Fab.com Screenshot | Source: Fab.com

Yesterday, BoF was first to bring you the news of the recent $18 million investment in Farfetch.com. Today, we continue a week focused on e-commerce by examining the historical challenges faced by online retailers and how recent innovations and infrastructural advances have fundamentally improved the economics of e-commerce, setting the stage for a renaissance in online retail.

SAN FRANCISCO, United States — Following the burst of the dot-com bubble in early 1999, e-commerce suffered from a lack of venture capital investment. The unrealised, over-hyped expectations for e-commerce — at a time when the market, consumer technology and infrastructure were less evolved — and the subsequent burns left venture firms with a nasty aftertaste. Perhaps the most spectacular fashion e-commerce failure was that of Boo.com, which launched in the Autumn of 1999, burned through $135 million in venture capital in just 18 months and was liquidated in 2000.

But on closer inspection, e-commerce has also faced additional complexities and capital inefficiencies that, for years, continued to push investors away.

HISTORICAL CHALLENGES AND FIRST MOVER ADVANTAGE

First, e-commerce lacked defensibility. With software or other internet services, intellectual property or the complexities of build create barriers to market entry for would-be competitors. But e-commerce businesses are essentially selling products. The most important elements of these businesses are the assortment, breadth and variability of the merchandise they offer, along with overall access to this merchandise. Access to inventory is not a sufficient barrier, however, as other stores can carry the same products unless a business has exclusive agreements with vendors, which happens rarely and usually only for a limited time.

In the absence of defensibility, companies needed to demonstrate solid metrics around scale of revenues, registered users and overall profitability in order to secure investment. But for e-commerce companies, this requirement created something of a catch-22. When compared to software or other internet services, start-up costs for e-commerce companies were higher, due to the expense associated with buying physical inventory, setting up a logistics platform for warehousing and fulfilment, and acquiring and retaining customers. Furthermore, since they operated at the wholesale level, their margins were relatively smaller.

In order to work and attract investment, these businesses required scale. But in order to achieve scale, they needed significant investment.

There were a few big success stories, such as e-Bay and Amazon, which gained significant first mover advantages. As Josh Kopelman of First Round Capital has pointed out, from 1999 to the beginning of 2010, the list of top general e-commerce sites in the United States remained almost unchanged. In fashion, online juggernauts like Net-a-Porter, Yoox, Neiman Marcus, and Shopbop maintained their incumbent positions.

IMPROVED ECONOMICS AND REDUCED ENTRY COSTS

In recent years, however, the tides have turned in e-commerce. For one, consumers are now acclimated to the concept of online retail. According to Forrester, the online retail market in the US alone is expected to grow to $279 billion by 2015. But critically, major innovations and infrastructural advances have also fundamentally improved the economics of e-commerce, attracting significant venture capital interest in the sector.

Starting in 2007, US private sales pioneers like Gilt Groupe, Rue La La, Hautelook and Ideeli were able to drive massive consumer adoption in a very short amount of time when compared to traditional e-commerce sites. They offered designer fashion at significant discounts, distributed directly to email inboxes.

With timing and supply constraints to compel immediate action, these members-only sites successfully identified and leveraged key behavioural insights to drive engagement, collect customer data and generate rapid sales. But perhaps most importantly, their ability to move product much more quickly than traditional sites reduced cash flow requirements. Indeed, many flash sales sites buy on consignment, while others do not touch or pay for inventory at all until it is purchased by the end consumer.

In recent cycles, the rise of social media channels like Facebook and Twitter have also enabled e-commerce businesses to acquire customers and accelerate growth far more efficiently. Fab.com, which sells discounted furniture, jewelry and art in 72-hour flash sales, has leveraged social media to great success, attracting a total of 1.65 million registered users in just six months. According to The Wall Street Journal, in November of last year the start-up processed approximately 100,000 orders, double the previous month, and is now averaging $1.4 million in sales per week. The company recently raised a Series B round of $40 million, led by Andreessen Horowitz, valuing Fab.com at more than $200 million. “They’ve leveraged social extremely effectively,” said general partner Jeff Jordan in a blog post on the transaction.

