McCartney are great examples of this. The company already has their feet wet in the action sports world with the purchase and current turnaround of Volcom. The commitment to responsible design and production is already touted throughout the groups portfolio of brands, but perhaps most recognizable with Stella McCartney who consciously uses alternative materials to leather/fur.
SPORT & LIFESTYLE AT KERING
The Sport and Lifestyle component of Kering’s business is still small at 33 percent of the group’s total, and is dominated by PUMA, the globes number three sports brand, Wholesale represents 79 percent of the sales in S&L, but the group’s retail sales are outpacing the channel (comp retail sales grew 6 percent in 2013). Expanding into new markets and product categories (Volcom launched its first footwear collection in 2013), and knowledge sharing between the brands are expected to be the keys to Kering’s success in sport.
Volcom has been suffering the same way the other brands in the action sports world have. While Kering has yet to prove success with the brand, they are committed to the business. Fueled by solid demographic and social trends, Kering will continue to grow its Sports and Lifestyle portfolio. Kelly Slater’s brand could be a nice way forward: brand and design strength (& growth!) like Stella McCartney / Alexander McQueen, with the global appeal of sports and lifestyle apparel.
It seems the wearables market is finally generating the fashionable momentum it needs to succeed. We now live in a world where design in every aspect of our lives matters, but nowhere in tech does a design-first approach need to be taken more seriously than in the wearable category.
Luxottica’s recently announced partnership with Google Glass – particularly for the Ray Ban and Oakley brands, and the fitness category (of course, done by Nike) are making good strides in both style and function. However, it is the smartwatch category that is believed to have the largest market cap.
“Many look at the smartwatch as the next tablet, a device that will define its own category and alter the pace of the entire mobile industry,” BI Intelligence analyst Tony Danova wrote in a report published last fall, also predicting a $9.2 billion market in four years.
Although the smartwatch story is set to explode this year, there is no clear market leader. In addition, the traditional watchmaking industry has seemingly written off the possibility of wading into connected waters.
The buzziest new devices are activity trackers and watches that wirelessly connect with smartphones. Samsung’s Galaxy Gear is the most readily available device on the market. At this point, it is still speculation that Apple could launch its eagerly awaited smartwatch, preemptively dubbed iWatch, this year.
The other entrants are making slow progress, some notable names include:
- ConnecteDevice of Hong Kong (Cogito brand)
- MyKronoz from Geneva
- Pebble Technology
- I’m Watch
MyKronoz in particular is an interesting competitor to what will look to be the big two: Samsung and Apple. The company is Geneva based, which is a city whose soul is in watchmaking. Perhaps the most compelling feature is its entry price point of $69, which is comparable with Swatch’s (the leader in watches). The results at My Kronoz are good. The company aims to ship 500,000 units this year, up from 100,000 the previous year.
“We felt that the Swiss watch industry was clearly not venturing into connected watches” –Boris Brault, ceo MyKronoz
Of course, the traditional watch industry would agree: “The watch communicates, whereas the smartwatch informs. It’s totally different.” Jean-Claude Biver, president of the watches division at LVMH Moët Hennessy Louis Vuitton recently mused to WWD.
The wearable category is shifting from the world of tech to the world of fashion, and it’s time we in the fashion and retail industries educated ourselves. Wearables is not sitting on the innovation sidelines any longer – they will quickly becoming truly relevant for the early adopter.
 Diderich, Joelle. 2014 March 27. Smartwatches Gain Steam. WWD via http://www.wwd.com/accessories-news/watches/smartwatches-gain-steam-7617758/
As Baselworld welcomes over 1500 watch and jewelry brands to its show this week, both traditional and technological timepieces are poised for growth. Although, there will be little overlap between the two categories in the foreseeable future.
GROWTH IN THE LUXURY TIMEPIECE MARKET
Overall growth of Swiss exports was 1.9 percent in 2013 (a year earlier, exports achieved an impressive 11 percent increase). Most of the key players in watches experienced modest results in-line, with only a few notable exceptions.
