JC Penney Ante

Update June 19, 2012

The first casualty of the “dream team” assembled by Ron Johnson to turn Penney’s around is out. Michael Francis the former Target exec hired by Johnson as president in October 2011, is leaving the company. Someone had to take the fall. He leaves with more than $15 million in salary, severance, etc., not bad for 8 months work. In May, they reported a 20% drop in sales. I still contend it comes down to great product before illusionary marketing.

May 2012

I wrote this original post in February. Yesterday Penney’s came out with a$163 million dollar loss, which was more than double what analysts expected. The COO said there was a 10% drop in store traffic, 5% drop in conversion and a 5% drop in spending per customer. All of this happened in spite of their recent national ad blitz. In my opinion the cart came before the horse on their “everyday low price” strategy. The exciting, modern ads sent people to see the same old zombie merchandise assortment, without a coupon!

I’m rooting for them, as I applaud their gumption to reinvent moderate department store retail. It will be a challenge in their sector as there aren’t many coveted wholesale brands in their level of the market. Retailers effectively put them out of business a long time ago with their own private label. It all comes down to the product, and they will have to create it.

February 2012:

On a visit to J.C. Penney’s this week,  I was struck by the enormity of the renewal project Ron Johnson (the former Apple executive, new Penney’s

J. C. Penney’s February 2012 Promotion

CEO) has ahead of him. February marks the beginning of the huge new initiative to make this retail behemoth brand relevant. Undoubtedly, he is filled with optimism as he comes from two companies that made their own outsized luck, Target and Apple. These two companies have strong identities and strategies, that rewarded them with brand greatness. Target invented the “hip mass retailer” with their real designer collaborations and cool marketing. No mass retailer had ever taken this approach. Apple has arguably the most dynamic and transformational product line ever created; customers will line up and sleep in the cold to be first to get their new introductions. Ron Johnson is “betting the ranch” that he can transform an enormous, faceless, moderate department store into an exciting retail brand experience.

He started by cutting back endless promotions in exchange for everyday low prices. The jury is out on this strategy for me, as consumers react to a call-to-action by a promotion and love the “art of the deal”. Walmart has everyday low prices, but they struggle in fashion categories such as apparel, as uninspired design isn’t desirable at any price. Will the consumer feel the everyday low prices are simply an inexpensive store, with inferior merchandise?

The store felt more colorful and bold contemporary graphics were placed around the perimeter, defining departments.. They have taken to the airwaves with slick, modern ads à la Target or Gap in their heyday. Do these images promise something that the stores are not yet ready to deliver? See Penney’s website.

A colorful presentation by the mall entrance.

It all boils down to the product. There is SO much apparel in their stores and the consumer can’t be fooled. The problem is that most of it is in-house, private label with meaningless labels. There were pockets of appealing fashion, like the “on-trend” women’s active apparel area. Shoes hit on the dominant trends. Mannequins in the dress department were outfitted with flimsy garments, some with puckered seams. Housekeeping was unevenly clean, very sloppy or absent in some areas.

The best thing they have going for them is still the Sephora department. (I still marvel that they were able to score the sizzling beauty brand.) The long-term strategy is to reassort the store into compelling departments of viable brands. The problem is marquee affordable brands don’t really exist anymore. Over the years, as retailers started making their own insular products they effectively trumped most of the moderate wholesalers. They shut themselves off from the creativity and variety of an open market.

Target’s strategy isn’t new anymore. Real designer collaborations are still a successful way to add authenticity and design credibility to a retailer, that makes most of their own products. There is virtually no way to get credibility without doing collaborations, as there aren’t wholesale fashion brand names in their price points, that create apparel, accessories and home products that consumers crave. When was the last time a 35-year-old woman waited in line for new Alfred Dunner apparel (one of JC Penney’s wholesale brands), like they did for the Missoni collaboration at Target? J. C. Penney will fail if they try to be “Target cool” or safely, mature Kohl’s. I think the opportunity is to position themselves as the “Nordstrom for the mass market”, a fashion department store with some real strength in shoes, bags, beauty, accessories, apparel and home. Nordstrom has the ability to tap the entire creativity of the better and designer wholesale markets. They offer established and up-and-coming brands and punctuate them with their own quality private labels. Penney’s doesn’t have the advantage of being able to access premier fashion brands.

Penney’s is in a game of product poker and the consumer won’t fall for the bluff. They will have to allow real creativity and autonomy to the various in-house design groups. The customer will reward them for a shopping experience that ups-the-ante with some authentic fashion risks and unexpected offerings. It is all about the product.

Dix & Pond is the blog of Dix & Pond Consulting

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Incredible Ippolita

Ippolita's Rose collection

If you asked an average American woman to name five fine jewelry brands she would probably say Tiffany’s, David Yurman, Harry Winston and after that would probably be left scratching her head for more. Even though the fine jewelry industry is in the “fashion business”, somehow fine jewelry brands don’t seem to bubble up in the public consciousness. I think the industry has billed themselves as sellers of boring commodities versus being  “must-have”  fashion brands in their own right. It is an industry asleep at the wheel, still dominated by small local retailers and dull-as-dust mall stores. Most style icons pine for the bolder statements created  by the so-called “fashion jewelry”  (costume) companies, currently dominated  by Kate Spade, Michael Kors, Marc Jacobs, J Crew, BCBG and others.

