GILTY PLEASURES & CHEAP THRILLS

Introducing Gilt Fuse Dear Ashley: We have some exciting news. We’re thrilled to announce the upcoming launch of Gilt Fuse! Gilt Fuse gives you inside access to a new lineup of fashion, exclusively for women. It’s a great way to shop for today’s most-wanted labels as well as tomorrow’s hottest emerging brands – at prices that are impossible to resist. Fashion that suits your need for effortless, everyday style. It’s your style, Gilt Fuse lets you express it. Stay tuned, Alexis and Alexandra

The power of Gilt is astonishing. Gilt Group launched in 2007 and boosts an impressive online closet of designer goods, as well as earnings. The company founded on the sample sale concept (offering designer goods for less by invitation only) through e-commerce earned an impressive $25 million in revenue last year, projects $150 million this year, and $500 million next year. 

While the site's success has clearly created a wave of imitations (Ruelala.com, Outnet.com,Hautelook.com),  Gilt has also pursued opportunities to expand its e-tailing venture to a diverse clientele.  

On August 10, Gilt will launch Gilt Fuse, a lower price point driven shopping experience (everything under $100) with a focus on a younger demographic but still promoting the designer names. Its first sale, is expected to feature Plenty by Tracy Reese, Kova & T, Modern Amusement, CC Skye, TKO Orologi, RJ Graziano, and BCBG, all at prices up to 70% off retail.

I am extremely impressed with Gilt's business model . Its reliance on excess designer inventory is strong (thanks in large part to the economy) as well as their ability to create prestige and demand through limited quantity offerings, timed sales, and invitation only status. And despite the doubt of some analysts, I feel like Gilt Group has the ability to continue to expand its business on its founding principles. There has already been talk of penetrating new markets (currently the site only operates in the US and Japan) as well as new product categories beyond accessories and apparel, such as travel packages. 

All in all, Gilt has created an online shopping experience breaking the consumers perception of Internet shopping as the complicated less than perfect shopping mall. Rather, Gilt has emerged as one of the leading dot-commers changing the fashion game from the browse and buy to the bid and buy. A bright futures a head both for the fashion hunters and the Gilt gatherers! 

 

FOOD FOR THOUGHT: TODAY'S READINGS

With consumers set on saving, expect a lackluster back-to-school shopping season [Retail Traffic]

Managing Your Small Business’s Online Reputation [NY Times] 

Secondary Act: Rad Hourani’s New Line [Style File blog] 

Coach Drops On Worries About Slowing Comp-Store Sales [WSJ]

FROM COACH TO FIRST CLASS: REED KRAKOFF IS THE NAME

Question of the day: Does the world need another brand?

Coach, the empire representing affordable luxury seems to think so. In what appears as a tall order, the man himself behind the brand, Creative Director, Reed Krakoff, is making things personal. From the full concept development, down to the brand’s name, his own, Reed Krakoff is pushing full force to make the fashion world embrace the new line. Treated as a separate entity yet fully funded by Coach, (deeming it essentially as its own competitor) the plans for the Reed Krakoff brand includes product offerings in women’s ready-to-wear, jeweler, handbags, and shoes.

The strategy? Sell Americana! The line, as Mr. Krakoff describes it will feature price points for its r-t-w from $495 to $1,195, and has emphasized the esthetic as an eclectic mix of “softness with American utilitarianism.” Handbags will retail from  $ 695 to $ 1, 295. There is also mention that the stand alone brand projects 10 initial free standing stores  (US, Japan, Hong Kong) and more long term goals include markets in men, home, and fragrance.

And despite Krakoff's wizardry touch (since joining the company in 1996, sales have, according to WWD increased 6-fold) the real doubt lies both in the volatility of the market, and the oversaturation of luxury brands. 

If fashion and consumer spending can become more of a patriotic symbol: a strategy Mr. Krakoff seems to want to utilize – than he could have a chance after all. However, right now that could seem like a far stretch. His price points represent an upper middle class demographic (the ones deemed far worse hit by the financial/mortgage storm) but the upswing of things could lie in the product differentiation (point of view) and investment in global expansion.

 It will be interesting to see if America will support the new American brand, (like the Clair McCardell days!) or if Reed Krakoff will do better at selling “America” to our long lost neighbors.