Swatch gained market share, reporting better results in the industry with an +8.3 percent increase. On the other hand, LVMH’s profit and the number of stores rose while the company’s sales revenue for watches and jewelry declined slightly for the year.
How does an industry continue to grow, while its functionality continues to diminish? “Watches are unnecessary because anyone can see the time on their cellphone or TV,” Enrico De Paoli, watch collector, recently admitted to the NY Times. And as many savvy consumers know, a $20 watch tells times as effectively as a $20,000 watch.
Buying a particular watch is about image, it expresses a set of values and your personal style. As each luxury brand at its core speaks to a different customer, each watch brand and watch feature does the same.
Isetan reported that is annual watch sales rose more than 60 percent last year, driven by sales in “complications” and womens’ watches. For those ‘outside looking in’, complications are features like perpetual calendars (taking into account leap years), chronographs, and moonphases. This is consistent with feedback provided by many executives – it is purely emotion driving purchases and growth, no longer under the guise of functionality.
Is there room for “SMART” in horlogerie?
“I do not believe it can compete with mechanical watches in our haute horlogerie segment in terms of emotional value, the shared passion we have making our watches and the passion that our clients have, the aesthetic value and longevity of the object and its long-term value”
-Theirry Stern, ceo of Patek Philippe
Smart watches do not even seem to be a point of discussion among luxury watch executives. With continued, albeit slowing growth, overall, brands remain true to their heritage.
Swatch is one of the few traditional watch brands to toy with a smart watch, launching a connected watch with the Paparazzi back in 2004. It has since been discontinued. Nick Hayek, chief executive of Swatch Group is still not impressed enough with available technology to wade back into that business. Battery life, a lack of functional difference from a smartphone, and information security concerns are a few areas that need to be addressed before the Group considers entering the business again.
Tissot is currently developing a wi-fi watch, and is a brand already known for their touchscreen T-Touch watch. But it is moving forward cautiously, “we don’t want to go in the same direction as what is currently on the market, and especially not watches that provide personal information like your heart rate or anything like that, because when you enter the health arena, there are risks attached,” Francois Thiebaud, Tissot’s president told WWD.
One of the few retailers who has opened the conversation around how the two different worlds may interact is Paris Left Bank’s Le Bon Marche. Their new watch department opened in the summer featuring the regular luxury players alongside alternative brands like Slyde and MF&B in their Galerie Imaginaire Horlogere.
True to the gallery’s name, the brands encompassed embrace the traditional elements of timekeeping and beautiful watchmaking, but are re-imagining it in a new way. Not exactly “connected”, but expressing an innovative set of values.
“The smartwatch is an information device that tells you that you’ve got mail or a message, whereas a high-quality Swiss mechanical watch is a communication device that communicates to others who you are,” Jean-Claude Biver, president of the watches division at LVMH said.
It is important not to discount the results achieved by Swiss watchmakers. The luxury business has never been built on a fleeting new thing, and often sells and appeals to consumers through its heritage. It is the premium end of the market that is driving much of the growth in watches, exports above 3,000 francs ($3,390 US at today’s exchange) grew 2.8 percent, while watches below 200 francs ($226 US) declined by 8.5 percent.
Perhaps smart watches and traditional timepieces really are playing in different fields. They are certainly appealing to very different customer needs for the time being.
Victoria Gomelsky wrote an excellent piece on some of the most interesting luxury watch products on the market. Click below to have a peek through.
 Henselder, Axel. 2014 March 27. “Looking Good: Swiss watch industry ticking along at record pace”. Baselworld Daily News.
Target’s expansion into Canada in 2013 was met with high expectations, and a level of excitement, all of which was decidedly missing when Walmart made a similar move in 1994 with the purchase of 122 Woolco stores.
The fiscal year generated $1.3 billion for Target, and the team operated with a gross margin rate of 14.9 percent. Although this was below the company’s expectations, considering the volume of openings – 124 in less than a year, these results would be considered a win by many retailers (although operating losses for the next two years are a tough metric to swallow).
