Is Bankruptcy Looming for J.Crew?

J. Crew’s Financials Aren’t Good

A Reuters article, dated 11/16/16 is speculating that J.Crew is considering a spin-off of their successful Madewell division, in a likely attempt to raise cash. According to the 3rd quarter 2016 results, J.Crew stores had a 7% sales decline and including Madewell, had roughly $1.5 billion in debt and just $38 million in cash. This is not a healthy place to be.

What happened to one of the best specialty retailers in America? It’s easy to blame mall traffic, but those shoppers are shopping elsewhere and online. By the way, J.Crew has had an exceptional e-commerce site for many years.

They got caught in a maelstrom of changing trends and self-inflicted wounds.

The 4 Biggest Reasons J.Crew is Struggling

Millennial shoppers are the most strapped generation in decades. This largest demographic in the history of the US, is now 16-33. They are the most diverse American generation ever, with a wide range of tastes. Their shallow pockets have given rise to fast-fashion, consignment, rental and vintage apparel sales. I don’t think they aren’t interested in fashion, but clothing is discretionary after rent, school debt, healthcare, transportation and food costs. 

J. Crew had been dogged by inconsistent quality and styling.

J. Crew had been dogged by inconsistent quality and styling.

J.Crew seemed to target this growing base with lower quality materials in an attempt to decrease or hold prices. They also dabbled in trendier silhouettes, adding to the brand confusion. In the classic business you walk a fine line, to offer the expected, with a touch of newness to excite the customer.

Seemingly, in an attempt to be all things to all customers, they alienated fans that saw them as the quality, hip “American” lifestyle brand in the mall. They should have embraced their monopoly as a reliable, premium brand and let the rest of the generic tenants duke it out.

J.Crew had what they thought was a winning formula, cotton/spandex Capri pants, cashmere sweaters and cotton tees. They rested on formulaic laurels while customers were discovering more comfortable, durable and flattering fabrics in athletic apparel from the likes of Lululemon and many others. The rapid adoption of athleisure was lost on J.Crew. They didn’t see that customers were embracing a new casual. They should have evolved some of their assortment to address the exodus, in new fabrications or styling with a J.Crew spin. They just launched, in fall 2016, a “brand-right” athletic apparel collaboration with New Balance, maybe too little, too late. The athletic apparel market has much less elbow room at this point.

There are new kids on the block. At one time, J.Crew was the epitome of the modern prepster. They blended an urbane twist with classic American looks, to define an eclectic, cool state of prep. This wearable market position had a wide audience with fashion and traditional customers.

This late summer 2016 product is what they are know for, classic with a twist.

This late summer 2016 product is what they are known for, classic with a twist.

In recent years, they veered off course with poor quality or trendy items, overly eclectic pairings and strange colors, a road too far for their loyal customer.

As J.Crew confused its customer, they created a vacuum for other rapidly growing, consistent brands to fill. Kate Spade has taken away legions of suburban and urban women of all ages with their whimsical, colorful vibe. Vineyard Vines offers the traditional country club and aspiring wanna-bees,  preppy classics, that really resonate with Millennials. J. McLaughlin attracts the hard-core suburban prepster with uber-traditional, quality clothes. Tory Burch skims off the East Side, preppy customer. Club Monaco speaks to the contemporary, classic customer. These five brands are growing and nibbling at J.Crew’s forgotten following. The pie is only so big and their slice is getting smaller.

There continues to be significant markdowns across categories.

There continues to be significant markdowns across categories.

The stores need a facelift. The above brands have bright, organized new store formats. J.Crew’s shops are cluttered, chaotic and dark and the wood paneling feels very Brooks Brother’s 1992. They don’t highlight their best categories in a focused, shoppable layout. The brand experience needs a serious intervention, a difficult task, with mountains of debt.

None of these opinions are probably news to J.Crew. This is a formidable company with tremendous talent. Maybe they became too insular or content?

This product is a bright spot in the Fall 2016 assortment.

This product is a bright spot in the Fall 2016 assortment.

Amidst the clutter this fall, I’ve seen glimpses of the best of J.Crew. Time will tell, if it’s enough to save them from a painful bankruptcy. It’s not looking good based on 3rd quarter results.

Most retailers never achieve the iconic consumer and fashion industry respect of J.Crew. I’m rooting for them to turn this ship around.

 

Some other posts you might enjoy:

Decoding Millennial Shopping Traits & Habits

Are Sporting Goods & Outdoor in a Death Spiral?

7 Common Fashion Brand Management Mistakes

 

The Dix & Pond Blog, by Stephanie Bernier is the blog of  Dix & Pond Consulting, a Boston-based, company that consults on business strategy, creative direction, brand experience, trends, product development and merchandising. Clients include retailers, apparel, footwear & consumer companies.  CONTACT US TODAY! 

Thank you for sharing with a friend, if you enjoyed the post!

 

 

 

 

 

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Post Bankruptcies:What’s Next for Sporting Goods Makers?

