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BOF: What American Department Stores Can Learn From the Success of Selfridges

BUSINESS OF FASHION | KATI CHITRAKORN

LONDON, United Kingdom — As retailers geared up for Black Friday and Christmas amid a slowdown in UK consumer spending, Selfridges reported record profits for the year ending January 2017.

The department store chain, a pillar of the Selfridges Group, which also includes Canada’s Holt Renfrew and de Bijenkorf in The Netherlands, said operating profits for the period were £180 million ($236 million), up 18 percent from £152 million ($200 million) the previous year, while sales reached £1.6 billion ($2.1 billion), a 16 percent increase from £1.4 billion ($1.8 billion).

“Selfridges has delivered excellent results… achieved by the success of our long-term planning and implementation of an ambitious programme of capital expenditures across all channels and stores,” Paul Kelly, managing director of the Selfridges Group, said in a statement.

He was referring to a £300 million ($393.8 million) investment announced in 2014, which has served as a catalyst for the transformation of its flagship London store. The retailer unveiled a new 20,000 square foot Designer Studio, devised to showcase established and emerging fashion designers, in July, three months after it launched a new 37,000 square foot Body Studio, housing lingerie, swimwear, pajamas and high-performance sports gear.

The focus now is on revamping the store's accessories department — the second phase is set to be unveiled next month, just in time for peak Christmas trading. When the changes are completed in 2018, the British retailer says it will be the largest destination for luxury accessories in the world.

Selfridges’ enviable productivity flies in the face of the financial headwinds facing the department store segment, particularly across the Atlantic, where American retailers have struggled to capture consumers as spending habits shift. Shoppers are increasingly ordering on phones, computers and tablets, with e-commerce giants like Amazon siphoning sales from physical stores. Many have also redirected their spending from physical products to experiences.

According to Springboard, a retail intelligence firm, the capture rate of footfall for UK department stores declined 5.8 percent between 2016 and 2017, over the period from January to August, more than any other type of store. “This indicates that the market share of department stores is declining,” says the company’s marketing and insights director, Diane Wehrle.

“[Selfridges'] level of investment, innovation, style authority and brand curation across its stores and online exemplifies how to stand out in a crowded market,” says Honor Strachan, principal retail analyst at GlobalData. “Retailers must identify which in-store services and experience-led departments will draw in customers and increase dwell time to benefit their future financial performance.”

So, what are the specific secrets to Selfridges’ strong performance — and what can other retailers learn from its strategy?

Reconfigure the Physical Footprint

Unlike US department stores, many with multiple outposts — Macy’s has 855 locations, Neiman Marcus has 42 and Bloomingdale’s has 38 — Selfridges is able to focus its energy on four physical stores across three cities: London, Birmingham and Manchester. While the US is a much larger country — with more than 323 million people in 2016, compared to 66 million in the UK — spread over a much larger swath of land, retailers must continue to shrink their square footage, focusing on densely populated urban centres.

Consider the approach of retail-real estate developer Westfield, which has abandoned its underperforming suburban locations. “Ten years ago, Westfield had 69 shopping centres in the United States; today we have 33 and two in the UK. We probably will have quite a bit less over the coming years,” Westfield co-chief executive Steven Lowy told BoF in an October 2017 interview. “We’re not far away from that right now, and the way we do that is by selling non-core assets and reinvesting that capital in assets like London, Milan, New York, Silicon Valley, etcetera.”

Redefine the Landlord-Tenant Relationship

Within its stores, Selfridges has embraced a concession model, which allows brands to run their own shop-in-shops, taking responsibility for customer experience and sales performance. “Often, concessions highly outperform the traditional wholesale model, because the brands help to manage and control stock and personnel, so they have a singular eye on the business,” says Robert Burke, chief executive of retail consultancy firm Robert Burke Associates.

“In Selfridges, particularly the high-end brands, the people working within those concessions are very well trained and knowledgeable about the product they offer,” says Springboard’s Wehrle. “You’re going there for a true quality retail experience — you’re not just going there to buy products.”

While the shop-in-shop approach is commonplace in Europe and Asia — Paris’ Le Bon Marché is another widely admired example — it’s less popular in the US. However, retailers including Saks Fifth Avenue have begun to employ it more regularly.

The key to making it work is in the execution. "The experience should be seamless,” Burke advises. “When a customer walks into the store, it should have everything they want and there should be great customer service. How the business is structured should be unknown to them.”

Recalibrate the Retail Mix

“The customer is always right” and “give the lady what she wants” are terms originally coined in 1909 by Harry Gordon Selfridge, the founder of the department store. So it’s no surprise, then, that Selfridges has long prided itself on offering a diverse curation of products and experiences where there is something for everyone.

For instance, on the third floor of the London flagship, known as the Designer Studios, streetwear-inspired brands — including Yeezy, Vetements, Off-White and Heron Preston — sit alongside emerging labels Grace Wales Bonner, Art School and Marine Serre and high-street favourites Topshop and Whistles. Established luxury brands including Céline, Saint Laurent, Valentino and Oscar de la Rentacan be found in the Designer Galleries, just one floor down.

But while many retailers offer a high-low mix, Selfridges prides itself on getting that mix just right. “Selfridges’ point of view is extremely clear,” Burke says. “The consumer can go to individual stores, but they’re coming to department stores to see a point of view and to find an edit of products in a specific way.”

Harness the Experience Economy

In a market where consumers have more and more tools to purchase goods at the cheapest possible price and the greatest possible convenience, the pressure is on for physical retailers to create a space that’s about more than transaction. “You can do your functional shopping online. It’s not like you need to leave the house for that,” Wehrle says. “If you can buy it on the internet, you need a real reason to go to the store.”

Founder Harry Selfridge was one of the first to approach retail as theatre. When French aviator Louis Blériot became the first person to cross the English Channel in an airplane in 1909, Selfridge decided to put the plane on display in store, with appearances from the pilot himself, drawing crowds of over 150,000.

