Amazon & Nordstrom: A Tale of Two Sales

Hello BoF Professionals, welcome to our latest members-only briefing: The Week Ahead. Think of it as your 'cheat sheet' to what everyone will be talking about on Monday.

THE CHEAT SHEET

Amazon & Nordstrom: A Tale of Two Sales

Amazon website | Source: Shutterstock

Amazon Prime Day is this Monday, while Nordstrom's anniversary sale starts Friday.
Amazon will use its massive sale to advance its fast-growing fashion business.
Nordstrom is adding upscale brands to help defend against e-commerce.

This week, two of America's largest fashion retailers will hold their biggest sales of the year: Amazon Prime Day is on Monday, while Nordstrom's sale opens to the public Friday. Expect Amazon to use its massive global shopping event for Prime members to advance its fast-growing fashion business, which since last year's Prime Day has aggressively expanded its private label offerings and listed more items from Nike, Calvin Klein and other premium brands. Watch for how heavily these newcomers are featured in Tuesday's sales. Amazon wants to be seen as a fashion destination, but has struggled to win over some top-tier labels, in part because brands don't want to see their products discounted. It's not surprising that Nordstrom, which has seen the low end of its high-low model rattled by the rise of e-commerce, is tilting toward luxury in its annual sale. A Piper Jaffray analysis of the pre-sale catalogue found fewer featured items priced below $100 and more between $200 and $499, including new additions from Chanel and Dior, two brands unlikely to sell clothes through Amazon.

The Bottom Line: For retailers in Amazon’s crosshairs as the e-commerce giant advances its fashion strategy, luxury remains a lifeline — for now.

Kylie Jenner is Keeping Big Beauty Up at Night

Summer x Kylie Cosmetics campaign | Source: Kylie Cosmetics

This week, Forbes valued Jenner's Kylie Cosmetics at $800 million.
The brand's young customers make it a tempting acquisition target.
A mega-influencer mention is worth about $60,000 to beauty brands, according to Launchmetrics' "media impact value" algorithm.

Kim Kardashian probably doesn’t think of herself as a poor relation, but the sponsored content pioneer has been overtaken by her younger half-sister. Kylie Jenner is on track to become the world’s youngest self-made billionaire, according to Forbes (though some dispute that designation). Jenner’s meteoric rise tracks with a new reality in beauty marketing, where influencers are leveraging their power as preference-drivers. The savviest have already deduced that if they can make thousands of dollars advertising someone else's brands, they can make millions building their own. The threat is particularly potent from celebrities with built-in fan bases; Lady Gaga is launching a beauty brand with backing from a top Silicon Valley investment firm. To head off disruption, big brands can overpay influencers to reach younger audiences or buy the next Kylie Cosmetics. The latter approach will cost them: Anastasia Beverly Hills last month received external investment at a reported multi-billion-dollar valuation, largely on the back of its strong social media game.

The Bottom Line: L’Oréal and Estée Lauder should be nervous; even if Jenner's star fades, she's inspired a generation of social media mavens to follow in her footsteps.

Anna Wintour Proves She's Bigger Than Vogue With Air Jordan Collaboration

The AJ1 High Zip AWOK | Source: Courtesy

Anna Wintour is lending her name and signature seal of approval (AWOK) to Nike Air Jordans.
The announcement comes amid rumors — denied by Condé Nast — that she will exit her post.
Two veteran Vogue editors are stepping down, deepening speculation of a leadership shakeup.

Anna Wintour is putting her name behind two pairs of Nike Air Jordans, as change accelerates at the top of American Vogue, where she has long reigned as editor-in-chief. Wintour and Nike aren't the most likely pair (she prefers Manolo Blahnik slingback sandals), but there's a certain logic to the collaboration as the integration of luxury and streetwear has caught the imagination of the industry and consumers alike. The collaboration was blessed by Condé Nast and leverages the Vogue name, but it certainly proves that Wintour has a personal brand of her own, with or without her position in publishing. For its part, Nike plans to use sneakers to boost its women's sales by two-thirds to $11 billion in 2020.

The Bottom Line: Whether or not she winds up leaving Vogue anytime soon, Anna Wintour's tie-up with Nike certainly cements her position as one of the fashion industry's ultimate influencers.

Stitch Fix and Net-a-Porter Chase the Youngest Customers

Gucci Kids | Source: Courtesy

Stitch Fix has launched a subscription service for children.
Net-a-Porter is opening a six-week Gucci kids digital pop-up shop.
Hypebeast shuttered its year-old kids' streetwear site.

Children go through clothes at lightning speed, look cute in just about anything and sparkly rainbow unicorns are permanently on trend (or so my three-year-old daughter tells me). Personal styling service Stitch Fix is aiming to capture a slice of the $69 billion US children's apparel market, allowing parents to specify up-front if they want to be flooded with cheap basics to replace playground casualties, or receive more stylish apparel for special occasions. Luxury brands, facing an oversaturated adult apparel market, are also beefing up their kids’ lines, betting that parents who shop from Gucci or Dior will want their children to do the same. Hypebeast’s failed Hypekids experiment might give them pause, however. Millennial parents may like Instagram photos of pint-sized influencers decked out in Balenciaga, but they also think about what happens when their kids jump in a puddle of mud or simply grow out of their mini-scale luxury goods.

The Bottom Line: Kidswear is booming, but luxury brands may face a low ceiling for sales.

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COMMENT OF THE WEEK

"The value of a brand should be in making everyone feel beautiful and doing so in a... way that's fair trade/wages, environmentally and socially supportive. Redefine your values and you'll still make bank. Infuriating."

- Gianna Fusto, on Burberry's destruction of $38 million worth of unsold goods.

SUNDAY READING

Professional Exclusives You May Have Missed:

Prada is making progress.
Zalando is building the Spotify of fashion.
What's ailing America's fashion darlings?
Luxury brands should embrace resale sites.

From Around the Web:

A call to ban paper invitations to fashion shows. (Fashionista)
Inside the Phluid Project, a gender-neutral store in New York. (New York Times)
Chanel does not like when its samples turn up on eBay. (The Fashion Law)
Target has a secret app where customers help create real-world products. (Fast Company)
Want to shop ethically? There's an app for that. (Dazed)
The Meghan Markle effect: shares of favoured brand Aritzia hit a 52-week high. (Bloomberg)
The death of skinny jeans means new life for Urban Outfitters. (Business Insider)
Peak streetwear watch: brands are hawking duds for pets inspired by Off-White and Yeezy. (Hypebeast)

The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com. We're also on the lookout for the best fashion-themed pop culture, so send us your books, music, tv and film recommendations as well.

Have you been forwarded this email? Get access to the exclusive insight and analysis that keeps you ahead of the competition. Subscribe to BoF Professional here.