Nevertheless, despite all the reasons not to, Coach is using the recession as an opportunity to think long term, and capitalize on a dream that could be a powerful voice for fashion, in the years to come. 

STYLING

Last week, was a fashion frenzy! The celebs were in full force promoting and celebrating new projects and did not disappoint in their wardrobe choices. Many of them, unleashed their inner rocker chic by relying on Balmain's fall 2009 collection featuring leather, sequins, and strong shoulders. The common thread, between the outfits that were soft(Amy Adams, Diane Kruger) versus hard (Rihanna, Sienna), is silhouette and the revival of the women's shape. For at least a couple seasons now, the runway has moved away from the flouncy shapeless dresses and have transitioned into a more body conscious look- and in a variety of ways. 

These stars are reflecting the school of thought for fall, and the accessible versatility for the ultimate woman. 

LILY ALLEN FOR CHANEL: COCO COCOON

It cannot be denied that Kaiser Karl knows a thing or two about how to create a powerful image. After all, the legend himself, always decked in black and white ensembles, and a coiffed 18th century Pompadour has carved the way for fashion designers as celebrities. But Karl's personal involvement does not end there, and the same bold creativity he utilizes to channel his Czar like presence is also used for the advertorial efforts for Chanel. 

For the latest fall campaign, Mr. Lagerfeld referenced muse Lily Allen for the promotion of the new Coco Cocoon collection. The more casual line boosts a variety of styles complementary to light traveling, made out of reversible nylon and lambskin in the traditional quilting style. The line is expected to hit stores October 10.  

                 Images Via Marie Claire UK

Image via fashion.glam.com

ST. JOHN:TURNING BACK TIME

St. John, like a lot of other luxury apparel brands is trying to combat the less than stellar performance of the economy, by going back to the drawing board, and reminiscing about better days.

St. John's is just one of the many who are embracing “heritage” as an opportunity to cash in, relate to customers, and create a more significant tie between brand values and the end consumer.

But this has not been the first step in St. John’s effort, to revive the brand. First, it was Angelina Jolie as its campaign muse, (which posed as a huge disconnect between the brand and her image), than came the fall launch of the “SoCa” concept, a spin off line of casual wear, that had a free standing store in Costa Mesa, Calf.

Today however, is a new day.

It seems as though St. John's. Is putting a side all the typical “hip tricks” and is going back to basics. The company describes in WWD, about the newly gained customer insight- its customers are buying more conservatively, and as a result, want “classic inestment pieces, with a modern flare.”

The modern part, can be categorized under the St. John Yellow Label, priced at 30 percent lower than its ready-to-wear, and featuring a sporty and cool vibe complementing the traditional St. John collection.

And it appears that for the 47 year old retailer , the customer is always on the mind. Other opportunities for St. John will include a basics program of all black pieces in a new fabric offering, as well as more special offerings.

Bravo to St. John who is an example of a luxury brand focusing on the consumer instead of relying on global expansion as a means to be profitable. St. John’s is forcefully implementing their approach by focusing on quality product and value, celebrating the customer, and her love affair for the brand’s clothes. 

1- 2 PUNCH: MAC ATTACKS NY FASHION WEEK

Mac Cosmetics, owned by Estee Lauder Cos. Inc., confirmed in WWD today that it has joined forces with Milk Studios to create a sponsored show venue for New York Fashion Week  (scheduled September 10-17). The space, known formally as Milk Studios’ Photography  is located at 450 West 15th street in downtown New York City.

In this bold move made by MAC, it’s clear that the competition for gathering and hosting the shows for the nations hottest designers just got tougher, thanks to the new alternative location, other than the tents at Bryant Park.

MAC, with its MILK Studio collaboration, has truly capitalized on the economic climate, frugality of fashion houses, and a shift in presentation styles, that many designers are taking. With this new venture, the most noted benefits are financial; MAC and MILK gives out the space for free, apposing to the traditional Bryant Park venue that runs from $26,000 to $50,000. And it seems like all the cool kids are doing it! Alexander Wang, Adam Lippes, Vena Cava, Band of Outsiders and Peter Som, are just a few feeling the downtown vibes, and gearing up to show their Spring/Summer 2010 collections at MILK.

