The Lux Consumer is in for a Whole New Experience: Amazon Plans Haute Couture Takeover

Original Discussion: Amazon Plans Haute Couture Takeover - Retail News. http://bit.ly/cV0ON8 cX: Luxury's Savior?

Why haven’t Bergdorf Goodman, Harrod’s or Barney’s done this? The buyers of these and other globally respected stores have deep and abiding relationships with the best fashion houses.  Why hasn’t one of them emerged as the leader in luxury online?

The reason they have not taken advantage of the Web's reach and ability to deliver robust (even yet-to-be imagined) shopping experiences is two-fold: the luxury market thinks of online retailing as the place for remainder merchandise and secondary and tertiary labels (mass appeal=sales volume).  The second reason is their best customers have not been there.  At least that's what they thought.

As sales shrink and "traditional" retailers reconsider their sku volume, luxury brands are suddenly seeing the Web in a new light.

Amazon's opportunity here is exactly what it was with books; consolidate a fragmented business by creating value for brands and consumers alike.  After all, this is what Bergdorf's, Harrod's and Barney's does.

Amazon's challenge will be to learn about personality and creating emotional connections (ala Zappos) with their customers. The best luxury buyers and sales people know the value of a customer over time.

Selling on the Web is still about procurement.  While sites like Yoox and Net-a-Porter carry big names (the Gilt models is still about consumer manipulation), they are still showing lifeless stills of dis-embodied apparel and accessories, most of it off-season.

Take Balenciaga for example.  On Yoox, most of the product is marked down and on Net-a-Porter there are only a few accessory items.  Stella McCartney on the Harrod's site is only about intimates and the highest price point is only 230 Pounds.  If I were at Harrod's store in person, odds are I would have much greater choice of Ms. McCartney's products and they wouldn't have to ship it for free.

Amazon gets the numbers.  (I won't even start on SEO)  Now they have to get the consumer. At the end of the day, it's about moving the merchandise.  Will they figure it out?  Mr. Bezos didn't spend all that time with Target for naught.

From RetailWire

Original Discussion: Amazon Plans Haute Couture Takeover - Retail News. http://bit.ly/cV0ON8 cX: Luxury's Savior?

Amazon.com is looking to go upscale with its clothing and shoe business, staging a relaunch that has its sites set on "rivals such as Yoox and Net-A-Porter," according to a Financial Times report.

The e-tailer is recruiting software engineering talent to help it develop "great new features to change the way people shop for clothing." As it has done in other categories, Amazon is looking to set the standard by which consumers judge all others in the space.

The push by Amazon comes on the heels of the eBay Fashion (fashion.ebay.com) launch in early April. That site is looking to build on the traditional eBay approach by adding an online mall of top retailers, such as Brooks Brothers and Lord & Taylor, as well as offering flash sales.

Fashion sales at eBay in 2009 have been estimated at somewhere between $5.5 billion and $7.1 billion. Scot Wingo, chief executive of ChannelAdvisor, said Amazon's clothing, accessory and shoe sales are in the $6 billion to $8 billion range.

Amazon has apparently taken some of the tricks of its Zappos business and made them its own. The company is now offering free returns on all U.S. clothing orders over $25.

It is also looking to provide a more sophisticated visual experience with expanded viewing options and color variations that it began using in its denim store during last year's Christmas selling season.

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US Retail Abroad: Is the Consumer Experience Different? Should It Be?

When I travel, I always seek out the best retail in a place.  Usually it’s a brand or a format, hotel or bistro I’m not familiar with that makes the biggest impression. So I was surprised and not surprised back in 1994 during my honeymoon trip to Paris to discover a Gap outpost at Galleries Lafayette.  (Much to my new wife’s chagrin, we spent probably a bit too much time “auditing stores”.)  That was the Gap’s first foray into international markets; today they have more than 500 company-owned and franchised stores outside of the United States.

The place I bought my khakis and t-shirts at Galleries Lafayette??  Of course, to the tourist and occasional Parisian consumer, the Gap was interesting.  I still have the classic black sweater I purchased that day.