Selfridges has since been focused on hosting immersive retail experiences, from its Roof Garden — a space that has been transformed into everything from a sweeping ice skating rink to thematic pop-up restaurants — to two permanent exhibition areas that host frequently changing concepts, themes and performances, curated by names like Mario Testino, Marc Jacobs and Yayoi Kusama.

Earlier this year, the store hosted a potato peeling workshop as part of a new programme that aimed to help stressed-out consumers calm down and "reconnect" with themselves. “Department stores need to ask — why would a customer come to their store?” Wehrle says. “That’s where Selfridges scores, because even if you don’t buy anything, you can experience things like the Roof Garden or their extensive food hall.”

Spend Money to Make Money

Another hurdle faced by US department stores is that “the amount of experienced merchants, buyers and back-of-house personnel are not as experienced as before,” Burke notes, referring to the approach several American stores have taken to maintain profit margins, including layoffs. In August, Macy's announced it would cut 100 jobs as part of a restructuring of its merchandising unit. In June, Hudson's Bay Company eliminated 2,000 positions, including letting go senior-level staff at Saks Fifth Avenue.

But cutbacks often feed a vicious cycle. “The US retail scene has been very challenged and as a result, they’ve had to pull back financially. With so many cuts, today’s merchants and buyers have become so numbers-driven that it’s very hard for them to take a lot of risk,” Burke says. “There’s less exciting merchandise because they’re so concerned about sell-through.”

By investing up front, Selfridges has managed to successfully execute an offensive strategy. “The sense I get from Selfridges is that they’re trying to do many new things,” Burke says. “They’re taking risks and really showing off their fashion products.”

To be sure, it’s not just sound business practises, sprinkled with a bit of magic dust, powering Selfridges’ success. The retailer has also benefitted from an increase in tourism following the fall in value of the pound since the Brexit vote in June 2016.

“Luxury retailers in the UK have discreetly increased their price points to help offset weaker traffic in other European stores, taking advantage of spiked demand and helping to build in the impact of rising inflation in 2017,” Strachan says “However, overseas visitors were still able to take advantage of lower prices versus their home market — leading to higher volumes and margins.”

But while tourism has benefitted Selfridges, there is little doubt that its initiatives are also driving domestic footfall and spend.

DIGIDAY: One year in: How Ralph Lauren’s Way Forward is playing out

DIGIDAY | HILARY MILNES

Grand restructuring plans captured by optimistic tag lines have become commonplace for luxury brands that have struggled to swiftly adapt to a changing consumer and retail landscape. In this series, we’ll break down the promises and analyze the progress of the different brands’ master plans to get back on track.

Facing threats and setbacks from fast-fashion brands, Amazon, an increasingly digital customer and its own unwieldy supply chain and management network, Ralph Lauren hit the reset button in 2016.

Now, the American brand is midway through its Way Forward plan, a $400 million restructuring project laid out under the leadership of then-CEO Stefan Larsson and CFO Jane Nielsen in June of last year. It’s projected to be completed by the end of the brand’s financial 2018. At the time of the 2016 announcement, the brand was facing annual revenue growth that had stagnated at $7.5 billion and annual profit losses of about 4 percent since 2014. Its market value was slashed in half as stock prices fell, from $16 billion in 2013 to $7.9 billion last year.

To right ship, Larsson and Nielsen created a two-year business plan pinned on closing underperforming stores, scaling back inventory, reducing discounts, streamlining its supply chain, shifting distribution focus from wholesale outlets to direct retail channels, and overhauling its internal structure to reduce management layers.

These tactics were meant to address Ralph Lauren’s biggest ongoing issues: There was too much inventory being marked down and sold through off-price outlets, and department store partners, facing their own issues, were contributing to constant markdowns. The company’s outdated supply chain and internal structure meant the production cycle stretched over 15 months, totally out of step with customer behavior.

“In recent years, there have been people working at Ralph Lauren who don’t even know who they report to or what their day-to-day duties are,” said a former designer who left the company last year. “It’s a mess of red tape and dead ends, and nothing is getting done.”

While there’s a new CEO and president at the helm, Patrice Louvet, the Way Forward plan is still in the works following the transition. However, Louvet has said he wants to expand the plan’s focus to Ralph Lauren’s digital capabilities, which includes an upcoming e-commerce relaunch, and its global expansion efforts.

With Ralph Lauren’s Way Forward plan has been underway for more than a year, here’s a look at where there have been hits and misses on its biggest promises.

Promise 1: Close underperforming stores, while reinventing existing ones.
Like many traditional brands transitioning into an Amazon era, Ralph Lauren was overstored.

“The path to expansion for retail brands used to be ‘open as many stores as you can,” said Robert Burke, a retail analyst and owner of the firm Robert Burke Associates. “That was the only way to get customers more access to your brand. Now, brands like Ralph Lauren are looking at these vast networks of physical stores, and they’re in trouble.”

Ralph Lauren has been slowly decreasing its store count; in 2017, it had 467 directly operated Ralph Lauren, Polo and Club Monaco stores, down from 485 the year prior. At the end of 2015, the company operated 493 stores. In the first quarter of 2018, the brand reported that operating costs had dipped 13 percent as a result, in part, of the store closures.

At the same time, the brand has been integrating technology and new experiences into its remaining store network. In a report earlier this year done by Contact Labs and Exane BNP Paribas on digital and physical integrations, Ralph Lauren was ranked as the luxury brand best integrating technology into its stores. The best example of in-store tech: its smart fitting rooms, powered by Oak Labs, which have been added to three additional stores after launching in its New York flagship.

Beyond flash, the fitting rooms are mining data for Ralph Lauren as it tries to align its inventory closer to customer taste.

“We know which items are being tried on but not purchased,” said Oak Labs CEO Healey Cypher. “I can tell Ralph Lauren, ‘Here’s a jacket that goes into the fitting room frequently but has less conversion than other jackets. The merch team should look at this — maybe the fit isn’t right, but the aesthetic is.’ Data like that can fundamentally change how retailers run their business.”