Sporting Goods And Retail Space Are Shrinking

By now, most major sporting goods suppliers of apparel, footwear and equipment have taken a significant write-off from the Sports Authority bankruptcy and others, like Vestis Group’s Eastern Mountain Sports and Sports Chalet.

Sports Authority represented about 450 big doors for equipment, shoes and apparel. Under Armour has reported a $23 million dollar charge related to the bankruptcy, one of the largest reported losses. Some will be resurrected by buyers like Dick’s Sporting Goods, but most of these distribution points have gone away forever. This is natural pruning of a diseased tree.

The sporting goods channel is challenged by many factors. They have an over abundance of similar apparel, when the athletic apparel market has exploded in terms of styling, new brands and available outlets to buy. Women no longer need to shop in sporting goods stores for clothes. Young people have lower sports participation rates and more single-sport focus. Millennials are increasingly exercising in specialty fitness clubs like SoulCycle, Flywheel, Orange Theory, Pure Barre, Title Boxing and others, versus traditional sports participation.

Health and wellness are mega-trends, but we just don’t need as much square footage in traditional sporting goods doors. A lot of athletic apparel and footwear has migrated away to other retail doors and we are in a seriously over-stored environment for all types of consumer goods.

Sports & Athletic Manufacturers Must Get Creative

What does a traditional manufacturer of athletic apparel, footwear or equipment do when their available floor or virtual distribution space is shrinking? They have to get creative and take share from competitors. That means business focus, seeking alternative distribution points and sharpening their brand and product offerings. Here are six ways to improve athletic related sales in a diluted market:

Focus Your Strategy – Now more than ever companies cannot afford to dabble in duplicative or pet projects that drain precious resources. This means pruning and consolidating your company’s tree, to concentrate on fewer, but clearly promising categories or businesses.

Find New Distribution Channels – This means potentially selling into a channel, location, market or country that you have never considered before.

Under Armour just announced that they are going to sell the moderate channel starting with Kohl’s. This will help them reach more female, suburban customers. They have around 1100 locations, which could more than make up for the Sports Authority loss.

Sometimes creative distribution creates strange bedfellows, but everyone wins. A great example of this is Nordstrom selling J. Crew’s Madewell product, in their full-line stores. Nordstrom is supporting a retail competitor and J. Crew has become a wholesaler. They both have flipped the script and it is working out very well.

Brainstorm for new opportunities by imagining the mirror opposite of your current strategy and point-of-view. Consider complementary partner brands for co-promotion.

Grow Direct to Consumer –Wholesale brands can no longer count on their traditional retail customers for continued future growth. They need to have a strong direct-to-consumer strategy to sell to or introduce their brands to new consumers. This includes considering every possible format…brick and mortar, pop-ups, retail showrooms for e-commerce, e-commerce, brand ambassador selling, direct mail, shopping trucks, event and festival sales, VIP events, home shopping networks, parties, etc. What are the new ways to bring it to the customer, on their terms?

Think Product First – There is no fooling consumers, they know innovation and creativity when they see it. Marginal product always equals marginal results. Frequently companies pour millions into marketing, when their product doesn’t live up to the hype. Creating growth means product first, as they may never see your marketing messages in a splintered media.

Force Fresh Perspectives and Creative Risk Taking – Stella McCartney, Pharrell Williams and Kanye, put Adidas back on the map. Rihanna is growing Puma’s bottom line. These celebrity or designer collaborations can be game-changing and newsworthy (not always successful) to bring new converts into the brand.

The idea is forcing fresh perspectives and taking creative risks. For instance, this can be done by hiring fashion people to do shoes and shoe people to re-imagine apparel. How do you surprise and delight customers? If you are still working like it’s 2006, you’re probably not on an uphill track.

Great Brand Experience is Key – Clearly defined brands that offer a consistent experience to their customers, will fare best in a lukewarm market. Does you product have an identity that it can be identified without labels? Do your products, stores, website, packaging, marketing and service have a compelling and consistent promise for the target consumer?

When was the last time you went in a sporting goods or retail  store and felt excited to buy? Consumers increasingly want experiences from brick and mortar retail, so stores must innovate with decor, services, restaurants, bars, events, fitting clinics and loyalty programs to attract a consumer bombarded with choices. Own The Moment stores by Bauer is an exciting example of a completely reimagined sporting goods experience.

 

Some other posts you might enjoy:

Decoding Millennial Shopping Traits & Habits

Are Sporting Goods & Outdoor in a Death Spiral?

The New Definition of Athletic Apparel

The Dix & Pond Blog, by Stephanie Bernier is the blog of  Dix & Pond Consulting, a Boston-based, company that consults on business strategy, creative direction, brand experience, trends, product development and merchandising. Clients include retailers, apparel, footwear & consumer companies.  CONTACT US TODAY! 

Thank you for sharing with a friend, if you enjoyed the post! 