Today, retailers from abroad like H&M, Zara, or Uniqlo are seeing the US as a ripe market for expansion.  (Take a look at those stores’ Web sites—tell me if you think their product is truly unique.)  U.S. retailers having saturated their home markets are doing the same thing—looking to the emerging middle classes of countries around the world for growth.

Partnering for Retail Expansion

I was recently asked to comment on a story for Business First  about US retail brands expanding abroad, specifically in the Mid-East.  The story by Dan Eaton points out that U.S. retail brands Payless shoes, Office Depot and Starbucks partner with companies like M.H. Alshaya Co. to make that happen.  In that piece, Colin O’Kane, an executive from Alshaya, says, “A customer who has shopped at a store in the U.S. should feel at home in one of the stores we operate.”

I hope they aren’t relying on customers who have shopped U.S. outlets of these brands.  Talk about niche marketing.  Yikes.  (Of course he wasn’t; I believe his point was about the appearance and operation of the stores.)

Will that be enough to sustain growth?  What about the long-term prospects of the business on the ground?  Fueled by encouraging numbers from competitors and online sales, some retailers are reporting up to 20% of their online sales are coming from non-U.S. markets, brands are very motivated to find the right market entry strategies.

Here in the U.S. we are in a “’post-brand” environment where we need to have constant dialog and build deep connections with our customers.  The brand stance alone no longer is enough for customers here. 

Is cultural relevancy relevant?

Are these brands banking on their novelty alone?  It’s hard to argue with what appears to be pent up demand for well-known U.S. brands like Abercrombie & Fitch.  Take a look at this video. It doesn’t need to be translated to understand that A&F did a good job on opening day.  Critics have pointed out that the Japanese consumer culture is not as overtly sexualized as A&F is comfortable with in Western markets.  Did they offend?  Did it hurt them?  Most likely not.  They have enough brand equity to be themselves—for now.

But what of the lesser brands?  When Tesco entered the U.S. with their Fresh & Easy brand they found a niche between grocery and convenience to exploit—a unique and possibly a defendable position.  They are constantly tweaking it for American markets.  How will Tween Brands’ Justice fare in Dubai?  How much will they have to understand the local culture to make the product, environments and staff relevant? 

The merchant and its partners must understand consumers and markets as they balance maintaining a brand image amid the dynamics of a new and foreign marketplace. Companies like Alshaya give retailers “someone on the ground” who has that market knowledge and can manage the business day to day and at less expense than if the retailer staffed and ran the stores itself.

Each Brand Deserves a Unique Strategy

International influences have always been a part of retail.  The fresh, new, exotic are what drive attention and desire. The first department stores of London and Paris shaped the great emporiums here in the U.S.  It was the buyer’s imperative to go out and find the most unique and interesting product—still is.

It needs to be said that among the many ways to expand internationally, each brand does it differently.  Whether it is Galleries Lafayette, Collette, franchising, licensing or some combination of the above, there are many ways to expand globally.   Companies like Alshaya understand middle-market specialty—mostly apparel—brands and their relevancy to the consumers already shopping there.  Al Tayer Insignia understands luxury brands and thus has been tapped by Macy’s to help launch their first international store, Bloomingdales in Dubai.  Walmart is pressuring the U.S. government to help change the laws in India preventing it from selling directly to consumers.  Will Kroger or Target pop up in Tesco’s back yard?  Probably not anytime soon.

Relevant links

Original Business First article: bit.ly/cF0MDe

A&F in Japan:

U.S. Grocer Chains Eschew International Development http://supermarketnews.com/viewpoints/us-chains-home-growth-0531/

Retail - All Abroad: U.S. Retailers Set Sights Overseas - CNBC http://bit.ly/amiu3j

Industry Statistics - Even without Web sites customized for foreign markets, global sales are rising - Internet Retailer http://bit.ly/dbQSOH

US retailers, unsure about home, should look abroad - Reuters - http://bit.ly/dqXevw

A&F Canada, Europe, Asia: http://en.wikipedia.org/wiki/Abercrombie_&_Fitch#Expansion_campaign

Walmart's Huge Overseas Expansion Distracts From Its Domestic Saturation Problem http://blogs.bnet.com/business-news/?p=1191&tag=col1;post-2452

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