The evolution of e-commerce solutions like Shopify, Magento and BigCommerce, along with the growth of Software-as-a-Service (SaaS) tools like Mailchimp, RJ Metrics and Shipwire and the rise of Amazon Web Services, a cloud computing platform, have also made it significantly easier and cheaper for retailers to build and manage beautifully designed e-commerce storefronts. Additionally, leveraging APIs (application programming interfaces that make it easy for software programs to talk to each other) has made integration much more time- and cost-efficient, not only for the consumer-facing storefront, but also in terms of the back-end workflow.

Innovation across the supply chain is also making development easier, improving scalability and easing integration, while also decreasing capital requirements for e-commerce businesses. Web-based point of sale systems, wholesale marketplaces, ordering and invoicing software, enterprise resource planning systems, and shipping and fulfilment systems are becoming simpler, cheaper and more flexible. In fact, companies can now use highly efficient software-as-a-service (SaaS) tools across the entire supply chain, paying periodically to access hosted software, without having to incur the costs and complexities of hosting and managing back-end infrastructure.

NEW OPPORTUNITIES AND ECOSYSTEMS

In the context of these improved economics, there are a number of problems to be solved that provide interesting opportunities in e-commerce. Traditionally, retailers have faced difficulties in turning customer data into actionable insight. This is beginning to change. SaaS tools let retailers more easily access and make sense of data, opening up opportunities for businesses to leverage the inadvertent “buyer profiles” that consumers are now creating as they express themselves on social media. Particularly interesting are the taste and behavioural data that consumers share on social curation sites like Svpply, Pinterest, Lyst and The Fancy.

While brands and retailers are scratching their heads solving their data issues, consumers are frustrated with the process of discovering products. It’s easy browse through a physical store, but searching millions of items online is overwhelming. Even if you know you want to buy a black pair of shoes, you still end up with thousands of options. Discovering products that are right for you remains challenging.

The growth of new technology channels and ecosystems created and supported by large players is also providing fertile ground for e-commerce innovation. Alongside the growth of social channels like Facebook, which offers retailers new ways to achieve viral distribution and offer social discovery, the mobile commerce market is expected to reach $31 billion in the US alone by 2016, up from $3 billion in 2010. But while these new channels create new opportunities for e-commerce companies, they also present a major challenge: multi-channel integration. Historically, merchants have been forced to cobble tools together to create a seamless, multi-channel workflow.

EBay’s new X.commerce initiative aims to address this problem, offering retailers a single platform that lets them easily add, customise and integrate tools from the X.commerce marketplace, making it easier for young companies to capitalise on the multi-channel opportunity. The stated vision of the X.Commerce initiative is to “help merchants and businesses of all sizes to compete and thrive in the fast-changing world of social, mobile, local and digital driven e-commerce.”

Indeed, with improved economics, new opportunities and goliaths like eBay supporting the ecosystem, the stage is set for a renaissance in online retail and the growth of disruptive business models built around new ways of buying, selling and engaging with goods.

Tomorrow, we explore the recent explosion of new business models in online retail, including personal subscription, social merchandising, mass customisation and collaborative consumption.

Elizabeth Knopf is a former investment associate and the co-founder of Sorced, an online showroom.

Gilt Groupe warehouse | Source: Fantabulously Frugal

Today, BoF takes an in-depth look at the past, present and future of Gilt Groupe’s business model and speaks with Gilt Groupe CEO Kevin Ryan on his plans to continue the company’s ascendance.

NEW YORK, United States — Back in November of 2007, BoF was amongst the very first media outlets to write about Gilt Groupe, the New York-based start-up that went on to dramatically reshape the online retail market for fashion, building a community of high value consumers around limited-time, members-only “flash sales” for designer apparel at steeply discounted prices.

The timing of Gilt’s launch couldn’t have been better. In the months that followed, fashion and apparel brands began to feel the impact of a global recession that would ultimately give rise to one of the most challenging macroeconomic environments in the history of modern retailing. Seemingly overnight, wholesale inventories became unmovable as retailers drastically reduced product assortments and orders.