 

 

 

 

 

 

Tough Retail: 7 Ways to Grow Your Consumer Brand

Seismic Changes Are Happening to Retail

Under-employment, stagnant wages, historically high school debt, credit card debt, large healthcare deductibles, staggering urban rent, first homes, weddings and new babies, is there any wonder why Millennials seek value in their discretionary purchases like apparel, accessories, footwear and home?

This is the overhang from a deep recession, the Affordable Care Act and lackluster recovery. It has given rise to the Amazon-effect, outlets, successful discounters like TJX, fast-fashion, rental, consignment and intense comparison shopping. Who can afford to pay full-price?

Practically every retailer and brand is chasing the most cash-strapped generation in decades, because the Millennial generation, ages 15-33 is now the largest population in the US, finally surpassing the much wealthier Baby Boomers and Generation X.

A quote in the Wall Street Journal on May 12, really caught my attention. “Non-discretionary spending on health, insurance, education, and housing has taken an extra 4% out of personal consumption expenditures in 2015 compared with 2000, according to Craig Johnson, president of consulting firm Customer Growth Partners. That has reduced the discretionary spending available for traditional retailers by $500 billon, more than the combined annual sales of Walmart Stores and Costco Wholesale combined.” No wonder  we are seriously over-stored.

Traffic is down at brick and mortar retailers, everyone is trying to explain it, but the reasons are actually quite obvious. There are huge headwinds on spending, so consumers are chasing good deals or staying home.

Online retail, even though it represents less than 10% of all purchases is the fastest growing retail channel. This reflects the ease of comparison shopping, selection and simplicity for insanely time-strapped consumers. It isn’t the best way to browse or make impulse purchases. Who goes on Amazon, just to see what’s new?

Survival Strategies in Tough Times for Consumer Brands

What should apparel, footwear, home and consumer discretionary companies do to combat intense spending headwinds? Here are seven ways to grow in tough times:

Offer brand value. Brands with a consistent, clear identity and experience will rise above the clutter and command higher prices than weak concepts and me-too products. Think Apple, Nike, Under Armour, Kate Spade, Madewell and West Elm.

Be strategically focused on core strengths. It’s necessary to test new things, but focus on your sweet spots, invest in your strengths and best brands. Don’t get romanced with low-value, expensive projects and extensions.

Value great design. Creativity and innovation create demand and pricing power. Big marketing efforts without great products to back them up, won’t fool consumers, who value authenticity.

Look for untapped markets or niche opportunities. For instance, the  underserved plus-size markets for women and men, trending activities, hot fitness trends, growing sports, hobbies, etc..

Increase DTC efforts. Many stores will close, decreasing available doors for your apparel, footwear and consumer products. Your direct to consumer efforts online, with company-owned stores, pop-up stores, partnerships, direct mail etc., will help you control your brand message and destiny.

Think beyond Millennials. Brands with cross-generational “lifestyle” appeal will weather the competitive storm better than discretionary fashion brands just targeting Millennials. Baby Boomers have the greatest wealth in the history of the US and are due to inherit even more, even though they also took a hit during the Recession.

Take risks. This is counterintuitive in bad times. Hire experienced and visionary people who can execute a well-balanced strategy of taking creative risks while covering established business.

 

Some other posts you might enjoy:

7 Common Fashion Brand Management Mistakes

The New Definition of Athletic Apparel

Decoding Millennial Shopping Traits & Habits

 

The Dix & Pond Blog, by Stephanie Bernier is the blog of  Dix & Pond Consulting, a Boston-based, company that consults on business strategy, creative direction, brand experience, trends, product development and merchandising. Clients include retailers, apparel, footwear & consumer companies.  CONTACT US TODAY! 

Thank you for sharing with a friend, if you enjoyed the post! 

 

 

7 Common Fashion Brand Management Mistakes

Great Fashion Brands Sell A Promise, Much More Than Products

It’s easy to think of fashion, consumer or retail brands that have lost substantial brand value over the decades. A great example is Talbot’s, once a venerable specialty retail force that sold customers a promise of the well-bred New England costal life. They also happened to sell preppy clothes and accessories. Over decades and several owners, the brand has been diluted to a unremarkable chain of apparel stores, a mere shadow of it’s storied past.

Great brands sell a relatable promise, values and even fantasies at an accepted value/price relationship. Products are number one, but it so much more than product. If you can’t identify and express this “magic quotient” in your fashion or retail brand, you have a serious problem. This is a big part of the “why me?” of a brand.

The “magic” is often so intangible that owners, managers, finance, merchandisers and even creative staff don’t get it. They find themselves stewards of a brand without the know-how to take it forward, without losing it’s soul. They collectively tinker with the recipe, ending up with a thin soup. Their individual actions are often random and lack a singular vision.