For Demsey, the President of Estee Lauder (the parent company to Mac) the goal is to create an environment that will foster more creative capabilities. The strategic approach for MAC has taken a 360 turn from its 5 year sponsorship stint with IMG at the Bryant Park Tents, into a new direction that the company describes as “ an integrated support of fashion and makeup artistry” providing MAC with a more active role with the designers and their presentations.

All in all, this move will provide more brand control and exposure for the multimillion-dollar make up company and on its own terms.  This news comes at a time, when fashion week at Bryant Park has come under siege as being “tired.” As a result of designers looking to add a lot more jolt to their business (go big or go home!), MAC's collaborative effort will be refreshing for the fashion community and for commerce in general. At a time, where fashion has taken a rough hit, MAC and MILK studios are representing the new American spirit-that creativity and ingenuity are essential in achieving economic prosperity.

Now only 48 days until New York Fashion Week… 

THE BIG BUY OUT: ZAPPOS JOINS AMAZON

Date: Wed, 22 Jul 2009
From: Tony Hsieh (CEO - Zappos.com)
To: All Zappos Employees
Subject: Zappos and Amazon

Please set aside 20 minutes to carefully read this entire email. (My apologies for the occasional use of formal-sounding language, as parts of it are written in a particular way for legal reasons.)

Today is a big day in Zappos history.

This morning, our board approved and we signed what’s known as a “definitive agreement”, in which all of the existing shareholders and investors of Zappos (there are over 100) will be exchanging their Zappos stock for Amazon stock. Once the exchange is done, Amazon will become the only shareholder of Zappos stock.

Over the next few days, you will probably read headlines that say "Amazon acquires Zappos" or "Zappos sells to Amazon". While those headlines are technically correct, they don't really properly convey the spirit of the transaction. (I personally would prefer the headline “Zappos and Amazon sitting in a tree…”)

We plan to continue to run Zappos the way we have always run Zappos -- continuing to do what we believe is best for our brand, our culture, and our business. From a practical point of view, it will be as if we are switching out our current shareholders and board of directors for a new one, even though the technical legal structure may be different.

We think that now is the right time to join forces with Amazon because there is a huge opportunity to leverage each other's strengths and move even faster towards our long term vision. For Zappos, our vision remains the same: delivering happiness to customers, employees, and vendors. We just want to get there faster.

We are excited about doing this for 3 main reasons:

1) We think that there is a huge opportunity for us to really accelerate the growth of the Zappos brand and culture, and we believe that Amazon is the best partner to help us get there faster.

2) Amazon supports us in continuing to grow our vision as an independent entity, under the Zappos brand and with our unique culture.

3) We want to align ourselves with a shareholder and partner that thinks really long term (like we do at Zappos), as well as do what’s in the best interest of our existing shareholders and investors.

I will go through each of the above points in more detail below, but first, let me get to the top 3 burning questions that I'm guessing many of you will have.

TOP 3 BURNING QUESTIONS

Q: Will I still have a job?

As mentioned above, we plan to continue to run Zappos as an independent entity. In legal terminology, Zappos will be a "wholly-owned subsidiary" of Amazon. Your job is just as secure as it was a month ago.

Q: Will the Zappos culture change?

Our culture at Zappos is unique and always evolving and changing, because one of our core values is to Embrace and Drive Change. What happens to our culture is up to us, which has always been true. Just like before, we are in control of our destiny and how our culture evolves.

A big part of the reason why Amazon is interested in us is because they recognize the value of our culture, our people, and our brand. Their desire is for us to continue to grow and develop our culture (and perhaps even a little bit of our culture may rub off on them).

They are not looking to have their folks come in and run Zappos unless we ask them to. That being said, they have a lot of experience and expertise in a lot of areas, so we're very excited about the opportunities to tap into their knowledge, expertise, and resources, especially on the technology side. This is about making the Zappos brand, culture, and business even stronger than it is today.

Q: Are Tony, Alfred, or Fred leaving?

No, we have no plans to leave. We believe that we are at the very beginning of what's possible for Zappos and are very excited about the future and what we can accomplish for Zappos with Amazon as our new partner. Part of the reason for doing this is so that we can get a lot more done more quickly.