Promise 2: Shift distribution focus from wholesale to retail, while cutting back on promotions.
The Way Forward plan looked to change the way Ralph Lauren is distributed by lessening the brand’s presence at department stores, which have become over-promotional, and turn attention back to the brand’s owned retail channels, including stores and e-commerce. According to Louvet, the brand is on track to close 25 percent of its wholesale distribution points by the end of this year.

At the same time, direct retail is growing. In the first quarter of 2018, retail sales jumped 22 percent, while wholesale slipped by 27 percent.

To get the brand back on track, Louvet said the main priority is to distribute through digital retail partners and its own e-commerce site, while controlling promotions. This year, the brand is relaunching its e-commerce site, collaborating with Salesforce to power its back-end logistics, to lessen focus on sales and drive more sales of full-price merchandise.

Promise 3: Align inventory with customer behavior.
This September, Ralph Lauren held its third see-now-buy-now fashion show, following its new motive to get product launches in line with customer behavior.

The shift starts with the supply chain. The brand has overhauled how it gets product to market, in order to shorten the production cycle as well as follow a consumer-facing calendar. What used to take 15 months in production now takes between six and nine, with about 35 percent of inventory on a six-month schedule.

As other brands and retailers, from Gap to Burberry, shorten their production schedules down to about six weeks, Ralph Lauren still has work to do. Louvet said it’s a continued effort to improve speed to market.

“Ralph Lauren is still a work in progress, and there’s a lot of work to do,” said Luca Solca, the head of luxury goods at Exane BNP Paribas. “But I would be optimistic about their chances ahead, based on how they’ve enacted this plan so far.”

BoF: At DVF, Multitasker Jonathan Saunders Revamps An Icon

BUSINESS OF FASHION | LAUREN SHERMAN

NEW YORK, United States — 9am. That’s when Jonathan Saunders, chief creative officer of the American fashion brand Diane von Furstenberg, is keen to meet at the company’s offices in Manhattan’s Meatpacking District. It’s a fairly early start time for a design studio, but on this particular mid-August morning, the open-floor seating is heavily populated, with teams already deep in discussion.

The Scottish-born Saunders — clad in a softly puckered black gingham shirt, hair greying perfectly at his 39-year-old temples — is poring over printed copies of his marketing budget. These days, he is as interested in speaking about customer engagement as bias-cut silk.

“In many ways, [DVF] has been more creative than I was able to be with my own brand,” says Saunders, who joined the company just a little over a year ago. His first collection — for Spring/Summer 2017 — was designed in just six weeks. Saunders relocated from London for the job after a brief sabbatical from fashion. (His namesake designer ready-to-wear line ceased operations in December 2015 after facing financial difficulty, although he still designs furniture under his own name and retains the intellectual property.)

On Sunday at New York Fashion Week, Saunders will present Spring designs once again, this time with a year of experience from which to draw. It’s been a difficult year to be in New York, in Trump’s America, and yet Saunders dismisses this. “I’m from Scotland, I’m from a working class background. I have fought tooth and nail to get an education and have a career. Hardness doesn’t ever frighten me or intimidate me — it excites me,” he says. “When I got to New York and started working here, I loved the directness of the city, the normalcy. I love being busy, I love working, I love design, I love creativity, but I also love making it happen.”

“It”, in this case, means designing clothes that sell. While Saunders has long been a fashion-world darling — he was rumoured to have interviewed to replace Raf Simons at Dior — he has struggled like many of his peers to make a designer ready-to-wear business work. At DVF, the clothes are more affordable. His task, instead, is to usher a brand that was built on a dying model into a new era.

DVF has played disruptor several times over the course of its 40-plus year history. First, in the 1970s, by liberating working women from an old way of dressing, landing the brand’s founder, Diane Von Furstenberg, then a young entrepreneur, on the cover of Newsweek wearing her signature wrap dress. (The cover line? “Rags & Riches”.) In the 1980s, waning demand and bad business decisions drove the brand to the verge of bankruptcy, but a successful stint in the world of home shopping gave Von Furstenberg the boost she needed to persevere. By the late 1990s, DVF was well positioned to stake a claim in the then- emerging contemporary market. With the help of then-president Paula Sutter, the wrap dress became a must-have once again.

Now, it is Saunders’ turn to bring relevance to the classic style. Much has been made of the relationship between Von Furstenberg and her chosen successor — and how he has worked hard over the past year to stand on his own. She, in turn, has been quite open about how important, if difficult, it has been for her to get out of the way.

But this morning, like every morning, her presence is felt. A basket of apples from her Connecticut farm sits at the bottom of the studio stairs for the taking, with famous-artist portraits of her likeness — including Andy Warhol screenprints — hanging on the walls of the waiting room.

These are small, but definitive, reminders that she is not going anywhere. Saunders’ biggest challenge is to be able to use this fact to his advantage instead of trying to work against it, all the while making DVF reflective of his own undiluted creative vision. “Diane has created a fantastic business over the last 40 years,” Saunders says. “She has an iconic product that still resonates, and without this I wouldn't have anything to work with.”

However, before Saunders’ arrival, DVF had fallen into the same pattern as many of its contemporary peers, serving up heavily merchandised product that succumbed to the demands of wholesale partners. They’d ask for fit-and-flare dresses one season, bandage skirts the next. Who cares if these styles and silhouettes were in line with a brand’s ethos as long as the sell-through was good? Or so the logic went.

However, as consumers have shifted their spend away from department stores, those temporary, season-by-season merchandising fixes have proven increasingly ineffective.

“Brands became so big and so overdistributed and higly merchandised that they oftentimes lost their personality and point of view,” says retail and fashion consultant Robert Burke. “At the exact same time, the consumer became more educated because of e-commerce. They have an incredibly high desire to wear unknown brands or emerging brands — things that you’re not going to see a million-times over on Instagram.”

As a private company, DVF declined to disclose revenue figures, but a 2015 report estimated annual sales of about $500 million, though market sources suggest it could be less than half of that. Still, it’s a respectable figure for a brand whose main source of revenue is not handbags, fragrance or t-shirts. DVF makes its bread by selling clothes — lots of them — that can cost $500 or $600 a piece. (A whopping 80 percent of the business is apparel, with only 20 percent of sales coming from other categories.)