7 Common Fashion Brand Management Mistakes

Consumer goods, especially apparel, home and footwear markets are brutally competitive today. Brand relevance and management has never been more critical in these fashion businesses. Here are 7 common fashion brand management mistakes:

  • The brand doesn’t have a clearly understood brand promise that the whole organization works from.
  • The company targets the wrong persona for the brand.
  • The products aren’t compelling and/or full of mixed messages. They extend the brand into new categories without a shepherd with a consistent vision.
  • Companies have the wrong people in key positions. Creative directors are often the brand visionary and steward for brand integrity across the organization. Hiring a poor creative leader can have disastrous results. A great creative director can get the best out of an average design and marketing team. They have to be clear , motivational leaders and able to stand up to equally senior employees in the company.
  • Companies sometimes overly-empower newly-minted designers, assuming they innately know what customers want. Experience does matter.
  • Design, merchandising and sales teams continue to repeat the same products without evolving the products for modern needs and relevance. They may be blind to demographic and fashion trends that affect the brand. Some insiders resist change.
  • Sometimes management outsources brand reinvention to branding and marketing agencies without the experience or market knowledge to make sense of the real path to growth.

Sorel,  A Perfect Case Study in Brand Evolution

Whether a brand is two, five years or many decades old, it’s value and brand promise has to be continually monitored for current relevance. It’s difficult to turn around a flagging brand, not impossible, when things have gone too far. I perfect case study is Sorel of Ontario, Canada.

Sorel was a men’s and women’s winter boot brand owned by Kaufman Rubber Company started in 1962 in Canada. At one point, they were one of the largest suppliers of waterproof “outdoor” boots in the world.

In 2000, the brand was bought out of bankruptcy for $8 million by Columbia Sportswear, of Beaverton, OR. The line plodded along until 2008, when they decided to revamp the brand. Sorel is now a big growth story at Columbia and was projected to do $200M in 2015 sales. (sales were $60M in 2009).

Sorel president Mark Nenow is quoted as saying to Bloomberg… “We’re going to make it about style, we’re going to make it about premium, we’re going to make it about design, we’re going to make it impossible to ignore.” He also said it is going to be about women, women, women.”  They started to make more feminine boot styles aimed at urban, fashion conscious women. The strategy upped the fashion ante, within the framework of brand heritage. Design and marketing delivered a consistent message. Sales grew rapidly.

They tried a pop-up shop in Manhattan in December of 2014 and it was a hit. It became their first permanent store. They recently opened a store in Burlington, MA.

This store stopped me in my tracks. It put Sorel in a whole new light for me, from “that boot brand” to “I gotta have it”.  They didn’t take the expected route of an “outdoor” store with winter and mountain references. It has a nod to heritage with their polar bear logo in a fun wall patchwork, but the brand experience is a hip, fashion store with rustic contemporary displays and lighting.

They now design a complementary  collection of innovative, “active, boot-inspired” sandals and booties that would make any fashion lover swoon, whatever the season. The newborns have the DNA of the traditional classic boots. They’re sexy, edgy and rugged.

I think about the marketing journey I travelled to see the brand as fashion, instead of functional winter boots. Fashion credibility started by seeing the boots at Nordstrom, but experiencing their store and the unique shoe collection changed my perception entirely. I can’t say I saw anything on social or other media. It was the store and the shoes that changed everything.

Sorel is the perfect example of a heritage fashion brand with a modern evolution. Genius!

 

Some other posts you might enjoy:

Are The Sporting Goods & Outdoor Industries in a Death Spiral

The New Definition of Athletic Apparel

Decoding Millennial Shopping Traits & Habits

The Dix & Pond Blog, by Stephanie Bernier is the blog of  Dix & Pond Consulting, a Boston-based, company that consults on trends, creative direction, brand experience, business strategy, product development and merchandising. Clients include retailers, apparel, footwear & consumer companies.  CONTACT US TODAY! 

Thank you for liking and sharing this, if you enjoyed the post! 

Are Sporting Goods & Outdoor in a Death Spiral?

Vestis Retail Group Files for Bankruptcy

Another one bites the dust. The Vestis Retail Group, owner of  Eastern Mountain Sports, Sport Chalet and Bob’s Stores of Meriden, CT is filing for bankruptcy. This follows the high-profile bankruptcy filing of Sports Authority of Englewood, CO and the recent closure of Boston-based City Sports stores. Prediction, the sporting goods graveyard will have more big-name corpses by year-end.

I also believe the outdoor, wood beam and hunter green team, Cabela’s, Bass Pro ShopsL.L. Bean and Dick’s Sporting Goods are seriously challenged these days. Because of the uniformity and proliferation of these outdoor/active mega stores, they are no longer the hot destination stores they once were. They’re surely feeling competitive headwinds from many directions. Dick’s will benefit from Sports Authority closures, but you can’t really say you’re a good student, just because the class average goes down.

In my view, the outdoor and sporting goods channels have reached saturation point and every niche has a ceiling. They will have to get smaller and find serious points of differentiation to thrive.