There is an additional Q&A section at the end of this email, but I wanted to make sure we got the top 3 burning questions out of the way first. Now that we've covered those questions, I wanted to share in more detail our thinking behind the scenes that led us to this decision.

First, I want to apologize for the suddenness of this announcement.  As you know, one of our core values is to Build Open and Honest Relationships With Communication, and if I could have it my way, I would have shared much earlier that we were in discussions with Amazon so that all employees could be involved in the decision process that we went through along the way. Unfortunately, because Amazon is a public company, there are securities laws that prevented us from talking about this to most of our employees until today.

We've been on friendly terms with Amazon for many years, as they have always been interested in Zappos and have always had a great respect for our brand.

Several months ago, they reached out to us and said they wanted to join forces with us so that we could accelerate the growth of our business, our brand, and our culture. When they said they wanted us to continue to build the Zappos brand (as opposed to folding us into Amazon), we decided it was worth exploring what a partnership would look like.

We learned that they truly wanted us to continue to build the Zappos brand and continue to build the Zappos culture in our own unique way. I think "unique" was their way of saying "fun and a little weird." :)

Over the past several months, as we got to know each other better, both sides became more and more excited about the possibilities for leveraging each other's strengths.  We realized that we are both very customer-focused companies -- we just focus on different ways of making our customers happy.

Amazon focuses on low prices, vast selection and convenience to make their customers happy, while Zappos does it through developing relationships, creating personal emotional connections, and delivering high touch ("WOW") customer service.

We realized that Amazon's resources, technology, and operational experience had the potential to greatly accelerate our growth so that we could grow the Zappos brand and culture even faster. On the flip side, through the process Amazon realized that it really was the case that our culture is the platform that enables us to deliver the Zappos experience to our customers. Jeff Bezos (CEO of Amazon) made it clear that he had a great deal of respect for our culture and that Amazon would look to protect it.

We asked our board members what they thought of the opportunity. Michael Moritz, who represents Sequoia Capital (one of our investors and board members), wrote the following: "You now have the opportunity to accelerate Zappos' progress and to make the name and the brand and everything associated with it an enduring, permanent part of peoples' lives... You

are now free to let your imagination roam - and to contemplate initiatives and undertakings that today, in our more constrained setting, we could not take on."

One of the great things about Amazon is that they are very long term thinkers, just like we are at Zappos. Alignment in very long term thinking is hard to find in a partner or investor, and we felt very lucky and excited to learn that both Amazon and Zappos shared this same philosophy.

All this being said, this was not an easy decision. Over the past several months, we had to weigh all the pros and cons along with all the potential benefits and risks. At the end of the day, we realized that, once it was determined that this was in the best interests of our shareholders, it basically all boiled down to asking ourselves 2 questions:

1) Do we believe that this will accelerate the growth of the Zappos brand and help us fulfill our mission of delivering happiness faster?

2) Do we believe that we will continue to be in control of our own destiny so that we can continue to grow our unique culture?

After spending a lot of time with Amazon and getting to know them and understanding their intentions better, we reached the conclusion that the answers to these 2 questions are YES and YES.

The Zappos brand will continue to be separate from the Amazon brand. Although we'll have access to many of Amazon’s resources, we need to continue to build our brand and our culture just as we always have. Our mission remains the same: delivering happiness to all of our stakeholders, including our employees, our customers, and our vendors. (As a side note, we plan to continue to maintain the relationships that we have with our vendors ourselves, and Amazon will continue to maintain the relationships that they have with their vendors.)

We will be holding an all hands meeting soon to go over all of this in more detail. Please email me any questions that you may have so that we can cover as many as possible during the all hands meeting and/or a follow-up email.

We signed what's known as the "definitive agreement" today, but we still need to go through the process of getting government approval, so we are anticipating that this transaction actually won't officially close for at least a few months. We are legally required by the SEC to be in what's known as a "quiet period", so if you get any questions related to the transaction from anyone including customers, vendors, or the media, please let them know that we are in a quiet period mandated by law and have them emailtree@zappos.com, which is a special email account that Alfred and I will be monitoring.

Alfred and I would like to say thanks to the small group of folks on our finance and legal teams and from our advisors at Morgan Stanley, Fenwick & West, and PricewaterhouseCoopers who have been working really hard, around the clock, and behind the scenes over the last several months to help make all this possible.