But as the industry evolves, Saunders must prove that a market still remains for DVF’s product. “My past experience in America and New York was very merchandise-led in a different way than what I was used to,” he says. “I feel like that’s changing. Not everybody is going to love what you do, and not everybody has to love what you do. It doesn’t have to suit every single person, for every single social or functional need in their wardrobe.”

Instead, for DVF to be successful today, it has to stand for something. Luckily, Saunders has source material. There, of course, is Von Furstenberg herself and her larger-than-life persona. “The brand’s ethos stems from Diane,” Saunders says. “In many ways, it was about ease of lifestyle... it was about women being able to dress in something that felt like fashion, but also didn’t feel so precious that it was unattainable.”

I love being busy, I love working, I love design, I love creativity, but I also love making it happen.

But most importantly, there is the wrap dress, perennially known as a universally flattering style. (The “flattering” bit is debatable, but wrap dresses are indeed adjustable, which means they are more forgiving to fluctuations in body size.) Perhaps it’s because of his background in product design, but Saunders has managed to see the dress for what it is — an idea — and cast it in a different light. “For me, it was important to be able to articulate the fluidity, the movement, the ease of the product without just replicating the product,” he says. “How does it resonate now? I’m trying to articulate it in a new way without ignoring the past.”

The result? People seem to genuinely like what he’s doing, including Von Furstenberg herself. At first, his changes to the brand identity — in particular, the sans-serif logo — felt premature to her. Saunders’ Autumn 2017 advertising campaign, shot by the young British photographer Oliver Hadlee Pearch in Tompkins Square Park and styled by Camille Bidault-Waddington, was also a major departure from the glossy studio portraits of the past. “When Jonathan started a year ago, it was tough for everybody, but it was tough for me because I let him be completely free,” Von Furstenberg says. “It was difficult to let go, but I wanted to, and I’m so glad I did because he gave it a huge fresh-up.”

Autumn’s leopard-print wrap dress, for instance, has all the components of a traditional DVF design — a classic pattern, that “easy” silhouette — but he cut it in silk instead of a pill-prone cotton blend, and dropped the hem to mid-calf. Over the course of multiple deliveries, he has also turned out several dresses and blouses in panelled florals cut on the bias: They are punchy and joyful, and rely heavily on his very specific sense of colour.

“In the traditional contemporary world, one doesn’t usually see this kind of design and individuality,” says Elizabeth von der Goltz, a luxury retail veteran who joined Net-a- Porter as global buying director in July 2017. “We’ve seen his fresh direction attract a new client, so we’ve been able to grow this business.”

That’s all to say that the collection looks special, not some generic department store play. “Jonathan has managed to retain the accessible price positioning of DVF while vastly improving quality to high designer levels,” says Marc Menesguen, a L’Oréal veteran who joined the company earlier this year as co-chairman of the board. “This allows us to develop a very competitive brand positioning and gives us global opportunity for growth.” Oftentimes, companies that experience an overhaul must shrink before they grow, and Von Furstenberg acknowdges that DVF had to “shrink a little” in order to move ahead. However, the company is tight-lipped on sales figures and will only acknowledge that e-commerce is driving a “substantial” amount of growth and that there are “pockets of growth” in the US, specifically on the West Coast, as well as in the Middle East, Brazil and the United Kingdom.

According to DVF, growth categories include knitwear (a Saunders’ specialty), outerwear (particularly leather, suede and faux-fur), dresses and “modern” evening wear. Saunders is also particularly bullish on accessories, which he sees as a significant opportunity, enlisting his friend (and longtime Marc Jacobs handbag consultant) Katie Hillier to collaborate on designs. “It was important to me not to try and provide somebody with solutions for day bags. Yes, obviously functionality is so important within a product, but for me it’s just about having fun, and really enjoying the process,” he says. “It is about a joyous decoration.... Because otherwise, what’s the point?”

So far, wholesale partners insist that shoppers are indeed falling in love with Saunders’ designs. Multi-brand sites with an international reach — such as Net-a-Porter — are faring well in particular.

Currently, the business is split 50-50 between US and international sales. Overall, 60 percent of revenue comes from DVF stores (this includes international franchise doors) and 40 percent comes from true wholesale doors. (The collection is available in 35 directly owned stores — as well as DVF.com — and 973 wholesale-partner doors worldwide.) For a brand so associated with its presence on the American department store floor, both figures must be reassuring to those plotting out DVF’s financial roadmap. (Direct sales and increased international distribution are both key paths to growth.)

Right now, however, Saunders doesn’t seem to have clear counterpart on the business side since the resignation of former chief executive Paolo Riva, who left the company in 2016. Von Furstenberg is still very much involved, as is her board of directors, which includes Menesguen but is mostly made up of family members (including her husband, IAC chairman Barry Diller) and close confidants (including Hamilton South, founding partner of public relations firm HL Group).

For now, however, Saunders — who works closely with Melissa Sussberg, the company’s EVP of global merchandising and US sales and Philip Atkins, its VP of global merchandising — is okay with a CEO seat left vacant. “Every brand, and every company at every stage of its development, needs to take their own situation, their own experience, and deal with it in the right way for that moment, and right now, it’s not the right moment for this brand,” he says of the company’s vacant chief executive role. “What’s so exciting right now is that we have a direct line to the consumer in a way that we’ve never had before. It means that designers, creative directors, creative people can no longer live in this elitist bubble of ‘we’re making clothes for ourselves’ self-indulgence. Yes, it’s wonderfully fun, but it’s also detaching yourself from what you’re trying to do.”

Von Furstenberg seems to agree, especially as she weights her options for the future. “It may seem odd the way I put the pieces together,” she says, referring to the current set up. “But there’s more that’s going to come and I am pleased with what we have have accomplished.”