As a consequence, many fashion brands were forced to liquidate excess inventory positions, causing a sudden and significant supply glut for “cut out” goods. Prior to the Great Recession, brands would have sold this excess inventory through off-price channels like Loehmann’s, T.J. Maxx and Century 21. But as the economy sank, these retailers were asking for discounts as high as 90 percent, while merchandising clothes in a haphazard fashion which did nothing to protect the high-end image brands had spent years cultivating.

What’s more, the extreme market conditions of the Great Recession created an acute financial imperative for retailers — off-price, as well as full-price — to convert their own excessively large inventory positions into cash, leaving many brands almost without any viable sales channel, let alone one that would protect brand equity.

Gilt charged onto the scene like a knight on a white horse, providing a novel, efficient and brand-sensitive way to liquidate excess inventory and enjoying explosive growth in the process. Based on this momentum, Gilt Groupe raised $138 million last May in a new round of financing, valuing the four-year-old company at $1 billion.

But fast-forward to the end of 2011 and flash sales are facing significant challenges. Here, BoF examines the rise, stumble and future of Gilt Groupe’s business model.

Although impeccable timing was critical to Gilt Groupe’s meteoric rise, there were other important factors behind the company’s success. Firstly, Gilt’s member base is largely comprised of one of the most desirable demographics in retail: urban sophisticates. The typical Gilt customer has a bachelor’s degree, is in his or her mid-thirties and “significantly over-indexes in higher household income buckets, when compared to the general online population,” according to a spokesperson for Gilt Groupe.

To build this quality customer base, Gilt leveraged online network effects to great success, starting with friends of the founders and early employees. “This is a business that has grown predominantly through word-of-mouth marketing,” one of Gilt’s founders, Alexis Maybank, told The Wall Street Journal last year. “75 percent of our membership has come from the suggestion of a friend, using our on-site ‘Invite Friends’ feature. That’s how we launched. We sent invites to a list of about 15,000 people — friends, former colleagues and classmates, dating back to grade school!”

Second, Gilt’s business model succeeded in driving consumer demand in a novel way: offering designer product at significant discounts, distributed directly to email inboxes, with timing and supply constraints to compel immediate action. Fifty percent of Gilt’s deal revenue is generated in the first hour after a sale starts.

Gilt’s email demand generation strategy also went hand in hand with a strong product assortment. From 2007 to 2009, the company’s core team had powerful relationships with fashion and apparel brands that, in conjunction with Gilt’s high value customer base, enabled them to secure highly desirable product, delivering a unique value proposition to their members.

And finally, Gilt managed to liquidate inventory in a way that protected the image of participating brands. Generally, brands are careful to close out their inventory in a manner that both optimises cash flow and ensures that their target audience doesn’t see it. But, amazingly, the quality of Gilt’s product offering and customer base enabled brands to sell excess inventory at a discount, while still maintaining a positive image.

How did Gilt start to stumble?

Ironically, it was Gilt’s massive success and the demands this placed on securing greater and greater volumes of desirable product that began to undermine the company’s ability to deliver on its core value proposition: great product at a great price.

From 2009 to 2010, Gilt’s revenue rose from $170 million to $425 million, according to estimates published by Internet Retailer. This significant growth created the need for more and more quality product to feed the Gilt machine, something that was difficult to fulfil in ever-increasing volumes.

While Gilt Groupe itself was inspired by the French private sales behemoth Vente-Privée (which recently launched its own a US-focused flash sales venture with American Express) Gilt’s success also spurred hundreds of other competitors to enter the flash sales market, from start-ups like Ideeli and Rue La La to strategic players like Amazon’s MyHabit and Nordstrom’s Hautelook.

With a flood of new Gilt-like clones actively looking for supply, the glut of excess inventory from the mid-2000’s economic boom dried up even faster. Additionally, in response to the global recession, many brands began producing at volumes that were lower than in the heady days of 2007. As a result, brands who were once price takers became price setters, increasing the cost of securing inventory.

