2011: A New Year in Retail

Happy New Year! 

The New Year is a perfect opportunity for reflection on the successes and challenges of last year. It is an opportunity to start planning for this year’s business with the slate wiped clean, especially if the fourth quarter brought more challenges than successes. Despite many retailers experiencing a slump this Q4, some retailers experienced impressive growth. Apple of course being top dog this holiday season with the iPad being a leading gift and amazon a leader of online sales. In fact, online sales experienced another year of significant growth  during the holiday season. Regardless of what your financial outcome for 2010, now is the time to create a plan for the new year.  As a retailer, now is the perfect opportunity to ask yourself a few questions.

What can be improved upon from 2010?

What opportunities were missed?

How should I be investing?

What can I cut back on?

How can the assortment better meet the demands of the consumer?

How can customer relations be improved?

These are just a handful of questions retailers begin to ask themselves as the new year arrives. Often times these questions are being answered even as the fourth quarter is playing out. I once had a brilliant mentor impress upon me the necessity of a 52 week calendar. 52 weeks is all we have in order to achieve our financial goals. When you look on a calendar those 52 weeks fill up very quickly and if you find your self in week 26 without a plan of action you have done yourself a tremendous disservice. Start the 52 week calendar now. What are you going to be doing each week for 52 weeks which will allow you to achieve your financial goals.

How do you start a 52 week calendar?

1.       Print a calendar of the year and start filling it out.

2.       Look back at what happened last year and the year before? Are there any patterns, cycles in spending with tourists, events, conferences which impact your business?—If so, write them down on the calendar.

3.       What events, conferences etc do you want to target and work on building a clientele from? Mark them on your calendar and later come up with a strategic plan on how to market and outreach.

4.       What type of marketing or advertising will you be doing? When will it go public?-Mark it on the calendar.

5.       What events either image or promotional will you be planning for your business this upcoming year. When is sale? When does new product arrive? Does the first day of school effect your business if you are in an area with a high concentration of college students? Do you plan on having a fashion show, participating in a trade show? Will you have trunk shows, demonstrations, designer visits etc?-Mark it down.

6.       When does your customer primarily shop? During slower periods of business plan what you can be doing in order to entice new customers to come in. I don’t like to push promotions because they  impact the margin and the bottom line but would a promotion for a particular target group like a student discount during the school year have a postive return on investment (ROI)?

7.       Does a top client have a strong relationship with an organization that you would like to partner with? A charity group? A business group? Would you be able to do an event with them offering a discount for the day of the event or a portion of the proceeds going to the charity?

These are just a few ideas and once you start this exercise you will find that the calendar fills up very quickly. This is just an organizational exercise. It is up to you to execute and follow through. This is the most important part. Remember each week is key to achieving your overall annual plan. Retail is about execution and being at the top of your game each and every day.

Good luck in 2011!

LVMH and Hermes-Part 3- A self made billionaire takes on an aristocracy

The saga continues and will continue for quite some time. How dare a nouveau riche try to gain control over a family owned, operated and managed 173 year old brand. Despite this modest summation the drama that is unfolding in France is an interesting one. One which has questioned current French law and one that could have a great impact in the landscape of French luxury which has a rich history within the apparel industry.

Bernard Arnault, the wealthiest man in France, purchased a 17.1% stake in Hermes through cash-settled equity swaps back on October 23, 2010. This began the saga which will continue for a very long time but who will be victorious? History says Arnault has a pretty good chance given his patience and strong business acumen. But it is also history that leads the family of Hermes and the public to question Arnault's plans of a hostile takeover, a takeover similar to his takeover of Louis Vuitton. Many in the financial world see this saga as absurd given that it is just business and buyouts and takeovers happen all of the time. But to the Hermes family this is an audacious move made against them.

As it stands Hermes is controlled by the 3 family branches descended from the founder, Theirry Hermes, the Dumas, the Puech and the Guerrand which own a combined 73.4% stake in the company and have the only decision making control. However, as time passes and the fourth generation gets older, eventually subsequent generations will gain their shares and control in the family business. The fourth generation had only 3 descendants while the sixth generation will have 20, greatly diluting the shares of the company among several individuals. This is what Arnault and LVMH is waiting for, as the quantity of shares get smaller and the number of inheriting family members grows, the younger family members may be open to selling their shares which opens the gate for LVMH to increase their stock ownership in Hermes.

Will an Arnault and LVMH control change Hermes? Speculation suggests that given the history of Arnault's takeovers he is very concerned with protecting the integrity and history of the brands he acquires which means there could be very little to no impact on the DNA of Hermes and Hermes in turn would gain all of the resources LVMH has to offer which could expand the brand to areas of the world it is not yet located. That being said, it all depends on how LVMH wishes to expand Hermes. An expansion could result in a decreased average price in order to increase market share throughout the world which would directly impact the brand identity and DNA. But all of this is speculation, as the saga continues we will find out more. At this point in time the consumer does not appear to be phased by this drama but the backlash and comments made by the Hermes family certainly is entertaining to those of us interested in the business of this industry. Only time will tell but if history repeats itself we could see a major change in the landscape of French luxury within two to three years.

LVMH and Hermes- Part 2- French Law Could Change

Shortly after LVMH had purchased a 17.1% stake in the prestigious French luxury brand Hermes, the French government could be changing their law, why? Today the French law states that investors must make a declaration when a purchase is made more than 5% of a company's stock; however this does not include cash-settled equity swaps which was the method used when LVMH made their purchase. In an effort to protect companies from hostile coups the French government may be changing it's laws. If the law change is not made there is potential for others to do the same and with little transparency it causes a dilemma for companies and its shareholders.

