“Going upmarket can be a daunting and risky move — for a public company, it certainly takes full buy-in and a commitment to experiencing a major reduction in revenue for a time period,” said retail consultant Robert Burke. “Today is a more competitive climate than it’s ever been. Luxury brands firmly established have gone high luxury. Having the vision to plan for the future, rather than the present, is key.”
For retail consultant Robert Burke, Dior’s approach of mixing luxury shopping with a more welcoming, accessible experience is a savvy one: Rather than “Pretty Woman”-ing clients, Dior is offering a taste of the wow-factor of its price-upon-request couture for €12 in its museum.
“Strong brands today realise that capturing consumers’ attention is what’s important,” he said. The move to include luxury hospitality, albeit only one suite for now, allows the brand to explore a new way to activate ultra high-net worth clients, while the pastry shop and museum make the store relevant to a wider public. “Brands are realising that there are ways to broaden their audience without diluting their impact,” he added.
“The customer’s psyche right now is if they’re going to spend a lot of money, they want something from a very big brand,” said retail consultant Robert Burke, who has known Altuzarra since before he launched the collection. “They’ve gotten much more educated on how to spend to get the most out of their money. That price point that Joseph is playing in really speaks to them.”
What’s more, Burke added that, from the beginning, Altuzarra’s willingness to participate in the commercial part of the business set him apart from his peers. “It was always about clothes that people will wear,” he said. “He possessed a more left-right brain approach.”
“The U.S. has always been a very resilient market, even during the 2008 financial crisis,” said Robert Burke, CEO, and Chairman of Robert Burke Associates. “The market rebounded quickly. And because European and Western brands, particularly bigger groups like LVMH, Richemont, and Kering understand the U.S. market very well and are familiar with it, they have focused on building their direct-to-consumer relationships with their own stores and online presence, relying less on third-party department stores and wholesale.”
“Brands have been aggressive,” added Burke. “When we look at Tiffany’s and its swift repositioning (which is still ongoing) to bring in a new customer and evolve by changing their ad campaigns and jewellery collections and communicating in different ways to different consumers, it has been extremely successful.”
Part of those aggressive tactics we have seen from leading luxury brands is the opening of new locations where there are strong pockets of wealth across the country. “The U.S. has always been a very established luxury market and the amount of physical retail here is very, very strong,” said Burke.
“We’re seeing a number of luxury brands expanding within the U.S. in what would be considered, not primary markets, but very strong local markets like Plano, Denver, Troy, and Scottsdale. These are new cities that have strong pockets of wealth,” he added.
“At the end of the day, it’s all about product,” said Burke. “Brands need understand their positioning clearly in the luxury market, and create something compelling. Customers are now more educated than ever, and brand really have to understand what their messages are and what their position is and how to back all of that up with their products.”
Other aspects that brands have focused on is the quality of service they provide to consumers. “The personal aspect of shopping and service is extremely important today,” said Burke, noting the success of The Webster, a multi-brand boutique with seven stores in the U.S. and an e-commerce site.
“During the height of the pandemic, they had their sales people in contact with their customers on Instagram and on WhatsApp. And they were going into the stores even when they were closed and pulling merchandise specifically for those customers and sending that over to them. Offering the level of service and personal shopping that previously had only been available to the very, very big spenders.”
“It was an extremely good lesson, it has stayed with people and it's paid off for the brands,” he added. I think that's kind of what people expect now, is that personalised service. That's changed enormously from pre-pandemic,” he added.
For Burke, it’s about understanding the nuances of the market. “I think it's a very good time to be in the U.S. but to establish yourself in this market, you have to understand the mentality. When everyone was working from home, customers were buying slips and tennis shoes and casual clothing and as soon as things began to improve, all of a sudden, high heeled shoes went through the roof. The customer is very quick to adapt her and I think it’s just kind of an American mindset.”
“Are the break-offs of these businesses a short-term gain? Yes,” said Robert Burke, a retail consultant. “But can it be a long-term play, too? This, we don’t know.”
Stock prices for Hugo Group, the official parent company of Hugo Boss, have consistently fallen since June 2018, according to public records. “It was a dependable brand,” said Robert Burke, a retail expert who previously worked as a top executive at Bergdorf Goodman. “Men would go there and get two or three suits. And then it became too dependable.”