While speculation regarding a potential initial public offering bubbled up a few years back, and there is always talk of DVF’s prospects as an acquisition target, the only certain thing is that Von Furstenberg wants to do the right thing. “At this stage of my life, I want to make sure that my brand gets in the very best hands so that it will last forever,” she says. “That means putting the right talent in place and also the hiring those with expertise in the new way of running a business. Jonathan was the first step. Now that we have lots of great assets, I may be looking to the next step.”

For now, Saunders is allowing himself to take pride in approving those marketing budgets — and thinking about new ways in which he can communicate with the customer, whether that means via an Instagram post or an in-store event. “It’s an interesting kind of dialogue,” he says. “It’s not about saying, ‘What do you want? I’ll design it for you.’ It’s about saying, ‘This is what I believe in. What do you think about it?’”

BoF: Have we reached peak merch?

BUSINESS OF FASHION | MAX BERLINGER

NEW YORK, United States — You may have noticed them. On city streets, on high school campuses, and, more often than not, on Instagram: young people wearing t-shirts emblazoned with oversize block lettering on the chest, the back or running up the sleeves. “I Feel Like Pablo” or “Bigger Than Satan” or “Summer Sixteen”, the shirts read. Or, rather, announce. It’s a fashion statement and also a coded advertisement for their pop-cultural allegiances. It’s “merch”, and it’s everywhere.

The once lowly art of selling branded merchandise inside concert venues has become its own fashion-adjacent industry with numerous sub-categories. Musicians including Justin Bieber, Drake, Zayn Malik and Kanye West each offer promotional clothing lines that mimic the swaggering energy of streetwear and skate brands, while high-end labels including Vetements and Gucci playfully adopt the aesthetic to ironic effect. You can now find merch at fast fashion favourites including H&M and Zara. Media brands are even creating their own merchandise, from The New York Times to the indie magazine 032c and fashion-news website Fashionista. And so are religious organisations, most notably the Los Angeles-based Zoe Church, where influencers including Justin Bieber and model Hailey Baldwin attend events and services.

The significance of this moment in fashion can be felt in the way such influencers have embraced, and evolved, the merch movement. See: Miroslava Duma sporting a Google baseball cap, or Rihanna’s meta take on the trend, when she wore a shirt featuring herself wearing an “I’m with Her” Hillary Clinton T-shirt during last year’s election.

Of course, commercial merchandise is nothing new. Concert tees have long served a starring role in the wardrobes of certain style tribes, with fans of Metallica, the Rolling Stones and the Grateful Dead wearing those items as regularly as a fashion fan dons a pair of Gucci loafers. And it has also always been a big business. In 1998, popular American group the Dave Matthews Band reportedly brought in $200,000 a day through merchandise sales alone. Pulling back, the numbers on the broader merch category are impressive. The global market for promotional products reached more than $21 billion in sales in 2016, up more than 2 percent from the year previous, according to trade organisation Promotional Products Association International. More than a third of those sales came from "wearables" — i.e., t-shirts, caps, jackets, etc.

For today’s consumer especially, merch is not just about associating oneself with a certain artist or tribe; it’s about associating oneself with the height of fashion. Consider Justin Bieber’s merchandising strategy during his 2016 tour. First, he offered the merch at his own concerts. Next, it was available at Barneys New Yorkand then, finally, for the masses at Forever 21. (It should be noted that Bieber’s line was made in collaboration with designer Jerry Lorenzo of the well-regarded label Fear of God, giving it an extra whiff of street cred.)

The result? Influencers and editors who got hold of the street-style bait early on wore the hoodies and t-shirts all over Instagram. Those posts essentially served as free advertising for when the products finally hit the floor at Forever 21.

Merch represents the way in which fashion has become inexorably tied with pop culture, yes, but it also underscores the use of social media platforms like Instagram to visually express one’s values.

The movement has been financially fruitful as well. Bravado, the licensing division of Universal Music Group that handles Justin Bieber’s branded apparel amongst others, has seen significant growth. According to Variety, Bravado reported growth of 13 percent during its first-quarter earnings this year.

Last year, Vetements chief executive Guram Gvasalia told the New York Times that sales of its merch-driven line reached eight figures in just three years. Luxury conglomerate Kering called out Balenciaga's “excellent” performance — in part thanks to creative director Demna Gvasalia’s elevated take on merch for the house — as a reason for an 11.1 percent rise in revenue for its portfolio during the first quarter of its 2017 fiscal year. Dior creative director Maria Grazia Chiuri garnered much press for the graphic t-shirts she showed during her spring 2017 show, which read “We Should All Be Feminists”. The bold statement was a risk that paid off. The shirts, which cost $710, sold out quickly — the proceeds of which went to charity — all of which helped fuel a 17 percent rise in sales at the house in the first quarter of this year.

You don’t want to saturate the market, experience a backlash and kill the brand. People get bored very easily nowadays.

For the fashion industry, the merch movement is a welcome antidote to a general consumer shift away from collecting things to collecting experiences. However, as with any trend, the block-letter look will eventually tire as consumers grow exhausted spending hundreds of dollars on screen-printed t-shirts. Therein lies the question: When will we reach peak merch?

“Merch fashion lines for artists will certainly carry and evolve,” says Sara Maggioni, director of retail and buying at the trend forecasting firm WGSN. “There’s too much money in it for them not to do it — for a little while, at least.” If anything, she says, the rise of merch has proven just how much the general public will buy into this type of branding, and clothing is just the beginning. “Supreme has already started to brand everything, from bricks to NYC metro cards, so anything can happen.”

“However, I do think that moderation is key,” Maggioni adds. “You don’t want to saturate the market, experience a sudden backlash and essentially kill the brand,” noting that even the beloved Supreme has gained detractors of late. “People get bored very easily nowadays.”

New approaches indicate that merch 2.0 could include deeper, more symbiotic partnerships between brands and celebrities. For example, Helmut Lang has tapped hip-hop artist Travis Scott for a collaborative capsule collection that, in theory, represents the ethos of both musician and fashion label. Bravado recently unveiled a collection created with the Los Angeles boutique Maxfield and the rock band Guns n’ Roses, featuring a “curated collection” using the band’s iconography but reinterpreted by Off-White’s Virgil Abloh and Palm Angels’ Francesco Ragazzi, and others. Forever 21 announced a collaboration with musician Future and streetwear label Cease & Desist.

