The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
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Gucci’s Autumn/Winter 2017 show was a decidedly maximalist affair. In a cavernous, purple-lighted space within the company’s new 377,000-square-foot headquarters in Milan, creative director Alessandro Michele sent 119 looks — both men’s and women’s — down a Space Age, plexiglass runway in a time-travelling carnival of cross-cultural references and heavy decoration.
But many fashion editors called the show costumey. Others said it was repetitive and unedited, offering more (and more) of the same aesthetic. To be sure, Michele’s work — best known for its bohemian eccentricity and magpie piling — doesn’t change each season like that of other top designers including Miuccia Prada and Marc Jacobs, who put out very different aesthetics with each show.
Yet the title of the Gucci show — “The Alchemist’s Garden” — was fitting for a designer who, along with chief executive Marco Bizzarri, has turned the once-troubled Italian superbrand into pure gold for parent company Kering. In the fourth quarter of 2016, Gucci revenue grew 21 percent, almost twice as fast as analysts expected, an astonishing figure for a company of its size in a stagnant luxury market, prompting Mario Ortelli, an analyst at Sanford C. Bernstein, to report: “knockout numbers at Gucci.”
Indeed, the kind of visual newness that gets fashion editors excited to shoot clothes each season isn't often what actually drives the business of fashion. And the consistency of Michele’s creative strategy — though lamented by some industry insiders — is actually one of the keys to Gucci’s remarkable results.
Rather than oscillating his approach, Michele is consciously building a long-term relationship with customers by creating products that are consistent — and thus don’t date as easily — from one season to the next. This way, customers have little fear that their purchases will become obsolete in six months and are more likely to pay full-price, making the brand less reliant on markdowns. In fact, Gucci’s full-price sell-throughs are “super high” according to Bizzarri.
But there’s more to the approach. Gucci’s aesthetic continuity is coupled with a smart merchandising strategy. Its secret weapon — alongside Michele and Bizzarri — may well be chief merchandising officer Jacopo Venturini, a former Valentino merchandiser known for leveraging the company’s popular Rockstud to create a wide range of commercially viable products with a consistent and strong brand signature. Now that’s more impactful than seasonal runway fireworks.
THE NEWS IN BRIEF
BUSINESS AND THE ECONOMY
Giorgio Armani | Source: Indigital
Giorgio Armani consolidates collections. The Italian designer announced he would discontinue his Armani Collezioni and Armani Jeans sub-brands, folding them into the company's three remaining lines — Giorgio Armani, Emporio Armani and A|X Armani Exchange — starting with the Autumn/Winter 2018 season. "There was too much confusion with so many collections," said Mr Armani. Armani joins brands including Burberry, Marc Jacobs and Dolce & Gabbana, which have all cleaned up their brand architecture.
Gap's results fuel hopes of a turnaround. Gap's comparable-store sales rose 2 percent in its fourth quarter, compared to a decline of 7 percent for the same period last year. The results were in line with analysts' estimates, bolstering hopes that CEO Art Peck's much-needed turnaround plan was on track. The company has struggled to drive growth in the subdued American retail market and to compete with the rise of e-commerce and fast fashion.
Macy's and Kohl's bet on being landlords. Both Macy's and Kohl's have announced plans to lease store space to other retailers as a way to extract greater return from their retail estate — one of their most valuable assets — at a time when department stores are struggling from declining footfall and heavy discounting. As well as generating steady income, renting space to popular brands could also attract new customers to their own stores.
J.C. Penney to close 140 stores. J.C. Penney has plans to cut 6,000 jobs and shutter as many as 140 stores, about 14 percent of the company's store base. The retail chain will also close two distribution centres, saving around $200 million a year. The news follows Macy's decision to shut about 100 stores and eliminate 10,000 jobs to adjust to declining mall traffic, as consumers increasingly favour online shopping.
Nordstrom results beats estimates. Nordstrom posted better-than-expected profit for its fourth quarter, boosted by the strong performance of off-price brand, Nordstrom Rack, although comparable sales fell 2.7 percent at its flagship brand. The department store has struggled to counter declining footfall, as consumers increasingly eschew brick-and-mortar retailers for online shopping.
Walmart's Amazon challenge helped by online sales. Walmart's continuing bid to keep up with e-commerce giant Amazon was boosted by its third consecutive quarter of double-digit online sales growth, helping the US retailer beat estimates for its holiday period. The company has been bolstered by the online expertise and new executive team acquired through its $3.3 billion purchase of Jet.com last year.
Italy launches Green Fashion Awards. The Camera Nazionale della Moda Italiana has partnered with Livia Firth's Eco-Age initiative to create a Green Carpet Fashion Awards that will highlight the Made in Italy brand and its focus on ethics and sustainability. For the event, which will be held during fashion week, brands including Fendi, Gucci and Prada will all make a look according to Eco-Age's rigorous Green Carpet Challenge criteria.
Tiffany appoints three directors to chart new path. The troubled American jeweller has appointed three new directors to its board just weeks after the departure of CEO Frederic Cumenal and creative director Francesca Amfirtheatrof, and the appointment of Reed Krakoff as chief artistic officer. The changes come as the brand is aiming to reverse years of declining sales, having faced challenges in both emerging markets like China and mature markets like the US.
Dennis Freedman departs Barneys. The executive vice president and creative director of Barneys New York has stepped down from his position. During his six-year tenure, Freedman, who was the founding creative director of W magazine, partnered with photographers including Juergen Teller and Bruce Weber on creative campaigns. The news comes during a period of executive change for the retailer, which named Daniella Vitale as CEO earlier this month.
Reiss appoints CEO. British fashion chain Reiss has named Christos Angelides as chief executive officer, taking over from founder David Reiss as part of a "planned succession." The appointment is a blow for Marks and Spencer, which had offered Angelides, who previously held roles at Next and Abercrombie and Fitch, a role running its troubled clothing division, according to reports.
Rocket Internet shares tumble as investor sells. Shares of Rocket Internet dropped nearly 10 percent after its second-biggest investor, Swedish company Kinnevik, sold half its 13 percent stake in the company. Kinnevik was one of the first investors of the German e-commerce company, which builds online businesses and has suffered in the past year from heavy losses and falling valuations for key start ups.
Snapdeal lays off 600 staff. The online marketplace is cutting 600 staff and its founders will forgo salaries, as the company faces challenges from bigger rivals Flipkart and Amazon, which have taken the lead in the competitive Indian e-commerce market. Snapdeal's $6.5 billion valuation is also under threat, as many Indian Internet businesses face markdowns due to investor concerns over profitability and deep discounting used to drive growth.
Alibaba extends brick and mortar push. The e-commerce behemoth has formed a strategic partnership with one of China's largest retailers, Bailan Group, to cooperate on supply chain technology and integrate Alipay payments with Bailan's membership programme. The move is the latest in Alibaba's ongoing expansion into bricks-and-mortar retail to combat slowing online growth, and follows the company's acquisition of a stake in retailer Suning Commerce Group.
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