An anecdotal comparison of the brands and products available on Gilt today versus those available in the company’s first couple of years shows that, over time, quality level has gone down. Back in 2009, it was possible to find prestige brands like Ralph Lauren Purple Label and Porsche Design on Gilt, in stark contrast to the many unknown brands that populate the site today. This meant that each time a subscriber opened an email and the product did not communicate the excitement-to-value ratio that had originally made Gilt so successful, their inclination to open subsequent emails from Gilt, and the brand’s position as a curator of style, suffered.

To be fair, these are challenges that have impacted all flash sale players and are not unique to Gilt. But they nonetheless present a significant threat to the company’s core business model.

What is Gilt doing to address the issue?

“Today because we are bigger and more well known, we get inventory that we didn’t get before,” Gilt Groupe CEO Kevin Ryan told BoF. This may simply be a matter of showing strength in the face of adversity as market sources suggest that inventory is indeed a major issue for flash sales players.

That said, Mr. Ryan did go on to explain a number of initiatives he has put into place to try and ensure Gilt’s continued ascendance. “We do some things that we didn’t do before,” he said. “We do more cuttings and we are increasing private label,” he continued. “We do pack and hold. At the beginning of a season, brands will go out and get orders from Neiman and Saks — and then we’ll order it as well. You can’t always count on this, but let’s say they end up with 15,000 orders and the minimum from their Chinese producer is 20,000. They’ll come to us and say, we’ll produce 2,000 for you, but you have to hold it until the end of the season.”

Leveraging its database of more than 5 million members, Gilt has also built a number of new businesses, launching Jetsetter, a travel deals site; Gilt Taste, a business unit focused on gourmet food deals; Gilt City, a Groupon-like local deals site; Gilt Home, a deals site for furnishings, home décor and gifts; and Park & Bond, a full-priced menswear business.

“What I do is try and sell more things to my existing customers,” explained Mr. Ryan. “We have new categories: hotels, restaurants, home, which have unlimited inventory,” he continued. “Within our overall business, two years ago, 95 percent of what we did was end of the season men’s and women’s. Today, that’s probably 35 percent of what we do. We’re in most of the big categories I want to be in right now, but we’ll add one or two over time.”

Performance of their new vertical product extensions is mixed, according to annual gross revenue estimates provided by Mr. Ryan. Compared to the size of the original men’s and women’s business (over $300 million), Jetsetter and Gilt Home (each close to $100 million in sales) have been successful. Currently less successful, though only 15 and 7 months old, respectively, are Gilt City (in the $50 million to $100 million range) and Gilt Taste ($10 million to $20 million). But Gilt clearly recognises the need to capture a larger share of their customers’ disposable income and seize adjacent revenue opportunities.

Gilt is on track in a number of other areas, as well. The company recently launched global e-commerce, shipping to over 90 countries, and understands social marketing in a way that many retailers do not, actively engaging with its large audience of fans and followers. Gilt has also seized the opportunity in mobile and tablet, deriving between 17 and 30 percent of revenue, depending on the day of the week, from mobile platforms, according to Chris Maliwat, a former vice president of strategy at Gilt Groupe.

But the negative impacts of reductions in supply, upward pricing pressures and growing deal fatigue are here to stay and will continue to create an increasingly challenging environment for Gilt and its flash sales peers.

What should Gilt do now?

First of all, Gilt could reinvigorate its vendor value proposition and focus on building new relationships with brands. Here, the most valuable asset for the company is the demand source of their customer data, a fact with which Mr. Ryan concurs.

“[Customer data] is a hugely valuable part of our business. I think we have the best personalisation of anyone, maybe second to Amazon,” he said. “For example, when you get an email in the morning, that’s one of 2,000 versions that goes out. The data is run every night, based on the sales, based on what we think [individual customers] are going to buy. When you open up the [website] you get a different page than I do; I actually get different sales than you do.”

But Gilt is not making the most of this data or sharing its full value with vendor partners. For example, Gilt could better quantify and harness the total value of their relationship with customers by doing things like delivering email analytics and driving social media for brands.