The quarter-by-quarter sales are increasing at a faster rate than the number of stores. However, the concern is the low margin rates in the second half of the year as the retailer began to clear excess inventory.
Strangely though, this isn’t what the customer is seeing. Empty shelves have been the widely reported inventory story in the country’s media. At a dinner party this past weekend in rural Ontario, the consensus around the table was that the company was “selling out” of merchandise too quickly because the company wasn’t buying enough.
Much of the retailer’s launch shows consumer perception at odds with what the business is telling the merchant and buying team. Initially, Target had indicated that the higher-than-expected demand attributed to the lack of inventory. However, almost a year into business it indicates a larger distribution and allocation issue with the retailer.
Is it possible that Target’s sales plans would never have allowed the buyers to fill store shelves? Typically if a retailer is missing its sales plans, as Target is consistent in suggesting, it results in the opposite issue of too much inventory in-store.
Pricing perception is another issue that both the media and consumers have embraced. Higher pricing is something Canadians are particularly sensitive to as higher duties and shipping costs often put goods just south of the border 10 to 15 percent less expensive on average. Target has always understood this, and despite multiple pricing surveys indicating Target is on-par with their Canadian competition, consumers believe they are being over-charged for goods compared with US Target stores.
A feature unique to Canada’s retail landscape is the brand and product exclusivity the country’s major players have secured. Unlike most countries, Canada has only one or two national players in each market category. This lockout may have prevented Target from forming key relationships with suppliers immediately in the country.
The retailer managed to secure some excellent working relationships regardless, a grocery partner was announced almost immediately and the Starbuck’s partnership soon followed. Many apparel designer collaborations, which Target has become known for, were rolled out in Canada including Peter Pilotto and 3.1 Phillip Lim.
Announcements with Root’s Beaver Canoe brand were a bit later, the exclusive home collection not to launch until September 2013, and Aliment du Quebec in the same period.
Despite Target’s initial challenges with inventory and distribution, some product assortment hurdles, and diminishing pricing concerns, it’s surprising the Canadian consumer hasn’t embraced the many social efforts of the company.
Their marketing is downright clever and suited perfectly to the market. It combines national pride, humo(u)r and friendliness which appeals to the broader population. In addition, Target has a full collection of stores which are all LEED certified – a remarkable feat considering they purchased their locations from HBC.
Target also distributes 5 percent of its profit through local community and social programs. School nutrition programs, Lac-Megantic Relief efforts, and Alberta flood relief have all benefited last year.
This reinforces the truly national focus the retailer has taken, embracing both major cities and small-town Canada. Their launch events featured storytellers in Halifax, the three tenors in Toronto, free Christmas tree farms in Sudbury, a hockey tournament in West Ferris, an art installation in Edmonton, and Carly Rae Jepsen in Mission BC.
Although Target has secured only 0.2 percent of Canada’s coveted grocery market to-date, we expect they will come out on top.
RETAIL ASSEMBLY is a mission-driven organization, upgrading skills and enhancing great businesses. Our top offering to this day is The Retail Buying Course, with case studies, great foundations and business insight. And if you wanted a deep dive into inventory management and demand-planning, our Bundle is coveted across the industry.
When it takes one year to prepare to make a tie, how do you grow this business to be ten percent of sales (425 million euros in 2012) for a luxury maison?
After only bags and scarves, le cravat is the most important business for the French luxury company Hermes. What is remarkable about the category’s significant size is that it takes over a year to develop a single tie. The design process alone is 2,000 hours, or six to eight months. Drawn in the Paris studio, the design is then sent to the engraver where colours are separated.
The quality of the Hermes tie is a direct result of its production. Rolls of silk are spread across tables, colours mixed in and then the silk twill thread is woven. This process is another six months, with the discerning eye of the artisans, finishers, and quality control.
“The solidarity of the twill is exceptional”, two distinct pieces to assemble (the blade and tail) versus the industry standard of three, and a single lining (when the industry, again, has usually two lining types), ensure excellent durability and dry-cleaning results.
Photos by Nathan Pask for WWD.