Then there is Ippolita. This Tuscan-born, Italian-American designer of contemporary fine jewelry is soon-to-be a bigger household name. Ippolita is coming on strong with her marketing of modern precious jewelry for the fashion obsessed. Her online and traditional media is sexy and compelling in a trendsetting, casual style. This multi-disciplinary sculptress, glass artist and acclaimed jewelry designer started in private label costume jewelry in the 90’s and then introduced her first fine jewelry collection in 2000.

Her  modern risk-taking designs and casually layered style is destined for brand greatness in a sea of solitaires and yawn-inducing tennis bracelets. She layers bold, handcrafted pieces encrusted with gems in a modern melange.  Wake up and smell the espresso, this quiet little Ferrari is passing everyone on the right! Ippolita is poised to take advantage of the sturdy luxury market; as she doesn’t dish up the same safe, traditional styling found in most fine jewelry.

I have particularly fallen for her Riviera Sky (multi-colored stones set in 18K gold), Glamazon (bold silver and gold classic statement pieces like 3″ hoops and chains), Rock Candy (gemstones set in contemporary gold and silver settings) and Rose (rose gold collection of solid metals).

The sexy, modern Wicked collection.

Big Runway for Michael Kors

The Gia Satchel from Michael Kors for Spring 2012.

The Gold Python Michael Kors "Gia" Satchel

Michael Kors Holdings, LTD recently announced their first quarterly earning report since their recent successful IPO, on December 15. Not surprisingly , they were exceptional, in fact their revenues were up for third quarter by 67.9% and comp store sales were up 38%. The red-hot company is planning to open 20-30 more stores in North America in fiscal 2013, as well as many more stores in Europe and Japan.

Michael Kors’ business today is a hard-won success after a long career of ups and downs. His appearance in Project Runway helped to make him a household name in the US, but his brand speaks for itself. The company offers the designer Michael Kors luxury collection and the aspirational Michael Michael Kors lower priced line. He has created an urbane brand of sexy, glamorous pieces for sophisticated city slickers (or wannabes). There is no doubt about what you can expect in his free-standing stores: sharp and sexy shoes, statement signature bags, bold  jewelry, power-hungry watches and tight collections of sleek, wearable apparel. His direct, social and online marketing are unswervingly messaged. 

Clear brand vision gets rewarded with growth consistent with the size of your market niche, i.e. Ralph Lauren, Coach, Anthroplogie, Lululemon, Vera Bradley, etc. Kors aspirational luxury niche is a large and viable one, so he has a big growth trajectory ahead of him. The Michael Kors brand isn’t yet as well-known as Coach, which makes his future prospects even greater. There aren’t many mall competitors other than BCBG, chasing his fashion saavy, urbane audience. BCBG tends to be a tad more youthful and contemporary so their apparel fits are more challenging to an audience over 40. Smartly, Michael Kors has focused on ageless accessories, apparel is more of a punctuation to the story. (BCBG has some very formidable accessories, but focuses on clothing.) Kors reports that 62.3% of sales come from accessories and fragrances. Women’s apparel in general, has become more of a commodity, where bags and shoes still offer better turns and pricing power.

The runway is long and wide for a big take-off for Michael Kors!

Neon Lights

Live life in the glow of neon lights in 2012!

Color trends evolve and something happens in the social mood that turns colors that might have been previously unappealing, into a “must-have” sensation. For me, that is neon and heart-stopping bright colors. The are so prevalent in the market this season and sure to reach a fever pitch over the summer. The charge is led by chartreuse, shocking pink, safety orange, reflex royal and washed out neon yellow.

Perhaps, it is the pure energy of these outrageously bright colors? We have been in a recessionary funk for so long, and it is hard to be blase in the presence of neon lights. They are suddenly the essence of modern style and shed new light on a pessimistic period. They are also integral to the active sport inspired, mega-trend in fashion.

I have never been a fan on the uber-bright, but have already purchased an in-your-face chartreuse skirt this year. It is provides a bolt of lightning, every time I see it in my predominantly black and white wardrobe. It is so unfamiliar, it is a new beginning, a new life for 2012.

Neon is showing up everywhere on items like skinny jeans (Rag & Bone), dresses (Michael Kors), bags (Rebecca Minkoff), innovative colorblocked pieces (BCBG) athletic shoes (Asics), casual apparel (J Crew) and yoga wear (Zella).

The modern way to pull off these explosive colors  is to ground them with a neutral, especially heather grey or white. For a dangerous, high-voltage look combine two to three colors in one outfit. For the faint of heart, a trickle of neon trim on sneakers, pumps, a tote, belt or scarf  is enough of a good thing to change your fashion fortunes in 2012.

Copper Market

Sexy soft, metallic and deep copper tones continue for spring 2012.