They also have an aging demographic and won’t have the same appeal to Millennials. 45% of this important demographic belong to a minority group (according to the US Census) unlike the Boomers and Generation X before them. The Millennial generation has more varied taste and less money to spend on apparel and accessories.

Apparel on clearance at EMS.

Apparel on clearance at EMS

What’s Happening in The Sporting Goods Channel?

Why is this happening in the sporting goods channel when sneakers are red-hot and athletic apparel has been biggest bright spot in apparel for almost a decade?

1. Amazon is an elephant in the room. According to a Slice Intelligence survey of 3.5 million consumers Amazon had a 43% share of all online sales last November and December. Their enormous selection, comparative deals, fast speed and free shipping are hard to compete with. According to Cowen & Co They are also on track to become the largest seller of apparel in the US, probably beating Macy’s by next year.

2. Sporting goods stores are no longer a key destination for women to buy athletic apparel. As the “athleisure trend” grew, so did the sources women and men have to buy these looks. Lululemon and Under Armour were the pioneers that challenged the category with fashion, quality and higher prices. Now the competition is fierce with traditional retailers increasing their assortments, specialty retailers like Athleta, brand-owned stores, online specialists and many wholesalers adding active to their assortments. Since women buy 80% of all consumer purchases, there is lot less traffic in sporting goods stores.

3. “Athletic inspired”, lifestyle apparel is far more important than performance apparel. The big expansion of active is wearing these clothes out of the gym. Many sporting goods stores and some apparel brands seem to think it is primarily about functionality and sweat reduction, not fashion and compelling design. Frequently, their lifestyle apparel offering is only the classic “outdoor” brands.

Many sporting goods stores devote enormous square footage to apparel and they generally don’t have the fashion chops to compete in a brutally competitive, rapidly changing apparel sector. Who needs another purple mock half-zip?

4. Sporting goods stores used to be the preferred place to buy sneakers. Performance sneakers,” sport-inspired” vulcanized cousins and fashion variations are the trending casual footwear today. Sporting goods retailers have not kept up with sneaker specialists and have treated the category as important as golf equipment. Women can buy “athletic-inspired” footwear from any of their favorite retailers from Forever 21 to Nordstrom today.

5. Youth participation is down trending for many sports. See this chart from Sports Business Journal in August 2015. There are many things going on here from the cost participation, fear of injuries, lack of interest, over specialization in one sport, etc. The drop in participation naturally creates less demand for equipment and related apparel:Youth sports participation rates.

What Should Brands do to Survive in This Climate?

What is an apparel, footwear brand or store to do in this highly competitive market? It demands creating real brand value, innovation, differentiation, targeting and understanding your competitive advantage in the market.

Competing just on price is a fool’s game. Fashion is emotionally driven by fantasy, hope or self-fulfillment, not just technical features or price. Wearable tech optimists, be warned.

Consumers want simple and exciting shopping experiences from brick and mortar or online stores. It’s time for the sporting goods and outdoor retailers to reimagine their stores for today, with nothing being off-the-table. Well conceived and executed brand experiences will turn this negative outlook positive.

 

You might enjoy these previous posts:

The New Definition of Athletic Apparel

Sports Authority Teeters on Bankruptcy- See The Reasons

Decoding  Millennial Shopping Traits & Habits

 

The Dix & Pond Blog is the blog of  Dix & Pond Consulting,  a Boston-based, company that consults on trends and creative direction, brand experience, business strategy, product development, merchandising and provides executive coaching for retail, apparel, footwear & consumer companies.  CONTACT US TODAY! 

Thank you for liking and sharing this, if you enjoyed the post! 

A “Dear John” Letter to J. Crew

To Mickey Drexler

Dear Mickey,

I write you with a heavy heart. You promised me that things were going to get better between us, but you still seem to be lost. The news around town is your sales are down and your debt rating isn’t great.

For years, I have been faithful to you, buying into your ideas, filling my closet and heart with tees, shirts, pants, dresses and even suits. You were my reliable love, a high-quality guy consistently offering the expected, with enough fashion surprises, that I kept coming back for more. I could always count on you. You made my life easy.

Mark down tee shirts at J Crew.

Markdown tee shirts at J. Crew.

No one could do it better. I never missed a chance to stop by in the mall. I toss most catalogs, but always save J. Crew for my next cup of coffee. Inevitably, I would grab my cell and buy into your fantastic stories once again. You were my Svengali.

When I wrote you months ago, you promised to change, go back to the old Mickey. I think you forgot who you are, the quality, pedigreed guy with colorful new ideas. You were the diamond-in-the-rough, in a sea of mall stores with similarly dismal apparel offerings. You don’t understand the unique place you had in my mind or the mall.

Did you hang with the wrong crowd? Do you think you should play with the fast-fashion girls to be cool? You played their cheap tricks and confused me with your reckless behavior.

As casual apparel got more athletic, you missed putting a J. Crew spin on it. This revolution was about sportiness, comfort and new materials, not the same old fits and fabrics.