Before getting to the Q&A section, I'd also like to thank everyone for taking the time to read this long email and for helping us get to where we are today.

It’s definitely an emotional day for me. The feelings I’m experiencing are similar to what I felt in college on graduation day: excitement about the future mixed with fond memories of the past. The last 10 years were an incredible ride, and I'm excited about what we will accomplish together over the next 10 years as we continue to grow Zappos!

-Tony Hsieh

 CEO - Zappos.com

MADISON AVENUE SPY: FIRST REPORT

The Madison Avenue Spy has written a great piece forecasting the retail environment for fall and what to expect a head. Particularly, she emphasizes that many well known designers have and will continue to reduce their price listings in order to capture the customer. Yet, despite this good news and power gained by the shopper, the real question is will this make a difference and translate into profits ? Read below for the whole story. 

Designers Re-adjust Prices for Fall

The summer sale season is drawing to a quick end. As we've been racing to the back of stores and sorting through scattered sales racks, department stores and boutiques have been carefully laying out the new collection like fragile souffle. For many designers, this new collection will truly determine the state of the retail economy.

One trend we quickly noticed is the "re-adjustment" in pricing. In mid-June, an eager Gucci sales associate commented that pricing was going to start off much more aggressive. She pointed out a fine mohair coat, which she said would likely be priced at $6,000 during brighter economic days. This season, the coat is hitting store shelves at $4,000 or about 33% less than a similar coat in 2008.

Gucci isn't the only brand trying to hold down prices. We recently got our hands the Prada winter price list. Classic styles that are almost never seen on sale have had their prices re-adjusted. A buttery, gathered, nappa leather tote was $2055 but is $1495. That's 25% less! A similar bag made of nylon was reduced about 9% from $1155 to $1055.

Burberry has also reduced the price of some coats. The weather proof iconic trenches are $750, or $150 less expensive than the start of the prior season. We also hear the Chloe has made their prices a bit more agreeable to consumers wallets

Will these lower prices help lure customers? Huici Lin, an avid shopper who works in research at a major university says, lower prices will help lure shoppers but prior seasons have trained customers to wait for sales. "No matter how pretty those shoes look in the glass display cabinet, they will still go on markdown."

If Huici is correct, this season may turn out to be great for shoppers like you and me but a bad sign for designers who have had to slash their margins to accommodate lower pricing.

http://madisonavespy.blogspot.com/2009/07/designers-re-adjust-prices-for-fall.html

THE NUMBERS ARE IN: NASTY FOR CONDÉ NAST

The September issues, arguably the make or break for the entire year, are just around the corner and the bleak numbers of advertising pages are down - way down:

The biggest losers: Vogue down from 607 pages to 427 a - 30 % decrease,  W with 165 and a -47% decrease , Vanity Fair at 213, down - 24.5% and Teen Vogue, with 136 ad pages, down - 17%.

What does this imply for the magazine world? Well for one thing, the uphill battle facing the dwindling publication world just got harder. It seems that the theory of increased ad pages due to lower rates and more favorable page selections and layouts did not happen. With this in mind, Condé Nast has definitely felt the fire- literally, putting to bed a slew of its magazines over the year (Men’s vogue down to twice a year, Portfolio, and Domino)

But despite the attempt to save itself, by embracing the online world- it seems that that too is not working as well as Si and the boys would like. Today, alone, came the mention that Men.Style.com will shutter, and the plan for Vogue to launch its own has been put on halt. (This year alone, Condé Nast closed teen sites Flip.com, and YM.com) 

On top of all of this, Condé Nast in a memo this week announced it’s hiring of consultant group McKinsey & Company, in hopes to breathe new life into the once powerful publication empire.  

Other buzz worthy signs of the hard times ? Hiring freezes, a slew of layoffs, changes at the cafeteria, and missing faces at the Paris couture shows (a la Wintour )

All of this sounds like a ticking time bomb to me.

Via Media Memo 

RECESSIONISTA: BAGGING IT

Always wanted that Hermes bag? How about the most coveted yet classic Chanel? Well, finally a fashion gal's salary will be able to cover the cost, thanks to a collaboration between London retailer Brown's and designer Oonagh O'hagen. Both have teamed up to create a limited edition line of white cotton totes with imprints of the most glamours designer handbags. For approximately $ 65 (US), your dream of owning that "Kelly"can finally come true- and at a fraction of the cost. Your welcome! Bags available at www.brownsfashion.com. 