Color for Spring 2012 women’s apparel and accessories seem divided in two diametrically opposed camps…sizzling hot, over-the-top brights and barely there nudes. These copper-toned, blushing beauties have been around for a few seasons, but seem to be driving the vice of copper even higher!

These “catch me if you can” colors are tender and taunting at the same time. They can be found all over the market from the dainty sequined top and skirt  from BCBG (lower right), Vince’s kitten soft sweater and dress (lower left). the caged Prada heel (upper right) and sporty items like red-hot Sperry’s metallic copper Top-Sider in the middle. They are hugely popular in rose gold toned jewelry and watches (I love  Ippolita’s Rose collection!) and are prevalent in nail colors and beauty, too.

If you are Geisha-pale, a true blond, red-head or rich dark-skinned you can rock these sexy shades. If you are somewhere in the middle, try wearing them on the bottom or on top over a pop of white or black to supply contrasting support. There is something magic about this color family. It is so feminine and seductively suggestive that it has transformational effects on the wearer.

Copper tones are the perfect expression of the mega-watt, lady-like trend in fashion. It is the counter punch to the active-inspired sporty styles that also dominate this spring.

Cardiac Arrest – Cole Haan’s Spring Oxfords

These scene-stealing Cole Haan Oxfords left me gasping for Nike air!

 I was left gasping for Nike air when I got a gander at Cole Haan’s new collection of wing-tipped, spectator oxfords for spring 2012. My heart skipped a beat when I saw their 3.5″ high heeled Lucinda Air Oxford pump in various fashion combinations of brown and hot pink (they have more compelling names like Beet/Sequoia), Black/White Pine and Sequoia/Cockle. These shoes will turn a mere mortal into a power broker in the click of a well-shod heel.

They also have a flat wingtip oxford called the Skylar…it also comes in a swanky white gold metallic combination.

The shoes have me craving a pair of well-cut menswear trousers to show off my best “manners”. 

This fashion tour-de-force is a big step in the risk taking direction for Cole Haan. They are sure to create a stampede from the fashion crowd. My husband has fallen for their killer Air Colton and Air Franklin’s, for men, too. Who would have imagined?

By the way they even have their Nike Air technology for added comfort. File this in the category of glam slam!

Talbot’s – Luffing Sailor

I originally published this post in February of 2012. Yesterday Sycamore Partners agreed to buy Talbot’s in a deal for $369 million, including net debt. This is good news for Talbot’s but the massive work to restore this shipwrecked brand is yet to come.

February 2012

I had the good fortune of meeting Nancy Talbot,  or  I should say “Mrs. Talbot” as everyone respectfully addressed her. She was a woman with a point-of-view, opinionated and had a clear vision for the iconic retail brand she had founded. Talbots was synonymous with a monied, New England coastal, lifestyle. Her customers played exclusive sports, golf, sailing, riding and tennis. They volunteered at non-profits. They had the luxury of choosing not to work. If  they worked, they were lawyers, investment bankers or women rapidly climbing the corporate ladder. If this wasn’t your real lifestyle, shopping at Talbot’s was entre to the exclusive club.

The stores felt residential. Her brand was defined by a touch of whimsy and happy color. She assorted her stores from hundreds of creative vendors, but it had the consistency of  one discriminating eye. She was a visionary brand builder in the league of a Mickey Drexler (J. Crew) or Reed Krakoff (Coach), for her time. There was a definitive social status for shopping at the red-doored, suburban stores.

Can Talbot's brand ever be restored?

Can Talbot’s brand ever be restored?

Talbot’s as it stands today is a sailor luffing in a sea of retail sameness. It lost its hard-won personality. If you woke up in a store, there would be no identifying clues to where you were.  Long ago, it lost it’s  cache of the New England good life. The series of owners and CEOs since Mrs. Talbot, didn’t understand what they were trading away. They didn’t understand how the customer evolved and weren’t protective of the exclusivity, the social aspect of the brand. They now design all of their own products and even with this centralized control, they’ve lost that one-eyed point of view. They played it safe and didn’t take any chances. In a quest for growth and uniformity, they opened hundreds of bland mall-stores. In recent years they stole other retail identities and zig-zagged product. Sales proliferated and it became “common” to shop at Talbot’s. Authenticity can’t be faked.

The Talbot’s customer was also a Coach, Burberry, J. Crew and Ralph Lauren customer. These are some of the hottest apparel and accessory brands in the world today. They stand for something, they take creative risks.  The common denominator is each one of these,  is it run by a visionary brand builder, not a committee allowed to sterilize risk taking based on historical sales. At these companies, fashion leadership dominates over history, while brand heritage is respected and evolved. Other brands are thriving in the classic fashion arena, Kate Spade, Tory Burch, Milly, Hunter Boots, Sperry, Jack Rogers to name a few. The former Talbot’s customer loves them all.

Talbots is on the block again and will inevitably be picked by another optimistic bidder. They will shutter stores and cut expenses and search for the holy grail of retail CEO’s. We are still grossly overstored and only true leaders will thrive. The results will be the same once again, if they can’t create social status and demand for shopping at this once venerable brand. They have to find leadership that truly understands that fashion is show business and have to restore credibility to the total brand experience.

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