Feeding Frenzy – Lululemon

I admit it, I’m a dyed-in-the-Lycra, full-blown fan of Lululemon Athletica. I was one of the sharks in the holiday feeding frenzy for all things Lulu. On a visit last week after Christmas, I could hardly move around the 60 or so people I counted in the little store lusting after Lulu. They were spending gift cards, making exchanges and if they expected markdowns, they were sorely disappointed. This fashionable Canadian purveyor of athletic clothing has risen to cult status at full-price. This is a true fairy-tale ending to a lackluster holiday season for most retailers.

There are always sexy and functional sports bras and tops.

There are always sexy and functional sports bras and tops.

In a highly competitive apparel market Lululemon has proven that there is always still room for fresh design and a compelling brand experience. (I think the stores are bit dark, though). They churn out unique and creative silhouettes that flatter the athletic and not-so-athletic bodies of their adoring masses. They create demand for their feminine and tastefully sexy styles. They tout performance fabrications for real yoga and running aficionados, but the rest of us just love the great quality and are willing to pay for it. They have broken every rule of the old footwear apparel players. They make expensive, feminine, comfortable, durable and sometimes radical styles for women and men. They almost singlehandedly started the trend for yoga wear as everyday wear in and out of the gym.

Certainly upper management from the major athletic companies are sending spy drones in the stores to figure out their secret sauce. They are buying and dissecting garments and creating their own vanilla versions. This is a recipe without all the ingredients. They are missing the point; it is Lululemon’s originality that makes it special. It is getting to the finish line first. Who cares about second place?

The opportunity for growth for Lululemon is still very great, as they are still far from a household name. They could benefit from larger stores and certainly more men’s product. Girls would be a smash hit, too. If I was a Nordstrom or Bloomingdales’s buyer, I would be begging for a wholesale line.

December Lululemon deliveries included signature pink and black jackets and a unique lace print used on tops and bottoms.

December Lululemon deliveries included signature pink and black jackets and a unique lace print used on tops and bottoms.

Dix&Pond is the blog of www.dixandpond.com Creative and strategic consulting for retail and wholesale apparel, shoe and consumer product companies. Follow me to get the latest posts

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JCP Product Report Card

Ron Johnson was hired in November 2011 as the new CEO to turnaround JC Penney. It’s time for his annual performance review and the results are decidedly mixed.

No doubt, he set a lofty goal to transform a poky middle-income retailer into “America’s favorite store.” He changed the pricing structure from hundreds of yearly promotions to everyday low prices. As I have said before, with all Johnson’s deserved bravado (from his stints at Apple and Target), he can’t change human nature and the love of the deal. Consequently, his sales are in free-fall.

He has had success tidying up acres of monotonous space and carving it into more appealing brand-specific shops. Some areas are downright Nordstrom-like.

My focus of this review is the product-to-date. A retail brand experience has 3 core parts, price, presentation and product. The latter is clearly the hardest nut.

Middle and low-end retailers have to create or partner with vendors for exclusive merchandise to compete with focused specialty retail and better department stores. The wholesale market for branded apparel has disappeared, as retailers increasing filled square footage with their own private label product. Upper-end department stores carry a mixture of coveted wholesale brands and complement it with their own designs.

It is impossible for JCP to create compelling private product across an entire spectrum and cater to a divergent customer base. They are clearly trying to serve two low-income masters, the loyal aging customer and the young growing family. The store experience has big highs and lows, depending on who you are.

 Most specialty retailers focus on a category or a defined target consumer. For instance, Victoria’s Secret focuses on creating intimate apparel and beauty products with one taste level.  Even though Target is a department store, they have a contemporary vision for all their fashion products. They don’t cater to a range of tastes.  

Unless JCP is able to harness the best design talent in the world, they will never achieve product greatness across the board. It is very tough to build and manage a massive creative engine and serve many masters.

They will only succeed if the store experience can supersede “acceptable,” but not exciting product. JCP doesn’t have a soul. It doesn’t have brand authenticity, except Sephora. They are hitting on the big trends but, most of the products feel like lukewarm versions of someone else’s good idea. Average grade C+.

Here is a product report card:

JCP 4th Quarter Product Report Card

Dix&Pond is the blog of www.dixandpond.com Creative and strategic consulting for retail and wholesale apparel, shoe and consumer product companies.

  

  

JCP – A View From the Field

As I have posted before (See JC Penney Report Card July 2012), the biggest challenge for JCP will be the product assortment, not the physical changes or visual merchandising. In a recent visit to see Ron Johnson’s progress turning a bland soup kitchen into a spicy retail buffet of instore shops and experiences, I saw a stark contrast of big improvements and steep mountains yet to climb.