Your career team is on a losing streak too, poor fabrics and skimpy fits. They clearly need a new coach.

J Crew career dress.

J. Crew career dress.

Sadly, you are addicted to cropped pants, cashmere cardis and slubby tees. You don’t recognize that even classic girls evolve. Your not thinking clearly. I know you have good genes. Your kid-sister Madewell, is on track to become a star. She has a clear brand direction and a bright future.

I’m sorry to say there is someone else, named Club Monaco. I get contemporary classic fashion-with-a-twist again. I’m willing to pay higher prices for quality in a hipper environment. I’m tired of the dark-paneled woodiness and your chaotic behavior. My current love is handsome, sexy and takes me to new places. He “gets” me.

Club Monaco spring trench.

Club Monaco spring trench.

Maybe someday we will be together again? Good brand management and design is about evolution and reinvention. You need an intervention and to hang with a better crowd. Your loving family hasn’t forgotten the good man you are.

 

You may enjoy these previous posts:

7 Common Fashion Brand Management Mistakes

Color Trends 2016/2017 Going Green

The Dix & Pond Blog, by Stephanie Bernier is the blog of  Dix & Pond Consulting, a Boston-based, company that consults on brand experience, business strategy, trends, creative direction, product development and merchandising. Clients include retailers, apparel, footwear & consumer companies.  CONTACT US TODAY! 

Thank you for liking and sharing this, if you enjoyed the post! 

 

 

 

 

The New Definition of Athletic Apparel

Athletic Apparel Has Been Permanently Disrupted

Remember when athletic apparel was mostly made by footwear and sports equipment companies? It was budget-priced, logo-driven basic tees, sweats and shorts, sold primarily in sporting goods stores, for working out and active sports. It was the ugly step child to the primary businesses.

Market disruption started about 10 years ago when higher-value athletic apparel started to hit the market by fashion and price pioneers, Under Armour and Lululemon. They were innovators with more costly, functional fabrics, fashion-driven styling and unique branding; think of Under Armour’s powerful mannequins and Lululemon’s yoga cult brand experience.

Their flattering and comfortable styles, outperformed and outlasted their cheaper competitors. Customers found emotional value paying for creative, sexy and fashionable looks at a higher price and started wearing them in and out of the gym. They created “aspirational status” athletic brands.

The athleisure trend took off and has been the biggest trend in apparel for more than 5 years. Active and casual apparel blurred into a new category. The genie is out of the bottle and it is never going back.

Athleta pushes urban lifestyle products.
Athleta pushes urban lifestyle products.

Competition in Athletic Apparel Has Gotten Fierce

As athleisure has grown, the competition for market share has gotten fierce. Many non-athletic brands including Tory Burch (Torysport) and Free People (FP Movement) now offer their own active apparel. Footwear companies like Nike really upped their fashion game and companies are doing designer collaborations like Stella McCartney and Kayne West’s Yeezy for Adidas.

High-end, ecommerce specialists like Carbon 38, and Bandier (online and opening stores), have sprouted up, carrying ediger brands, like Michi and Heroine Sport. Designer ecommerce company Net-A-Porter started Net-A-Sporter.

Lululemon is seriously challenged lately by Gap’s Athleta. Athleta fully understands the blurring of the category with their combination of performance and sophisticated street wear looks (they used to only carry bright colors and the cliché “zen-like” NorCal prints). Lululemon has recently vowed to double-down on market-leading innovation and put a greater focus on performance athletes, in a recent article with Bloomberg.

Lululemon is pushing market-leading innovation.

Lululemon is pushing market-leading innovation.

Retailers like Target, Kohl’s and JC Penney greatly improved their active offerings. Macy’s, late to the athleisure party, now has a big selection in 700+ stores and online. Victoria’s Secret has an growing sports bra and athletic business. In fact, the sport bra  business has seriously dented fashion bras. Fast-fashion stores like Primark, have large active assortments at rock bottom prices.

Primark has rock-bottom prices, like $10 pants.

Primark has rock-bottom prices, like $10 pants.

Active Apparel Distribution Has Been Diluted

Distribution has been widely diluted across all retail channels. Sporting goods stores are no longer where most women buy their athletic apparel. Footwear and sports equipment companies have to sell direct to consumer and forge forward-thinking relationships beyond the sporting goods channel to regain market share.

It’s no wonder retailers like Sports Authority and defunct City Sports didn’t capitalize on this mega-trend. Sporting goods stores have to do more than display apparel in cavernous spaces and start competing head-on with real apparel merchants. They must be discerning, take brand risks and edit out the so-so.

Adidas at Urban Outfitters.

Adidas at Urban Outfitters.

2016’s Definition of Active Apparel

Athletic apparel is two-pronged. A smaller percentage is worn for true performance sports, but the lions’ share is used as casual, lifestyle clothing. Shorts designed for running, are a teenager’s summer staple. Sports bras are worn all day. Leggings and sweats are paired with Uggs for school. Hoodies are everywhere.