With a development investment as high as each tie is, we are referring here to the 2,000 hours of design plus another few months of engraving, how has Hermes grown the business in its almost 50 years? In 2012 silk and textiles saw increases of 16 percent over the previous year.
“Our designs evolve perpetually – we never engage in a big revolution, but we change in each collection the size of the designs, the rhythm, and color combinations,” Christophe Goineau, creative director of Hermes men’s silk department, told WWD. The Hermes 59 EA vintage silk tie has had 100 different colors applied to it over the years.
Tie size, options of light- and heavy- twill fabrics, and an eight- centimeter width versus a 9.1 centimeter provide additional options which do not significantly affect the production process – and very little of the design and engraving process.
Classical designs offer a longer shelf life, and lend themselves more easily to different color combinations. The whimsical designs offer more play and creativity in scale, and rhythm. This is how the company maximizes each design’s life – and their sales.
Read more strategic business insights:
Hermes is a company known for its high quality, meticulous, creative and talented artists and craftspeople. They are also one of the most successful and profitable luxury companies on the globe today, out-indexing the players with double digit increases year-over-year. It is something they have achieved this without sacrificing their values and core.
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Nordstrom has launched a new beauty concept that will continue to roll out to top doors next year. The retailer achieved $1.2 billion in beauty sales last year, and is now looking to create a new environment for their customers. They are not inventing a model, it bears resemblance with much of what is happening at Sephora stores, but they deserve full credit for evolving beyond the standard department store model.
Brand presentations complete with brand ambassadors dominate the main floor of almost every department store. Macy's, in fact, just completed their own cosmetics floor renovation at Herald Square, which featured mainly redone brand counters (shown above). By introducing open-sell and a list of other features, Nordstrom is setting itself apart.
Open sell, stocking and displaying product so the customer can pick it up herself and head to the check-out (without having to go through a brand-appointed sales person), is perhaps the most important strategy Nordstrom adopted to support it's strong service component. It should be noted that Nordstrom's service philosophy differs from the luxury business norm. The retailer believes in giving their customer freedom of choice, both in product, but also in how they want to be serviced. This includes the freedom to walk in-store and pick-up a favorite lipstick or cream without interacting one-on-one with a brand ambassador.
Nordstrom has not abandoned the traditional model; they are simply using both. Brand ambassadors are still present to service those customers seeking advice. Alexandre Choueiri of L'Oreal USA agrees, "Luxury buyers consistently ask for more brand expertise, more educated staff on our brands, better service around products, etc".
A beauty concierge further highlights Nordstrom's commitment to servicing the customer the way in which they want to be serviced. Beauty concierge features industry experts who are not connected to a particular brand.
Many of the retailers more innovative partners have shown support for the concierge; Louis Desazars (CEO of Nars), "their opinions should not be skewed ad should be very genuine to what they believe is the right product for the customer…I think it was a very smart move for Nordstrom".
The end-cap category displays help the customer to navigate some of the more populated merchandise categories. They also feature trend focused multi-brand assortments throughout the store, ensuring the overall experience is playful and fun.
Retailers like H&M, Forever 21, and Sephora have long offered a mini must-haves section, generally located close to the long line-ups to the check-out counter. They have served as great pick-me-ups and add-ons to increase the customer's basket and spend. Nordstrom is ensuring their mini must-haves will turn once a month featuring "what's really hot in beauty". Mini's are a great way for customers to trial and test a product.
SERVICING MULTIPLE CUSTOMERS EASIER
Nordstrom's focus on servicing their loyal and new customers continues to drive them toward new ideas at a much quicker pace then most department stores. By eliminating barriers and increasing customer's engagement and access to the product, their service environment is more dynamic and shoppable for a new wave of consumers.
"You can really service multiple customers easier than a traditional environment"
-Alicia Valencia SVP of sales and marketing at Bobbi Brown.
Last year, Nordstrom's beauty category achieved over $1.2 billion in sales, which is a healthy business for the retailer at 11-12 percent of its total. They certainly did not need the renovation of drive sales, but often those who get ahead of the game remain there.