Physically, the stores are significantly more pleasant. There are now many beautifully lit, tidy and open spaces. As small, colorful instore shops form, specifically JCP brand product, kids, lingerie, Arizona Jeans, Mango, activewear, outerwear and of course Sephora, there is sense of modern purpose and destination excitement. The brand experience in these departments invites exploration. The products are compelling and on trend.

Contrast to that, missy, petites, woman’s, handbags, jewelry and the home product areas are generic, at times sloppy and suffer a serious lack of purpose. Junior’s, men’s and shoes fall somewhere in between. Juniors has the tough task of duking it out with top-notch mall competitors like Forever 21 and Urban Outfitters.

Fall 2012 Product at JC Penney

Fall 2012 Product at JC Penney

As previously reported, Penney’s is banking on a revival of the shop-worn Liz Claiborne brand they bought from Fifth and Pacific (formerly Liz, Claiborne, Inc.) Since the glory days of Liz in the 80’s, this brand has stalled, sputtered and headed for a crash. Why do you think Liz Inc. was eager to close the chapter, change their name and put the past behind them? There have been multiple redos over the years, including one by Issac Mizrahi, that flamed out as quickly as the seats cooled at their fashion show. Liz Claiborne lost its way years ago and some of the best talent in the industry, hasn’t been able to resurrect it.

JCP has devoted an enormous amount of space to a zombie brand. They have identified it as a key brand for the new JCP. Liz women’s is a significant part of the entire women’s apparel area. They have erected a grand entrance, with slick modern seating, leading to cluttered racks of dreary sportswear targeted to a matronly customer. There is nothing distinctive or compelling about this merchandise. It could be any concocted private retail brand designed by merchant committees, not with a visionary eye. To make matters worse, the Liz Claiborne men’s product seems targeted to a contemporary, entry-level guy with black shirts, wide belts and slim cut pants.

Handbags have been one of the bright spots in a long cycle of weak apparel for many retailers. Color, interesting materials and unique shapes are driving this category. JCP flatly misses the trends here and their offering is redundant, neutral and uninspired, ditto for shoes. Fine jewelry occupies prime real estate and the assortment is ordinary at best.

Home is not where the heart is for JCP. I am looking forward to Jasper Conran and Jonathan Adler products in the future. Martha Stewart is another planned home introduction. The Martha Stewart brand has diminished in stature, as simpler, contemporary lifestyles have become more important to younger customers stocking their first homes. The current JCP home offering is painfully safe and sleep inducing.

JCP has to hire or collaborate with the best talent in the industry to give their products an authentic soul. Consumers can’t be fooled. They have no real moderate market to turn to.  This is a massive task with the size and scope of their offerings. No surprise there are highs and lows all over the store. They have to make sure their best talent is assigned to the key categories.

As for every day low prices, I think  their final strategy will fall somewhere in between low prices and deals. They can’t change human nature and of the thrill of the deal.

Kudos to Johnson for taking on such a mammoth challenge. The most coveted brands in the world, like Apple have a real soul and identity. It is  clearly impossible to harness enough top talent and provide the culture of creativity, to build a whole store of exceptional proprietary brands.

Dix&Pond is the blog of www.dixandpond.com                                                                                                                                                                    Creative and strategic consulting for retail and wholesale apparel and consumer product companies, as well as reporting for investors and equity analysts.

She doesn’t have to have it….

For the past several years women’s apparel sales have been lackluster. Handbags and shoes have taken the spotlight and continued to outperform while apparel languishes. The excitement in shoe and bag design is palpable. Designers have continued to up-the-ante in footwear and bags, in bold colors, fresh materials and pushed the limits on new shapes. Confidence has spurred a creative explosion in these categories. This has added up to multiple seasons of big personality accessories winning hearts and wallets, in a down cycle of consumer sentiment.

Women’s apparel is another story. Here are several reasons for the depressed fashion phenomenon.

There is a lack of creative risk taking in apparel by wholesalers and retail merchants; call it retail sameness, fear of failure, wholesale and retail firms have a bad case of stage fright. They’re driving with eyes in the rear view mirror and trading down on quality. Many look to the past for the future and figure the safe road is the way to hunker down. Recessionary assortments of apparel are a counter intuitive bland diet for a customer with no appetite. Consumers have to be stopped in their tracks and wined and dined with fresh novelty and must-have styling.