CIT: DEAD OR ALIVE ?

CIT, the most important factoring institution for the fashion industry has been given another lifeline. After reports of bankruptcy, according to WWD, CIT has received a tentative $ 3 Billion dollar deal to avoid the potentially disastrous rippling effect that would be felt by the fashion community. CIT is the quintessential middleman for retailers and manufactures a like, whose business accounts for 60% of the fashion industry’s factoring volume.

The closing of this organization, would not only effect the thousands of direct clients CIT works with, but also, the thousands of fashion insiders who rely on factors as a necessary means to push business. Particularly, clients already are having a hard enough time matching up with lenders that will meet their needs.

For many, the concerns for CIT carry far beyond payment terms. Rather, as the controlling factor for the industry, many are concerned over CIT’s power, pushing a way many smaller manufacturers, simply because they can. Other fears include the risks that come with consolidation, and the less heard voice that the designer/manufacturer/retailer can have due to the monopolization of the factoring business.

Despite the debate on weather or not CIT should succumb to its natural fait, rather then being given a second chance at life- it is clear that its impact would be devastating at a time when retail has suffered enough. As the most important shopping season enters, CITs death would be extremely detrimental in rebuilding the economic landscape for not only the US, but for the world. While many are divided on the this potential dilemma, and particularly where this money should come from, it should be known that CIT’s role in facilitating in stimulating consumer spending is important.  

Expect more to come on the days a head and its implications for the retail world. 

WHAT NOT TO HAIR

Nick Arrojo out, Ted Gibson in! TLC's What Not to Wear is overhauling its expertise list by giving the show a fresh set of scissors to the equally talented king of locks. Ted Gibson, mane empire includes salon locations in New York, Washington, and Florida, a hair care line, and contributing style expert duties on air. His name buzzes amongst the celebrity and social elite (an Oprah seal of approval!) who boost his ability to create jaw dropping looks that are both sexy and flattering. Filming has already begun. 

CROCS UNDER WATER

Have the fashion Gods finally heard our call? The much controversial rubber Crocs could be near its end. According to NY Magazine's, The Cut, the company has incurred a large amount of dept that makes it unlikely to pay off before its due date in September. Other milestones to note; last years loss of $ 185.1 million dollars, 2000 jobs, and happy investors. 

Finally, I have never been so happy to see laces! 

To read more about it click here

TEXT A ZINE: THE INTEGRATION OF MOBILES AND MAGAZINES

It is no surprise that the age of old media has constantly been tested against the new wave of the digital world.  What began as the democratization of the cell phone, (the people’s tool!), than became our reliance on social media, and PVR. As a result, magazine publications are taking a heavy hit, and continue to face a dwindling environment.

While there is nothing new about the magazine- those who truly grow anxious by the thought of its depletion, can perform from a place that is relevant. People magazine’s Style Watch is one publication outlet that has utilized a multimedia approach beyond the effortless integration of dot coms and intern bloggers. Rather, People magazine’s Style Watch has successfully adopted text messaging as a means to create a fully integrated machine and deliver services that provide both the people and advertisers with what really matters—merchandise.

I have always had a problem with magazine content and its inability to engage the reader and turn them into the ultimate consumer. Too many ads, pointless editorials, and approximate pricing does not turn the reader into an active participant in the shopping game.  But Style Watch has provided text-messaging codes placed beside its items. Once the reader sends the text code of the item desired, a third party service, Snipp, sends the reader information (via cell phone number or email) including the date the product is expected to sell, its price, and where to purchase it. I think these efforts on Style Watch are ingenious. Not only do they support the purpose of the magazine (to sell stuff), but they also please advertisers and allow both parties to track the brand equities and success of each party’s efforts.

I think in this Google age where everything is instantaneous and the latest, magazines need to make more of a sensible effort to combine the benefits of their traditional purposes with complementing aspects of the new age. So as we greatly anticipate the coveted yet lighter September issues, I hope the masthead rulers start thinking more about the future of magazines and their relationship with the consumer and less about preserving a historic name.