Consumers are also developing their own merch, feeding into the remix culture so prevalent today in younger generations. Because there are no minimums for customisation today thanks to advancements in software and digital printing technology, small runs of personalised product can easily be made and distributed. Anything could be considered merch, from a t-shirt printed with one’s declarations on the President to beer cozies customised for a bachelorette party.

Consumers express status not just through purchases, but also through their statements and values.

A new wave of indie brands are also capitalising on the trend. Consider the retro graphic T-shirts from Monogram, the popular skate line Bianca Chandon and the flirty embroidered messages at Sporty and Rich, from the social influencer Emily Oberg who now serves as women’s creative lead at the streetwear brand Kith, as prime examples.

The rise of personal merch has equalled financial success for companies like Zazzle, the $300 million Silicon Valley-based customisation platform. Chicago-based custom apparel website Ript Apparel brings in $4 million in revenue annually. Teespring, which has raised $55 million since its founding in 2011, is fuelling small businesses like that of merch maker Benny Hsu, who claimed in 2016 that he was able to make $100,000 in just five months by selling product he manufactures via the customisation website.

Adriana Krasniansky, senior strategist at consultancy PSFK, sees two places the merch trend could go. First, after expressing their personal tastes, consumers may accelerate the ways in which they use clothing as a means of expressing more value-oriented messaging — think of the rise in shirts used as political dispatches in the post-Trump era. “A big thing we’re seeing is consumers express status not just through purchases, but also through their statements and values,” she says.

Krasniansky points to the fact that part of the popularity around merch is its tribal qualities. While merch is currently fashionable, it’s the community connected to it that makes it resonate emotionally. The next step is figuring out how to make those in-real-life experiences translate online. “We’re looking at the activation around merch. The built-in hype, getting people into queues or stores — that’s becoming more digital,” she says. “So we’re thinking about augmented reality: how do you create a pop-up that isn’t a physical pop-up? How do you create that community, like the sneaker line, in a digital space?”

As for longevity, it appears that we’ve not yet hit the trend’s apex. “I think we’re just ramping up,” says Robert Burke, chairman and CEO of Robert Burke Associates. “It hasn’t peaked yet but it’s certainly been prolific.” However, he also notes that the pendulum does swing, and it does so swiftly. “With anything that comes on strong, it also falls off quickly,” he says. “No one has a crystal ball, but I think when it becomes too much, people will start gravitating towards things that are easier on the eye.”

WOMEN'S WEAR DAILY: Contemporary Business in Flux Amid ‘Challenging’ Backdrop

Industry executives point out contemporary collections have gotten too big, they’re over-assorted and not focused enough.

WOMEN'S WEAR DAILY | LISA LOCKWOOD

The contemporary category is struggling to become, well, more contemporary.

Faced with a highly promotional retail environment, a slowdown in store traffic, intense competition from the web and fast-fashion chains, contemporary’s large legacy players are trying to reinvent themselves while newer, more agile companies are gaining market share.

“I think contemporary has been especially challenging,” said Robert Burke, chief executive officer of Robert Burke Associates, the luxury consultancy. “It had been so predictable in the way the customer wanted it to be predictable.”

For years, if a customer liked a particular pant, she’d buy four or five every single season, or if she liked a particular dress or wanted a career suit, she’d have a certain brand she’d go to, he said. “It was much more defined. A lot of that is just not what’s happening today. The customer is moving so fast on so many levels and she’s incredibly educated and not as predictable as she once was. It’s caused the brands to reevaluate where they are today.”

Several industry sources blamed the category’s woes on too much sameness in the market, the high prices attached to legacy contemporary brands, less expensive options coming from some of the South Korean and Australian labels that are more trend-driven, and many less expensive options from Zara, H&M and direct-to-consumer firms such as Everlane, Revolve, Asos, Boohoo, Modcloth and Ayr.

“The customer is still buying clothes, but they’re looking at brands like Reformation out of Los Angeles, which is strong in its online marketing and connecting to the consumer,” Burke said.

One retail source noted that especially in spring and summer, the consumer is looking for fun, colorful, festive and romantic looks, and some of the legacy contemporary brands, such as Vince and Theory, are much more serious. “When we move into fall, we’ll see a little more action in those brands because they have investment pieces,” the source said.

Susan Sokol, president of Susan Sokol Consultancy, pointed out that the larger contemporary brands that are overly distributed and more saturated are having the most challenges. “That customer is much more aware of prices and she’s not as devoted to one particular brand. She’ll change it up,” she said.

Soko believes that customer is more exploratory and likes to shop online and at specialty stores such as Forty Five Ten, Hirshleifers and The Webster, where “she’s finding a mix and it’s more exciting for her.” She cited some contemporary brands that are doing well such as Alexis, Jonathan Simkhai, Caroline Constas, Ulla Johnson and Nili Lotan. “She [Lotan] does an amazing job. She really found those core business drivers. She borders between entry-level designer and advanced contemporary,” Sokol said.

Kim Vernon, president of Vernon Co., agreed that the contemporary customer now shops many brands, big and small, for exciting, fun fashion pieces, in smaller multibrand stores, single brand shops and online. “The 20-year-old contemporary brands are not keeping up with fashion, trend and newness that some of the smaller independent brands offer, causing an erosion of their former market share,” she said.

Frank Doroff, vice chairman of Bloomingdale’s, said the contemporary business is “comping up, in the low-single digits.” He said the legacy brands have been a little softer. Where he’s seeing good results are in the denim business, Aqua, and elevated T-shirt brands such as ATM Anthony Thomas Melillo.

“Things that appeal to a younger customer and more fashion-forward customer have been very good,” Doroff said. “So have our high-end, more advanced denim brands such as Mother and Frame,” he said.  He noted that some elevated T-shirt brands, the active business, and some new boho brands such as LoveShackFancy have sold well. “We’re selling a lot of shirting. The shirting trend was great for business from everybody,” he added.