There is a dearth of contemporary brands for the wealthiest segment of the market. Boomers+ have the money, but there is a lack of fashion forward casual brands suitable for the aging customer. This segment must choose between dowdy mature offerings or “do I look foolish” in this uber-short contemporary dress? Consequently, they turn to forward accessories to look current without looking like a sorry soul. This is an opportunity to reach a big underserved market.

Size matters. There is a lack of larger sizes for an “expanding” population of all ages. Women bigger than a size 12 or 14 can’t find much in most specialty or in mainstream areas of department stores. A huge part of the population is literally ignored. Larger women have to turn to the democratic accessory and beauty departments for a fashion update.

It is frustrating to shop for apparel in traditional store formats. Most women today are strapped for time, have short attention spans and an overwhelming sea of options. It is difficult to shop for an item, when most department and specialty stores are organized by collection.  If she needs a white top, she is forced to shop a whole store or department to find the item. A harried consumer will bypass department stores for the ease of shopping a simpler format with item depth, like J. Crew. Handbags, shoes, cosmetics, jeans and lingerie tend to outperform other areas. These departments are classifications, not collections and easier to shop. Part of the rapid growth of online shopping is that it simplifies the process. It quickly nets the offer to classifications.

The best accessories come from wholesale branded companies like Prada, Kate Spade, Tory Burch, Longchamp, Coach, Michael Kors, to name a few. Bags and shoes are two areas where there is little private label. Consumers are validated by brand authenticity and the inherent status of branded accessories. For the most part, private label apparel is subject to large committees of leadership, who all put their stamp on the offer. Subsequently, they can water down the soup.

Accessories are the easiest way to update last year’s wardrobe. Apparel like accessories, is an emotional buy. It is unfortunate that most traffic doesn’t covert to a sale, only a disappointed customer. Compelling merchandise is the key way to improve conversions. If wholesaler and retailers continue to offer vanilla assortments, the consumer will continue to spend her disposable income on the latest accessories and technology.

 The following pictures are “best-foot-forward” displays from some major retailers. Their brand identities are indistinguishable. Do you think “she’s gotta have” this merchandise?

Dix&Pond is the blog of Dix&Pond consulting…strategic and creative product development and brand consulting.

Anthropologie -The Drag on Urban

Urban Outfitters recently released fourth quarter 2011 earnings that fell by 47.8%, as they were cutting prices to clear slow-moving holiday merchandise. Returning CEO Richard Hayne (former CEO Glen Senk has moved on to David Yurman) has pledged to get the ailing retail superstar back on track.

Admittedly, women’s apparel has been the problem. There has been weakness in women’s apparel at the younger Urban Outfitters division, but more dramatically at Anthroplogie, which targets a 30+ clientele.

An example of Anthropologie's stellar visual merchandising.

An example of Anthropologie's stellar visual merchandising.

Anthropolgie gets kudos for creating an iconic and unique brand experience in their stores. Their creative visual merchandising is second-to-none in women’s specialty retail. The daring use of unusual materials and space devoted to non-revenue producing theater is of legend. For me, the staged ingenuity has become the reason to visit the store and the merchandise is secondary. Visual merchandising is supposed to create excitement and drive traffic, and it accomplishes that. Their dark stores, filled with hand crafted products have a bazaar like quality, more “tourist attraction” than fashion purveyor. Mannequins are overly styled with pieces that may be very wearable in less fussy combinations. It is a treasure hunt through odd spaces filled with vintage inspired home furnishings, special gifts and arbitrary racks of apparel. It is more Green Movement, than fashion moment. Is visual merchandising dominating the fashion?

Anthropolgie has created an apparel marketplace for confident and avant-garde women. I applaud them for being risk takers in a copy-cat industry. They have created a big brand personality, but the difficulty of shopping the store and styling challenges the customer. She has to want an eclectic statement or be forced to sort thru cavernous spaces to find a pretty skirt, top or trend-right jean. Most women don’t have the time or confidence to do it, not to mention that fashion has gotten cleaner, slicker and more colorful lately. This division may have gotten bigger than the audience for its textural, third-world styling.

The complex styling of this dress makes it less salable.

The complex styling of this dress makes it less salable.

Free People stores performed better. Their stores are smaller and brighter than Anthroplogie and they benefit from their wholesale presence in fashion leaders such as Nordstrom and Bloomingdale’s. The stores are eclectic, but have some stand-out fashion items, in a more conventional, approachable space. Urban Outfitters may be suffering from the highly competitive youth market and growth of competitors such as Forever 21. Their college age customers are laden with debt and short on cash.

The collective combination of these pieces is very avant-garde.

The collective combination of these pieces is very avant-garde.

I think this retail luminary has the ability to glow again. Feminine, lady-like fashion, is trending now and plays to their forehand. They don’t need to compromise their identity. They just need to clean it up and simplify the message.