Design teams must understand the bulk of their products will never be worn for active sports. Personally, I own at least a dozen Lululemon tops and have never even tried yoga. Active designers simply can’t assign cursory importance to the “lifestyle” part of their business.

The definition of athletic apparel in 2016 is predominantly knit-driven, fitness inspired, comfortable casual apparel that is made of functional and innovative fabrics that can be worn for range of casual uses, including sports activities.

Fierce competition in the women’s and men’s apparel and accessories markets requires real innovation in styling and function. I’m not just talking “anti-stink” here, but unique and compelling designs as trend relevant as the underlying brand. The emotional connection to an active lifestyle is more important than the intended use of the clothes.

The world doesn’t need another ordinary half-zip. If the label was removed would anyone recognize your brand? What’s compelling about your products? The innovative brands will have pricing power, the copy-cats will experience significant mark downs and price deflation.

 

The Dix & Pond Blog is the blog of  Dix & Pond Consulting,  a Boston-based, company that consults on trend and creative direction, brand experience and business strategy, product development, merchandising and provides executive coaching for retail, apparel, footwear & consumer products companies.  CONTACT US TODAY!  or call 617.733.7411

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No Surprise, Sports Authority Teeters on Bankruptcy

Sports Authority misses interest payment

Update. Since this post was written, Sports Authority has since filed for bankruptcy protection…

Sports Authority, the Englewood, Colorado based sporting goods apparel and equipment mega-store has missed an interest payment on debt and bankruptcy is rumored. I can’t say this news surprises me.

What blows me away is that they are in the two hottest sectors of the apparel and footwear industries, athletic apparel and sneakers and couldn’t capitalize on it. We are in a multi-year athleisure trend, the wearing of sports apparel in and out of the gym, disrupting casual apparel and knocking even the venerable jeans business down a peg or two.

What’s wrong at Sports Authority?

Sports Authority is a big store with an enormous selection of sporting goods and apparel. The stores are dimly lit and cavernous, sort of like a warehouse club without the bright lighting, wide aisles and good deals. A visit to Sports Authority means walking long distances through a sea of me-too sweats and hoodies. There are no clear paths or sight lines. They are located in suburban settings, not particularly convenient for those key Millennial shoppers without easy transportation.

For a carrying products that consumers use in the happiest times of their lives, this store is seriously, no fun. They have tons of stuff, allowing little room for discovery. Great retail is emotional theater and Sports Authority falls flat. Bad music, poor lighting, safe selections, old technology and no creative displays. You are on a self-guided tour of a depressing warehouse. They try to be everything to everybody. They are water on the camp fire.

They could benefit from about 50% less SKUS and some focus on the hottest lines and equipment. Too much inventory and no foot traffic = missed loan payment. This store gives equal billing to down-trending golf product as red-hot sneaker lines. Their relatively small sneaker assortment in relation to their size, abdicates the business to mall competitors like Champs and Foot Locker.

The apparel assortment is the retail equivalent of safe-sex, run of the mill products from most of the usual suspects. Why not take a chance on some of the upstart creative athletic brands, mostly found online? Why not an area for discovery of new brands? How about some exclusives? Champion looks way better at Target. “Move on folks, nothing to see here.”

Where’s the creativity to drive traffic? How about fitness demonstrations, classes and athlete appearances? Healthy free snacks? Basketball half-court? Equipment testing areas? Contests? New lighting?  Hip music? You get the picture. Give up some SKUS to free up the dollars for the fun quotient. Tug at my emotions.

All retailers exist in a highly competitive environment today. Consumers are seeking the best experiences for their dollar. Whether it is a simple transaction on Amazon or a red-carpet experience at Neiman’s. They seek rewarding and entertaining retail experiences.

Bauer “Own The Moment” Experience Store

Sadly for Sports Authority, today was the day I decided to visit the new Own The Moment Hockey Experience Store by Bauer (Performance Sports Group, Exeter, NH), in Burlington, MA. My advice to any hockey store within a 100 mile radius, it’s time to retire. This store is state-of-the art retail theater at it’s finest. I see a lot of retail stores and this one takes my breath away. In fact, I just may learn to skate.

There is a huge selection of thoughtfully placed equipment and apparel in beautiful displays with spot halogen lighting. Halogen has a way of making things more precious. It’s like a futuristic hockey museum, with wide spacious aisles from front to back and in between. Everything is precisely displayed. You are intrigued to wander around corners, each area more enticing than the last.  In addition to a big open video viewing area, they even have an in-store ice rink for testing the latest equipment. They offer everything hockey for men, women and kids.

They truly capture the powerful athleticism of the sport. The testosterone soaked displays, images and edgy mannequins, got my heart racing. Who is that bearded guy anyway? Who knew hockey equipment could be so damn compelling?