Transparency on such matters enables share holders to decide when to sell and when to buy and if no one knows who is increasing their shares, if cash-settled equity swaps are being used, then the principle shareholders could change without anyone's knowledge until the deed is done.

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NYC's Fashion Industry Forges Ahead For the Next Generation

Last week during the CEO Apparel and Retail Summit Mayor Bloomberg announced the plans New York City has in store to revitalize the fashion industry and lay the groundwork for maintaining its strength for the future. The plan is an aggressive multiple point plan that will make the industry current and promote and cultivate new talent to lead the industry into the next generation.

The capital of the US apparel industry is New York City which employs 165,000 people and accounts for 5.5% of the city's workforce. With this being said, each year jobs and manufacturing continue to be moved overseas and out of the country so New York has reacted by developing a plan with the Mayor to preserve the heritage and industry that has played, and continues to play such an integral role in New York's economic structure and history.

The main points of the plan are as follows:

* NYC Fashion Fund, to help emerging designers gain access to capital and support services to produce their goods.


* Project Pop-up, an annual competition to promote new and original retail concepts. Temporary pop-up stores could be created to test some of the ideas generated.


* New York City Fashion Draft, an annual event to coordinate the recruitment of college students from the United States and around the world who are interested in fashion management.


* Fashion Campus NYC, offering business seminars led by industry executives, and networking opportunities to summer interns.


* New York City Fashion Fellows, which will recognize 30 rising stars in business-related fashion management who are now often overlooked when the industry hands out awards to those in the creative end of the business.


* Designer as Entrepreneur, to help emerging designers boost their business skills through a boot camp that focuses on business plans, financial management and e-commerce.

Although New York, followed by LA, is the apparel capital in the US there are several programs, funds and resources that have the same goal in mind. Each month new resources present themselves online and in brick and mortar. Being one such resource, MODEcollective will continue to use this same philosophy in an effort to arm young talent and students with as much information and resources as possible to become active participants in the US fashion and apparel industry.

Fairchild's WWD celebrates 100 years and brings 10 year old Style.com to join the group

Big events for two of the largest resources for the fashion obsessed.

WWD, a Fairchild Publication and an icon in the fashion industry, celebrates 100 years as a publication. This month in celebration of this momentous occasion, WWD published a large edition for their milestone, filled with images, photos and features highlighting the history of the industry that they have captured in the pages of their newspaper for the past 100 years. This is an edition not to be missed and I encourage fashion enthusiasts, industry professionals and especially students and young people entering the fashion industry to pick up a copy and read some of the features. Being a fashion enthusiast and professional myself I get so excited learning more about the industry I fell in love with. As you turn through the pages of the milestone edition you read about the outside influences of fashion for the past 100 years, the founders of the New York fashion industry, the history of the designers who lead the industry today and much, much more.

In addition to WWD celebrating 100 years Fairchild Fashion group also brought the fashion resource Style.com (formerly of Conde Nast) to their group. Mutually the two companies are very positive that this is the best way to proceed for the future of Style.com. Beginning last year and continuing this year, Conde Nast Digital has made other changes to their portfolio which included giving W and Vogue their own web sites. In addition the former Men.Style.com folded and became part of GQ. This leaves us with the question, "What is next for Conde Nast Digital?"

LVMH takes a 17% Stake in Hermes

Bernard Arnault

On October 25th WWD announced that LVMH acquired a 17% stake of Hermes. Hermes, founded in 1837 is the french fashion house which is the epitome of luxury and elegance. Receiving anything in an orange box, regardless of the size, is exclusive and absolutely divine.  Three days later on the October 28th WWD announces that LVMH could possibly be interested in buying more stakes in Hermes but LVMH has said it is not interested in seeking out representation on the board of Hermes nor is LVMH interested in taking over the brand at this time.  Hermes says they will battle if a takeover attempt were to be made.

So why would Hermes be so quick to say they would fight a takeover?  History plays a significant role.

In reality many of our favorite brands, designers and luxury houses are owned or partly owned by other major organizations. However, the significance in this case is the history of LVMH, the brain child of Bernard Arnault, the 7th wealthiest man in the world at an estimated net wort of $27.5 billion USD. If we look at the history of events and circumstances that led to the establishment of LVMH we will find that looking into the past may give us some insight into future intentions.

What is the history of the establishment of LVMH, the largest luxury conglomerate in the world and why could this be a sign of what is to come?

Let's start at the beginning, Bernard Arnault had a vision which employed his savvy business sense to acquire luxury brands and to acquire the best. At 37 years old, in 1984, Arnault began this endeavor by acquiring Agache Willot, a company who went bankrupt who had the valuable asset of Christian Dior and he also financed the once-hyped Christian Lacroix and aimed to build him up from square one. When it came to creating LVMH, Arnault had done his research and exploited the conflict between Moet Hennesy's CEO and the president of Louis Vuitton in order to merge the two. Arnault above all is a smart and shrewd businessman who capitalized on buying up brands he believed in who were in financial trouble, companies who experienced conflicts and he took advantage of companies whose stock prices decreased in market crashes. This was the beginning of years aggressively pursuing, almost like a predator, brands that he coveted as he began creating his conglomerate through hostile takeovers and buyouts.

Despite the polemic approaches Arnault used to create his masterpiece, he is also responsible for revitalizing, saving, bringing many brands to the levels of success they are today as well as giving opportunity to American designers and young, emerging and modern talent the like of Michael Kors, Alexander McQueen and Marc Jacobs.

Given this history one must wonder what the plans LVMH and Arnault may have for Hermes.