The sourcing capabilities of in-house personal shoppers are usually limited to the in-season stock and brands they carry. Today’s consumers don’t want to be siloed, says luxury consultant Robert Burke, who was formerly senior VP of fashion and public relations at Bergdorf Goodman before founding his own consultancy in 2006. “More than ever, customers are in control, and brands need to be as fluid online as they are in store,” he says, reflecting how this shift presents new opportunities for independent personal shoppers.
Industry experts are intrigued. “They’re taking things one step further by going direct to the consumer. There’s less relationship building,” observes Burke. “It might be the evolution of where we’re going with personal shopping, because the customer already knows what they want. They don’t need to be told. They just want to find it.”
Burke identifies the potential of wholesale management platforms such as Joor or Nuorder, which have helped to digitise and standardise the buying process and also an added layer of data that can inform future purchases. Personal shopping could follow a similar route, he says. “For so long, so much was left up to individual salespeople and their ability to be entrepreneurial. I believe that personal shopping is going to become more standardised and mainstream as the technology emerges to support it.”
Luxury brands should, at least, be more prepared for new lockdowns in China this time around, nearly two years into the pandemic, says luxury retail analyst Robert Burke. “Brands are not in shock or paralysed by this kind of news [anymore]. A year and a half ago they weren’t prepared. Now they know how to function in a limited way [with] a store closure and still do significant business.”
Physical stores, when merchandised with idiosyncrasy and passion, can delight customers in a way that’s hard to pull off online. But when it comes to exciting brick-and-mortar options, there’s a “void” in the market, said retail consultant Robert Burke. Now, a crop of upstarts and a few savvy incumbents are betting that the hunger for a great place to shop in person, across brands, is back, and they’re using a mix of old-school customer service and new selling models to once again bring pleasure to shopping.
“It was easier in the Charivari days,” Burke said, referring to the legendary Manhattan boutique that sold everything from Ann Demeulemeester to Dries Van Noten, and closed in 1998. “Today you see everything online.”
While Nair's background may seem unusual, it's becoming more and more the case with luxury fashion. Until recently, a more likely candidate was often candidates from the fashion sector, essentially life-long merchants. According to Robert Burke of Robert Burke and Associates, a retail consulting firm in New York, it's on the way to being the norm.
"Luxury brands are becoming such big businesses in the past few years that we have seen a shift of appointing CEOs from outside the industry," he notes, referencing Antonio Belloni.
"What they are looking for is intensive corporate experience," Burke continues. "It's a misnomer that people who don't come from the fashion world couldn't understand it. It's not the case; luxury is consumer goods."
Burke knows that today's companies are more than just the product they make. Nair's background of 30-years at Unilever, culminating in the top HR spot, garnered her a global reputation for progressive and human-centered leadership, delivering significant business impact. She is currently responsible for over 150,000 employees across more than 100 countries globally.
This speaks to diversity which is at the forefront of everyone's company values," suggests Burke. "It's not just about selling product. Kering has done a great job addressing this, which you see in the store's personnel and environment, the quality of life, and sustainability practices. If Chanel wants to be more known for its core and human values, communicating that with a strong stance is important. Leena has an extensive background in HR, promoting core values and positioning."
He feels her role signifies a bigger vision to lead Chanel into a new era focusing on people, culture, and message. "It's certainly about a good product, that is a given, but it's also about bringing in a new customer and relating to the next generation.
Lastly, Burke wonders if the iconic brand will follow its competitors' footsteps by becoming more active, socially conscientious, and philanthropic. Chanel had established the Chanel Foundation in 2011 aimed at 'improving the economic and social conditions of women and adolescent girls around the world,' according to the company website. They also support the art and young designers through their Culture Fund and Next Prize, respectively but do so quieter than some of their other marketing efforts.
"Million-dollar businesses have to operate differently today. It's far greater than just selling luxury products. Compared to their competitors, they don't get into philanthropic efforts publicly or have sustainability conversations. Nair seems to be well-versed in that."
While it’s not typical for companies to announce pending deals of this size before they are finalised, Richemont and Farfetch could be hoping to gauge investor sentiment because it is so significant, says luxury consultant Robert Burke.
Robert Burke, the founder of a luxury consultancy firm in New York, called Mr. Blazy’s appointment “well received in the industry” and said he didn’t expect any “slowing down” in the brand during this period of transition.
“It makes a lot of sense,” Mr. Burke said of Mr. Blazy’s new role. “He clearly has already been immersed within the Bottega brand itself.”