Taking a page from fast fashion, Gilt Groupe would also do well to further its focus on analytics, transforming itself from a data-rich, but insight-poor platform to a vertically aligned organisation driven by actionable information derived from its wealth of data. Retailers like H&M and Zara have upended the traditional seasonal approach to retail through intensive use of analytics coupled to a modern, vertically integrated manufacturing machine. Indeed, it’s their ability to transform analytic insights into demand-responsive product compositions that is their core strategic value proposition.

“Store managers communicate directly with Zara designers and feed them data on what sells well and what doesn’t,” reported The Wall Street Journal in September. “If managers say a polka-dotted-black dress is flying off the racks, it is able to turn around quickly and churn out polka-dotted dresses in other colours and have them in stores in a matter of weeks.”

But Gilt has a significant competitive advantage over fast fashion retailers in the structured nature of the demand signals (clicks, views and purchases) the company can read, meaning that it’s possible for Gilt to automate the identification of trends, while retailers like Zara must rely on store managers to proactively surface these insights.

As this game-changing start-up looks ahead to 2012, Mr. Ryan remains confident that the initiatives he has put in place will support a potential IPO and move the business into profitability. “The overall company is not profitable yet,” he said. “Sometime next year we’ll cross over. The zone where we might go public, and I think we probably will go public, is between fourth quarter next year and fourth quarter the year after,” Mr. Ryan told BoF.

Matthew A. Carroll currently runs outdoor brand Cloven Footwear and sits on the board of three tech start-ups in San Francisco, California.

Editor’s Note: This article was revised on 19 December, 2011. An earlier version of this article misstated that Gilt Groupe was not targeting sales to specific consumers based on their shoe size. It is. The article also misstated Chris Maliwat’s affiliation with Gilt Groupe. Having previously served as vice president of strategy, Mr. Maliwat left the company in November 2011. The article also neglected to mention that new business lines Gilt City and Gilt Taste are 15 and 7 months old, respectively, at the time of writing.

Gilt Groupe Screen Shot | Source: Gilt Groupe

Gilt Groupe consider going public in 2012 (FT)
“Gilt Groupe, a ‘flash’ sales site for designer clothes, plans to join its peers Groupon and Amazon as a public company, perhaps by the end of next year, when the company will be close to generating $1bn in annual sales… Gilt and rival sites… Are among the fastest-growing segments of online retail, which is itself expanding faster than traditional retail amid economic malaise in the US and Europe.”

Jack Wills debuts in Hong Kong (Red Luxury)
“The ‘fabulously British’ clothing company, Jack Wills, will make its Asia debut with the opening of two stores in Hong Kong. Mark Parker, the company’s president of Asia and the Middle East, said: ‘Harbour City has a high percentage of mainland customers. It’s a very, very large window into China, and greater China is a very important market long-term. In Causeway Bay…there’s a large number of [mainland Chinese] customers, local consumers and international travelers.’”

Why Deco Now? (On the Runway)
“Every fashion designer, they say, is an architect manque, intent on imposing a structure on the wayward human form. That observation seemed especially apt in a season of spring runway shows filled with dresses constructed to glide over the body and embellished to echo the linear symmetry of Art Deco design.”

Alexander McQueen’s McQ label (Telegraph)
“The founder of the Alexander McQueen label, Lee McQueen, may have tragically passed away last year, but his legacy lives on through his brand’s expansion. The luxury label’s younger, more renegade outpost, McQ, has announced the opening of its first stand-alone store and its debut on the catwalk at London Fashion Week.”

Elle Macpherson: the brains behind The Body (Telegraph)
“Macpherson insists that the financial revelation that struck in her early-to-mid twenties was her own, unprompted by some agent… . It came, she says, after ‘working for Sports Illustrated for so many years, and recognising that working for a business in which I did not have a profit share was not attractive’.”