Leah Kim, executive vice president, general merchandising manager, women’s at Barneys New York, said, “Overall, the business in this [contemporary] space has been soft.” She said Barneys doesn’t carry such legacy brands as Theory, Vince, Diane von Furstenberg or Joie, but carries T by Alexander Wang, which is doing very well. Among the brands in this area that are also doing well are Off-White, Monographie, its Saloni exclusive capsule collection and Warm.

 “We have been seeing a shift from casual or oversize looks to elevated feminine looks. At least that’s what the Barneys customer is looking for right now. The streetwear trend is also still very strong into fall,” she said. The retailer continues to focus on securing exclusive brands as well as exclusive packages to draw customers’ interest and to bring them into Barneys over the competition. “We also have many exciting in-store activations and customization events planned for fall that will create a lot of buzz and bring people into the store,” Kim said.

Saks Fifth Avenue re-branded that zone of the business as The Collective. “We believe contemporary is a tremendous opportunity for us,” said chief merchant Tracy Margolies. “It’s curated. We’re focused on mixing brands and mixing pieces. It’s not a monobrand store. We show you how to do it. We’re really going after trends.” For fall, the store is highlighting velvet and the jacket.

“We really get behind these trends in a big way from all vendors, all categories. Lastly, it’s current and featuring new of-the-moment designers,” she said. Saks has added a handful of new vendors this fall such as Maggie Marilyn, Ganniand Amo Denim.

Margolies said the legacy brands are still important, and there are designated spaces for them. “Our clients know Saks and they come to Saks for some of those legacy brands. They’re definitely a core resource, and what makes it fun is mixing and matching those brands together with some of these smaller brands, or even back to denim,” she said.

What’s changed over the years in contemporary is the influence of social media. “What happens is social media and influencers drive trends, and people come to the store and they want that now. We’re working fast and furiously to make sure we service the trends that are on social now and how quickly can we get them. Our vendor partners are looking to work quicker on lead times. The whole ‘buy-now-wear-now,’ they want to wear it that night,” Margolies said.

“I think this zone of business is changing. It’s not just the legacy brands. The business is changing in general because of social media, things are moving faster,” she said. “Thezone is being much more trend driven and we’re adding new and emerging designers as well.”

She noted that brands such as Zimmermann, Jonathan Simkhai and Cinq à Sept are “doing great.”

Lori Friedman, owner of Great Stuff, a contemporary women’s specialty retailer with five stores throughout Connecticut and New York, said she continues to do well in the category. “It’s all in the buy. I try to aim for brands that are not in department stores, but I don’t always get that,” she said.

Friedman has done well with brands such as Sea and Nili Lotan. “She’s fabulous,” she said of Lotan. Price, she said, isn’t a major factor in the sector. “It’s good when it’s expensive. They seem to want a better product,” she said. She finds what resonates with her clientele is different from what they can buy in the city. “It’s still casual. In the city, it’s more urban. My customer wants lifestyle clothing. She wants clothing to wear on the weekends and Saturday nights when she goes out to restaurants,” she said.

According to Julie Gilhart, a fashion consultant who spent 18 years as fashion director of Barneys New York, the contemporary category truly came into its own when a few key people were delivering style at a price such as Phillip Lim, Alexander Wang, Rag & Bone, Vince and Diane von Furstenberg. Since, the consumer’s attention has splintered.

“They were all of a sudden able to give this designer look for a price and that’s where the traction was, and they started to build a business. What’s happened is the emergence of online, you can shop the web, you’re not limited to have to go into the store, and you have a lot of options. Then you have the fast-fashion brands that have come up. They can deliver a good style at a good price. All of a sudden, you have two categories, you have street brands that really feel in style and are appealing to more than just street kids. Off-White is the quintessential example, and look at Supreme which is collaborating with Louis Vuitton. You have people like Kanye [West], Heron Preston, and they’re getting a lot of attention. Then you have the whole sport thing,” Gilhart said.

Like others, Gilhart pointed out that the contemporary collections have gotten too big, they’re over-assorted and not focused enough. “That’s what the online part of the business has done. It’s made things become very focused. Then you have the growth of The Real Real, and the customer can buy an expensive piece and then sell it. There are many, many choices for the customer now,” said Gilhart, noting that customers frequently gravitate toward the brand’s story, content and Instagram. “If you’re a start-up brand, you’re into that world, but if you’re already a pre-existing business with your structure based around the department store, it’s hard to shift it. A lot of [legacy contemporary] brands grew through the department stores and are one step away from their customer, instead of direct to consumer.”

She encourages young brands to sell online, and then a small specialty store before tackling the department stores. She suggests selling on Instagram, too. “You can do as much business doing that as a young brand, than if you had one store buying your collection,” she said.

Gilhart recalled when she was at Barneys, it was easy for a new brand to start there because the retailer did everything for them. “We did their marketing, we did their sales, we were engaged, and it’s very different now. It’s only been the last five years, that buying online and on your phone, and social media has really influenced things,” she said. Interestingly, it used to be that selling into Barneys was a badge of honor. “Barneys gives an indication to the market in terms of where you are and what you do. But as far as the customer, it doesn’t really matter. They can go online and it doesn’t matter where they get it.”

“Probably one of the most difficult places to be right now is to be a contemporary brand in a department store,” Gilhart said.

Among the biggest problems facing the contemporary sector are the incessant sales going on that have influenced the way the consumer shops. She doesn’t need to buy it at full price, because if she waits, it will be marked down 20, 30, 40 and eventually 70 percent.

That constant sale mentality influenced one contemporary collection, ATM Anthony Thomas Melillo to develop a new business model outside frequent markdowns.

“The [current] model is based on markdown and not design. You have all these brands, they have an enormous amount of product, and in the end, what is the design, where is the lifestyle? Contemporary is an odd word,” Melillo said.