“Dover Street Market offers genuine discovery,” said retail consultant Robert Burke. “It has always veered away from being overly commercial and focused on innovation and newness. They have a very devoted customer and a level of creativity that brands love. The approach is less like a retailer’s and more like an artist’s.”
Robert Burke, chairman and CEO of Robert Burke Associates, said Rent the Runway lost 60 percent of their customers in a matter of months due to the pandemic. “I still think it means the rental sector is weak, but it's going to come back and be stronger than ever. The whole focus on sustainability and people managing their purchases and closet space isn’t going away.”
However, Burke said, Rent the Runway “very wisely jumped into resale, something we see as incredibly important. Even Net-a-Porter announced it’s going to do a resale site. Also, because Rent the runway is so U.S. based, there's enormous opportunity internationally.”
“The pandemic made change palpable for many of these brands,” said Robert Burke, chief executive of retail consultancy Robert Burke Associates. “It was the perfect time to look at themselves and make some major, sizable changes, whereas this was harder when they were chugging along day-to-day.”
The announcement is a rare move for Kering, which tends not to issue directives or specific policies across brands. Instead, the luxury conglomerate, which is widely regarded as an industry leader on sustainability, sets high-level environmental and social standards and leaves it up to individual brands to determine how to meet them. "Making a corporate-wide decision is a very good and smart move,” says luxury retail consultant Robert Burke. "It’s in keeping with what’s happening in the industry in general. It is certainly something that the consumer's responding to. We're not seeing any opposition to it.”
To put it simply, no one size fits all, said Robert Burke, CEO and Chairman of Robert Burke Associates. Over the past few years, the industry has seen a wider move from established brands lessening their dependence on multi-brand retailers and the embracing of direct-to-consumer from all the industry.
“What's happening is the whole ecosystem is undergoing a shift,” said Burke, noting Prada’s recent deal earlier this year with Net-a-Porter to use a drop-ship model – selling its products on the retailer’s website, but controlling more of its sales, logistics and customer data. “I think you'll see more and more of that,” he added. “We are at the stage where the brands want to retain more control over their sales, retailers are operating more and more like marketplaces, and independents like Dover Street Market or The Webster are the highly curated tastemakers.”
Both brands and retailers who are unable to pivot to more flexible ways of responding to the changes in the market may find themselves stuck between a rock and a hard place. “It's one thing when you're small enough that you can regroup and it’s another thing when you're so big, you can set your own destiny. It's everything else that’s in between.”
Burke believes brand will need to have a balance. “They’ll need a little bit of both,” he said. “They have to have direct to consumer. And then they have to try to get into the premier specialty stores, and have some personal business. That makes sense for them. But it's going to be tough.”
“Traffic is coming back to stores, but it’s a moving target,” said retail consultant Robert Burke. “Everyone wants to create a safe environment for customers.”
“Retailers are hesitant,” said Burke. “It’s only going to happen when governments mandate it. If governments had a requirement, many retailers would be happy. And they would have the right to enforce it.”
“If you look back even recently, the path for a designer was very, very clearly written, and rarely deviated from: You worked for a big house. You trained under a big name. You got a job with a big house, and then perhaps started your own label. There were very few people who entered into the luxury fashion world that didn't have an exclusively design background,” said Robert Burke, CEO and Chairman of Robert Burke Associates.
“I think that's what really sets him apart is he's not a traditionally trained fashion designer,” Burke added. “He really brings a new customer in, and a new point of view for the time. A House can have a very strong legacy and stay very true to that, but they can also lose their value during that process of staying true to their legacy.”
“Collaborations and extensions can be incredibly positive, or they can be negative, depending if they make sense to the consumer, or they seem as if they are just a commercial move to make money. That's always been the case,” said Robert Burke, CEO and Chairman of consultancy Robert Burke Associates. “It really means touching the consumer in the way in which they live beyond just the core product.”
“For the customer, when they believe in the authenticity and the value of a brand that they trust, then its great but if the brand shakes the trust of the consumer by doing something odd or strange or off-strategy. Then they can quickly turn on the brand,” said Burke.
“Generally, really far out collaborations that are for the runway have been challenging, because the runway is the runway,” added Burke, speaking on brands like Ferrari expanding into fashion. And it's one thing to do two or three or four local pieces it's another to take it as a serious editorial collection. Only time will tell.”
“We absolutely will not see brands retract on extensions and when they have the confidence of the customer in their brand, it means a huge amount,” said Burke. “The onus is on the brand not to do something off-brand, because the risk is losing that confidence.”