Inditex Headquarters in La Coruna, Spain | Source: Inditex

How Zara clothes turned Galicia into retail hotspot (Reuters)
“The green, rainy region of Galicia in northwest Spain is best-known as the destination for pilgrims hiking the Camino de Santiago to pay tribute at the remains of apostle Saint James… But a different kind of pilgrim also makes the journey here — retail sector analysts visiting the headquarters of Spain’s most successful modern export, Zara clothes, which has made the founder of Inditex one of the richest men in the world.”

The Future Of Fashion, Part Nine: Azzedine Alaïa (Style.com)
“Fashion will last forever. It will exist always. It will exist in its own way in each era. I live in the moment. It’s interesting to know the old methods. But you have to live in the present moment. The evolution today is in the machinery. There are machines that did not exist before. It allows you to be a lot more of a perfectionist.”

Luxury Daily Deals Site Gilt City Picks Up BuyWithMe at a Discount (All Things Digital)
“Gilt City, the daily deals site operated by fashion and luxury online retailer Gilt Groupe, has acquired BuyWithMe… Gilt will be purchasing BuyWithMe’s assets, including its member and vendor lists, as well as some of its technology. Other companies also exploring offers included San Francisco-based Bloomspot and the No. 2 player, LivingSocial.”

UnitedStyles Lets You Play Fashion Designer (TechCrunch)
“Based in Shanghai, UnitedStyles is a Facebook Connect-enabled service that lets any user create customized women’s apparel, allowing them sketch out, adjust and share a design via an online interface and customized 3D preview… Co-founder Marc van der Chijs tells me that his objective is to recreate the entire fashion design experience for Internet users, ‘It’s very strange that you cannot [already] design your own clothes online.’”

Rise: Anna-Sophie Berger (Dazed Digital)
“Graduating next year, 22-year-old Anna-Sophie Berger has a mad obsession with humanness and geometry. The Austrian student also likes to work around the concept of limitation and simplifying clothes to a very basic shape. For her mainly black and white collection ‘m/m2′, Berger chose the square that was transformed and disrupted, before shown as an installation pinned to a wall to visualize the two dimensional aspects of the flat squares and contrasting that in the look book, when the model’s body wearing the clothes creates a three dimensional volume.”

Gilt Groupe screenshot | Source: Gilt.com

Online flash sales less flashy as inventory shrinks (Reuters)
“The flash sales business has lost some of its flash, forcing online luxury clothing merchants such as Gilt Groupe, Ideeli and Rue La La to radically change their business models. These businesses burst onto the fashion scene during the recession to try to move a mountain of unsold clothes. Now there is less luxury inventory and flash sales sites are bigger. That has forced these companies to pay more or find other ways to get their products.”

Storm Clouds Loom Over China’s Red-Hot Luxury E-Commerce Market (Jing Daily)
“With China’s luxury industry expected to become the world’s largest by 2015, and the country’s online population swelling, dozens of companies have jumped on the high-end online retail bandwagon… With online shopping moving up the value chain, more competition looking to crack the market, and more individual brands expressing interest in adding e-commerce functionality in China, there’s plenty to be optimistic about. But as an extremely young and untested market, full of similarly young and untested companies, storm clouds may be looming.”

LVMH confident on 2011 as Q3 sales rise (Reuters)
“LVMH , the world’s biggest luxury group, posted forecast-beating third-quarter sales growth on Tuesday and said it was confident for the rest of 2011, showing no signs of a slowdown in the luxury industry despite the slowing economy… The company said like-for-like sales rose 15 percent to 6.01 billion euros ($8.27 billion) in the three months to Sept. 30.”

India’s Luxury Market Up 20% in 2010 (Forbes)
“It’s not just the new wealthy in China that is enjoying a life of luxury. Its neighbor India is showing that it has a taste for the good life as well. The luxury market in India is grew 20 percent to 5.8 billion in 2010 and this growth is expected to continue into the near future, according to a survey by the Confederation of India Industry andA.T. Kearney Ltd.”

London To LA (Vogue UK)
“The British Fashion Council has taken the cream of British design talent to Los Angeles for the first time, as part of its London ShowRooms series… The initiative, which regularly takes the country’s most promising designers to Paris and New York to meet with potential stockists, will allow London-based names… To meet LA’s key press and buyers at a showroom.”