A destination to visit, this store is an outstanding example of retail as entertainment.

The Dix & Pond Blog is the blog of  Dix & Pond Consulting,  a Boston-based, company that consults on trend and creative direction, brand experience and business strategy, product development, merchandising and provides executive coaching for retail, apparel, footwear & consumer products companies.  CONTACT US TODAY!  or call 617.733.7411

Thank you for liking and sharing this, if you enjoyed the post!  Follow me to get the latest posts!

 

How to Increase Traffic & Conversions on Your Ecommerce Website

Most ecommerce companies say they their number one goal is to increase visitor traffic and conversions.

The Internet is enormously competitive and crowded today. BTC and BTB ecommerce companies need to be doing everything possible to be found in searches and from online and offline marketing techniques. This is equally important for startups, established brands and long time retail websites.

Some startup entrepreneurs have a great looking website and are surprised by how few sales they are making. They frantically wonder, “How can I get more viewers to my site?” Some retailers have been selling online for years and see visits to their site down trending and bounces rising. They are in panic mode asking “Why is my site getting less traffic and conversions? Should we be trying new marketing strategies or a redesign?”

There are many things you can do to improve your traffic. Here is an eight point checklist on the best ways to increase visits to your fashion apparel, accessory, footwear, home or consumer product site. CLICK TO READ THE CHECKLIST.

How to increase your web traffic

The Dix & Pond Blog is the blog of Dix & Pond Consulting,  a Boston-based, company that consults on business and brand strategy, product development, creative direction, merchandising and executive coaching for apparel, footwear, home & consumer products companies.

Thank you for liking and sharing this, if you enjoyed the post!  Follow me to get the latest posts!

Primark’s Boston Store- a Retail Force to Be Reckoned With

Primark, the UK-based discount retailer opened their first US store in Boston this month. The low-cost, low margin, fast fashion retailer, is located in the 70,000 square foot, historic Filene’s department store building in Boston’s Downtown Crossing section. They have plans to open 10 more locations on the East Coast by Easter 2016.

Well designed floor sets at Primark

Well-designed floor sets at Primark

I visited the store on Saturday the 26th and found it mobbed with urban shoppers. The location is a tour-de-force for a company that targets 18-35 year old, cash-strapped Millennial demographic. The Washington Street site, of recent decades has been a decaying, retail wasteland. Surrounded by the Financial, entertainment districts and Chinatown. It is far from other residential neighborhoods, but directly across from the highly central Park Street subway stop. The daytime walkable population swells dramatically, from the Financial District and other nearby employers.

Boston is home to three major upscale shopping areas, Copley Place, Newbury and Charles Streets. Many of the world’s best retailers open test stores here, because of the many universities, large population of wealthy international students and tourists, as well as a cosmopolitan, well-heeled population. The mass customer has been grossly underserved in Boston proper, so Primark, H+M and Macy’s in Downtown Crossing offer a strong trifecta for budget-conscious customers.

Seventies items at Primark

Seventies fashion items at Primark

I’m blown away by Primark’s well-merchandised assortment, attractive floor sets, and incredibly low prices, e.g. cotton tees for five dollars, jackets for thirty-five, seven dollar jeans, trendy shoes for ten…The assortment is compelling with strong key item basics and on-trend pieces like Bohemian, seventies-inspired items. It is wearable and stylish, including men’s,women’s, children’s and home.

The offer is more “adult”, less “teenage” than Forever 21 and Old Navy, less contemporary than Zara and less trendy than H+M. They also have a particularly strong intimate apparel department, which could eventually take a bite out of Victoria’s Secret. I couldn’t help thinking, why a frugal customer would scour discounters like TJX, when they can find such depth of selection at Primark?

Sometimes foreign-based retailer’s brand aesthetic doesn’t fit with American styling, color and taste levels. (I think this will hamper Uniglo’s future US expansion.) Primark’s Dublin-designed products feel comfortably appropriate in the US market.

A well done athletic assortment

A well done athletic assortment

Primark is another game changing player in the seismic shift of the Teutonic plates under US retail. The Millennial customer’s high debt levels, surging rent, transportation, entertainment expenses and the cost of staying connected, have had a deflationary effect on apparel pricing. To a great extent this customer is brand agnostic and sees apparel as a commodity. Fast-fashion, discount stores, consignment and apparel rental retailers, have been the beneficiaries of this mega-trend.

I spoke to an eagerly observing Primark executive. He was leaving in a few days to open the King of Prussia store in PA. I said, “Forever 21, Zara, H+M, Kohl’s, Target and J.C.Penney have a lot to worry about with Primark“. He wryly replied “That’s what we hope for.”

Men's clothing is wearable and compelling.

Men’s clothing is wearable and compelling.

Dix&Pond is the blog of Dix & Pond Consulting, Boston-based, product development, creative, branding, business consulting and executive coaching for apparel, footwear & consumer products companies and retail analysts. Follow me to get the latest posts

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