NOT ALL BAD, NOT ALL GOOD
Both Ralph Lauren and Michael Kors gave the retail market a much needed boost of confidence this week as they reported better than expected earnings. What was driving the positive momentum? A better mix of products that customers are willing to pay full price for, while cutting back on discounting and promotions. But it's still very early days in their turnaround efforts. Going forward, Michael Kors will be dialing up price points, and Ralph Lauren plans to reduce their department store distribution by 20-25% before the end of this fiscal year. TBD on whether both brands will be able to 'regain the permission to charge full price' with an overhaul of their product, sourcing, and distribution strategies.
However, it definitely wasn't all good news in earnings this week, as Macy's and Kohl's haven't been able to evidence any real signs of their turnaround strategies working. As you can imagine the market didn't react kindly to this bad news.
The clock is ticking on these key players, that's for sure.
A MARKETPLACE FOR LUXURY
Not to be outdone by its competitor JD, who recently announced a partnership with luxury multi-brand site FarFetch, Alibaba launched their 'Luxury Pavilion' this week. But not all of its 500 million-plus shoppers will have access, as the Pavilion is invite only. Adding to this air of exclusivity, the site will offer customized experiences for this select group of shoppers. Brands selling on the platform will benefit from the incredible back-end data and support provided by Alibaba in this new endeavor.
Not going to lie, we're a bit sad our invite got lost in the mail.
DON'T MESS WITH GUCCI
A stripe is not just a stripe, according to Gucci. They're smacking Forever 21 with a suit alleging trademark infringement for the use of their signature stripe in recent designs. Forever 21's response? 'Clothes with this same, common stripe design have been sold for many years, by many different brands and remain widely available today.' Well, the courts will have to weigh in, but Gucci already got one major statement of support from an unlikely ally, Everlane.
The New York City commercial real estate has been having a tough go of it recently, at least as far as retail is concerned, with vacancies on the rise in key retail districts, including Soho and Madison Avenue. How bad is it? In Soho, for starters, from 2011 to 2017, the availability rate of storefronts went from 4.7% to over 23%. While decreasing rents have created opportunities for smaller and less cash-rich brands to get a prime piece of real estate, the overall contractions have many concerned about the long-term health of these districts as retail destinations and the city's commercial real estate market as a whole..
☀️ THIS WEEK'S BRIGHT SPOT ☀️
Beauty remains abuzz, and let's be honest, the industry is one of retail's saving graces these days. In the spotlight this week? Birchbox. As one of the first players in the beauty subscription business, they've had some setbacks recently, but it has been leaked that they are in early acquisition talks with several different companies, including Wal-mart. It's not clear how serious the talks are, but this could help solve Birchbox's very major issue of its debts coming due in 2018. As for us, we continue to keep close tabs on Wal-mart's evolving e-commerce strategy.