Park & Bond | Source: Park & Bond

Gilt Groupe Targets Guys for New Luxury Retail Site Park & Bond (Forbes)
“Internet retailer Gilt Groupe is straying from its tried-and-true flash sales model to launch Park & Bond, a full-priced menswear site without the limited-time component that’s been responsible for Gilt’s rapid growth since it was founded in 2007… But in order to really flex the buying muscle of its 400,000 male customers Gilt is going to offer them a specially selected full-price assortment on a dedicated site.”

When luxury and commodities collide (FT)
“Pity the poor jewellers of this world. As the price of gold soars and investors hoard bullion, the price of one of the luxury industry’s prime raw materials goes through the roof; suddenly, what was the base metal of high-end adornment has become as precious as the sparklers it normally holds.”

“China Currently Has No Strategic Vision For Cultivating Our Own Brands” (Jing Daily)
“Recent cases like the Da Vinci furniture scandal expose a sad truth: China still lacks a domestic luxury industry to speak of. Still, Hong — who recently signed Xiang Yaodong as BNC’s first in-house designer — and a growing number of Western-trained Chinese designers are looking to cultivate a home-grown luxury fashion industry that can rival international brands.”

Hugo Boss to raise 2015 margin target (Reuters)
“Hugo Boss is set to raise its 2015 profit margin target this fall, helped by the vigour of the global luxury market and improved productivity, sources close to the German fashion brand said. The maker of sharply cut men’s suits has already met its 2015 underlying profit margin target while bigger luxury rivals such as PPR , LVMH and Burberry published record results last month.”

Watch a teaser of Carine Roitfeld’s Elizabeth Taylor-themed magazine (Independent)
“France’s first lady of fashion styled a Chanel campaign and the Barneys fall catalogue recently, but her work for V Magazine marks her editorial debut since leaving French Vogue at the beginning of the year.”

Wonder Girls for Chloé | Source: Luxuo

In China, Women Begin Splurging (WSJ)
“‘Many people are inclined to believe that gentlemen are generously purchasing luxury gifts for women in China, but our observation is that the great majority [of the buyers] are women who have achieved great success in their business and are now rewarding themselves with the finer things in life.’”

GQ, Gilt Groupe Team Up on E-Commerce Site (Ad Week)
“Gilt Groupe’s Park & Bond, an upcoming online retail spin-off for men, will host a GQ online store that will feature items picked by the magazine’s editors. Starting with the September issue, the picks will be marked in the magazine as well as on GQ.com, which will send shoppers to the e-commerce site.”

Resort isn’t a season for fashion to take a break (AP)
“The resort season is not a time for fashion to take a vacation. Resort collections, which hit stores during the all-important Christmas holiday shopping season, are a growing part of designer businesses as consumers move toward styles they can wear year-round.”

City speculates on Abercrombie bid for SuperGroup (Retail Week)
“US retailer Abercrombie & Fitch may be interested in acquiring trendy fashion retailer SuperGroup, City speculators believe… Shares in SuperGroup, which floated last year and subsequently rocketed, have fallen lately on fears of a sales slowdown.”

Jean Paul Gaultier lands in Montreal (Montreal Gazette)
“The object of the show… is to allow the public an up-close view of haute couture, which only those invited to the shows in Paris or the very few clients of haute couture in the world can see.”

Lanvin Petite | Source: Courtesy of Lanvin

Little Luxuries: Designer Apparel for Children is the Next Big Thing (Forbes)
“Move over fast fashion collaborations, another way haute designers will reach more consumers this year is by crafting luxury clothing for the scooter set… Back to school will bring even more designer collections to the playground.”

Can Prada get away with a luxury valuation? (CTV News)
“The price range looks rich. The question is whether the voracious Chinese appetite for luxury brands will let Prada get away with a luxury valuation… [The IPO]values Prada at as much as 28 times the company’s estimated 2011 profit. Six other luxury-goods companies, among the LVMH and Burberry, trade at an average of 21 times forecast earnings.”