Dix&Pond is the blog of Dix and Pond consulting.

Another Approach for Ann Taylor?

Designing a line of clothing is like putting on a Broadway play every season. Sometimes the new one is better than last season’s, sometimes not. It is nearly impossible to have a continuous upward graph when creating a new product line in the notoriously fickle fashion field. The Recession of the past several years, has put retailers on the defensive and exacerbated the issues.

Ann Taylor window, March 2012.

Ann Taylor window, March 2012.

Ann Inc. just reported fiscal 2011 results. The larger Loft division reported a 10.5% increase in total comps (including all channels), with an 8.1% in store comps for the year. In contrast, Ann Taylor had a 1.1% total comp increase, with a 10.9% decrease in store comps. CEO, Kay Krill is promising improvements at Ann Taylor…”among the number of changes underway, we are evolving the assortment in-store to offer her a better balance within each category, including more color choices, greater versatility and more depth in key fashion items and marketing looks. In addition, we will be offering more depth and breadth in opening price points in virtually every category to provide her with even greater value.”

I have soft spot for Ann Taylor. In my early career, the brand defined upscale fashion for ladder-climbing women. I was an ardent fan. In my heart, I still want them to succeed. As a designer, industry insider and former alpha-customer, the myriad problems are obvious to me.

In my opinion, they responded to the Recession with sparse inventory, lower quality fabrics and abdicated core basics. Colors have been hit or miss, at times exciting and occasionally, thoughtlessly unwearable.

The big advantage of specialty retail and e-Commerce is that these channels are easier to shop than department stores. Busy women don’t have time to search the collection-based apparel assortments of department stores to find a basic tee, a pair of black pants or a great white shirt. Interestingly, the best performing areas in department stores are sold in categories, handbags, shoes, jeans, cosmetics, dresses, etc. The problem is specialty retailers keep trying to offer collections vs. understanding shopping simplicity is one of their core advantages.

Ann Taylor used to be reliable for a decent assortment of well-made, consistently fitting casual and dressier pants. They also were a great place  for terrific white shirts from basic to highly styled. Who could tell they weren’t from Theory? You could count on deep inventory in quality tees for the season; who needed J Crew? Shoes became boring and generic, the day they parted ways with Joan & David.

Ann Taylor should be a contrast to Loft, with better quality, more sophisticated products. Loft is doing well, but why try to compete head on? As a former Ann Taylor fan, the Loft quality never did it for me. Ann Taylor today could be any one of a number of faceless specialty chains. Some thoughts for improvement:

Offer a better value to the customer thorough improved fabrications, not lowered prices. Ensure depth in the core replacement basics needed every season. What about a permanent white shirt area like an Anne Fontaine? How about a basic pant area that carried the core styles of the season? Create a section for tees, where white would NEVER be out of stock. Add more compelling bags and shoes that are less concerned with price and more focused on fashion and quality. How about some traffic-building accessory brand names such as Brahmin, Tory Burch, Longchamp or Kate Spade?

It is time to take a counterintuitive, novel approach to change the fortunes at Ann Taylor.

Dix and Pond is the blog of dix& pond consulting

Low inventory levels are obvious at Ann Taylor.

Low inventory levels are obvious at Ann Taylor.

Exclusive Club Monaco

Ralph Lauren is clearly among the greatest brand builders in the history of the fashion industry. It is no wonder why the Ralph Lauren Corporation purchased Club Monaco the urban casual, Canadian-born specialty wholesale and retail company. They have been quietly growing this little jewel in their portfolio since 1999. They currently have more than 65 stores in North America and locations in Europe, Asia and the Middle-East. They have yet to launch their e-Commerce site. Holiday 2011 sales at Club Monaco were up 17%.

Back detail is an alluring touch at Club Monaco.

Back detail is as alluring touch at Club Monaco.

The stores are filled with sophisticated, casual clothing suitable for the lifestyles of contemporary men and women.  It is a textural collection with that mixes high-quality fabrics and neutrally based color stories. Modern and minimal pieces easily mix into the wardrobes of the tastefully hip, such as trench coats and pleated skirts. There is an unstudied sexiness to the chic pairings with a strong sense of identity. Even the accessories are distinctly on-trend, not the cheesy, key items blown out by most specialty retail chains. (See Club Monaco)

Club Monaco is far from a household name yet, and that is part of its appeal. They only have about 65,000 Facebook fans, but this” little engine that could” is judiciously expanding their reach. Ralph Lauren will continue to shepherd this brand carefully, so it is surely not going to lose its je né sais quoi.

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