Luxury shopping websites offer China a cheaper alternative (Relaxnews)
“These canny operators have found a way to keep their nation’s brand-hungry consumers satisfied – and it involves buying older ‘out-of-date’ items from the luxury brands in Europe and the United States, and then selling them in China at prices way reduced from their original ones.”

Gilt Groupe to Launch Full-Price Men’s Retail Website (Just Luxe)
“Park & Bond will be the Gilt Groupe’s full-price men’s retail website that will launch in late summer this year. The upscale fashion portal for men will feature 80 luxury brands and cover multiple categories. The premise of the nomenclature is classic, timeless, hip and contemporary.”

The 11 Best Fashion Brands to Follow on Tumblr (Fashionista)
“It makes sense that fashion brands have glommed onto Tumblr. The microblogging platform’s highly visual nature is a perfect fit for fashion brands to showcase their identities in creative and subtle ways. Of course, some brands are much better at it than others. Here are the brands we think are using Tumblr best right now.”

Fast Fashion | Source: Sydney Loves Fashion

Why fast fashion is slow death for the planet (Guardian)
“With high-street chains churning out fresh designs every few weeks, we now buy more cheap clothes than ever before. But as Lucy Siegle reveals in her hard-hitting new book To Die For, it’s a trend that will cost us far more than we imagine.”

Why Pay Full Price? (WSJ)
“Neiman Marcus’s loyalty program, InCircle, is a credit card that… allows the retailer to keep track of purchases, as well as shopping frequency and any cross-shopping among its brands. The loyalty program ‘can retain customers, it can get new customers, it could win back anybody who has lapsed.’”

Goldman and Softbank invest in Gilt (FT)
“Goldman Sachs and Softbank of Japan are at the head of a group of investors providing $138m in financing to Gilt Groupe… The new financing supports estimates valuing Gilt at about $1bn… ‘It’s a stamp of approval, a sign that Gilt is doing the right thing.’”

Fashion Brands Attempt To Assess Social Media’s ROI (Thread NY)
“Fashion brands are beginning to assess their return on investment (ROI) for engaging on Twitter, Facebook and blogging. Some brands are certainly finding more success than others—and many are left shaking their heads about what works and what doesn’t.”

The fashion god who brought his message to the streets (Independent)
“It was Pierre Cardin, 88 – who this week announced he was putting his business up for sale (for €1bn, or £880m) – who opened those doors, inventing the franchise, a fashion directive that has changed the face of consumer culture. ‘Everything is Pierre Cardin.’”

Mary-Kate and Ashley Olsen | Source: Andrew Hetherington for Newsweek

Look, Ma, We’re Fashion Moguls! (Newsweek)
“With their high-end label The Row, Mary-Kate and Ashley Olsen have such a grown-up hit on their hands that even Michelle Obama wears their clothes.”

Man Shops Net (WSJ)
“Sites like the dapper Mr Porter, an extension of Web retail pioneer Natalie Massenet’s empire; avant-garde portal Oki-ni; Southern-bred start-up Lyonstate and flash-sale favorite Gilt Man and its coming full-price site are upending the notion that acquiring cool clothes requires tedious hours spent sifting through mountains of merchandise.”

Deadline set for buy-out deal to rescue All Saints (Telegraph)
“The future of retailer All Saints hung in the balance on Saturday after it emerged its management team has been given a deadline of Tuesday evening to finalise a rescue buy-out deal.”

Fame, fortune and fashion: inside the Elie Saab story (Arabian Business)
“Today, the 46-year-old runs a truly global empire, with boutiques in Paris, London and Dubai. His clothes are on sale in 22 countries, and he has moved into bags, shoes and jewellery.”

Lunch With Vidal Sassoon (FT)
“‘All around me, things were changing: fashion, architecture, politics, and I thought hair had to change too. I thought it had to become democratic. I said to myself, ‘If I haven’t changed things in five years, I’ll stop.’ So I decided to cut hair instead of just ‘doing’ it.’”