 “I was not launching ATM to do what the legacy brands were doing, rather I was launching to fill a white space. To me the white space then and now was a brand that had the brand aesthetic of something dedicated to a new type of lifestyle I was seeing — the chic customer who wanted to look and feel relaxed, but chic and special, not mass. Legacy brands were pumping out a lot of clothing, but without a personal touch. Nothing about a piece of clothing that you can find in all avenues of distribution feels special,” he said. “We have always felt we do not need to be on every markdown and ‘friends and family’ promotion. This to us is the death of a brand,” Melillo said.

He said he does business with Bloomingdale’s and insists that they don’t mark it down, put it on sale or “friends and family” promotions. “If I can get that customer to still go in that store and buy me at full price, it’s a pretty good accomplishment on my end,” he said.

Andrew Oshrin, ceo of Milly, is showing gains by raising the company’s profile via social media and advertising.

“I think Milly is a bit of an outlier. We’re seeing some significant growth at our three biggest accounts — Saks, Neiman Marcus and Nordstrom,” he said. In addition to seeing some international growth in core product classifications, he’s also seeing 4 to 5 percent growth in its own omni-retail channels, where it operates two stores. E-commerce is trending up 15 to 20 percent.

Stacey Bendet, ceo and creative director of Alice + Olivia, said her business in department stores is strong. “We’re up at Neiman’s and Saks. And we are fighting a lot of the markdowns. It hurts our own stores. It’s hard for us to sell things at full price when everyone else is selling at markdown,” she said about the brand that operates 36 stores. “We’re in the world of Amazon. Everything is available at the touch of a button. You have to make your shopping experience and your brand experience easy for the busy woman.”

Bendet believes the department store retailer “needs to act as curators and stores with a fashion point of view, instead of becoming a market of everything. If they become OK with downsizing a little bit and becoming like a European department store model, I think they will go back to being successful. There needs to be a bit of a correction of the size that they are. I think we will enter this era of a boutique department store, instead of a mass department store. I think Amazon in its own way has crushed the concept of the mass department store.”

Alice + Olivia changed its business at Bloomingdale’s to a concession. “We manage it, we operate it and we control those markdowns,” she said. “We’ve had double-digit growth through that, in fewer doors. It’s been excellent. We’re managing that business and operating it, and it’s been really profitable and great.”

Jane Siskin, ceo of Cinq à Sept, is finding success in its first year of business. She had earlier been the licensing partner of Elizabeth & James.

“I think that we came into the market at the best time and maybe the worst time. It was the best time because the customer was hungry for new brands and that has been incredibly important to all the retailers, both majors and specialty stores. Everyone is always searching for something new. Obviously we came to market with a new brand with none of the new brand problems. They knew we were going to ship, they knew we could do reorders and would chase hot items; that was a big advantage. As for the worst of times, it’s no secret the retail environment is very challenged right now. We’ve been in a very interesting place, sort of nestled in the middle, between having something great and new with a tough environment,” she said. “I think that to grow a brand right now you really have to be in tune with what’s going on out there. You have to listen and watch every single day, what’s working, what isn’t working, where are you getting traction and where are you not getting traction? Categories you could always rely on are more challenging than others.”

For example, Cinq à Sept had a particular dress that sold everywhere. When she recut it in new colors, the customer was no longer interested in that dress. “In the past, you could sell that dress over and over again. The customer is more discerning. The higher-end customer, when she sees people wearing the dress, she isn’t that interested in buying the dress. When we added embroidery, it was excellent. You have to look and listen every single day. Your ear has to be to the ground,” she said.

Cinq à Sept is housed near more advanced contemporary brands such as Rag & Bone, ALC, Alexis, Jonathan Simkhai, Zimmermann, and Tanya Taylor.

Siskin said her business is split evenly between specialty and department stores, and frequent promotions at the latter are a fact of life.

“Listen, in order to grow a business with department stores today, you have to be a partner on all sides. Obviously, we’re not immune to partnering on the profitability side. But we’re much more focused on partnering on how to bring more people into the stores to shop, to bring more brand awareness, to create an experience. It’s a 360 strategy,” Siskin said

“The idea of putting goods in, hoping they sell, and paying at the end, as far as I’m concerned is antiquated and not sustainable anymore. Our challenge with the retailers is how can we make it better. We are hyper focused, laser focused on being part of the solution,” she said.

NEW YORK TIMES: Colette, Paris Fashion Destination, Is to Close in December

NEW YORK TIMES | ELIZABETH PATON AND VANESSA FRIEDMAN

Colette, the fashion and lifestyle emporium in the First Arrondissement of Paris that proved to be a launchpad for young designers and a shopping destination for industry insiders and tourists alike, will close its doors on the Rue St.-Honoré in December after 20 years.

A statement confirming the decision was posted on the boutique’s website on Wednesday.

“As all good things must come to an end,” the statement said, “after 20 wonderful years, Colette should be closing its doors on December 20th.” The company cited retirement plans for the founder, Colette Roussaux, who ran the store with her daughter, Sarah Andelman, and made it one of fashion’s favorite new-style family businesses.

“Colette Roussaux has reached the time when she would like to take her time; and Colette cannot exist without Colette,” the statement read, referring to the store requiring its founder.

The closing of the store, long considered an apex of Parisian fashion trends and a vital champion of emerging labels, comes amid rising rents for retailers in Paris and increasingly unpredictable consumer habits, including a move toward more fashion-spending online. The city of Paris has also been hit by volatility in the tourism sector in the last two years, after a series of terrorist attacks.

Colette had sales of 28 million euros ($32 million) in 2016, with e-commerce accounting for 25 percent of that and the rest coming from its single store.

An eclectic three-story trove of elaborate cocktail gowns, tuxedos, sneakers, postcards, pens and gadgets, all across 8,000 square feet, Colette was founded by Ms. Roussaux in 1997. It was one of the first stores to cater to an aesthetic lifestyle, as opposed to a specific product category, becoming a model for a new kind of retail. Ms. Andelman functioned as the store’s buyer and public persona.

“The first stop the fashion crowd would make was to Colette,” Robert Burke, founder of the luxury consultancy that bears his name, said in an email. “The selection of brands, the way the forms displayed, the cloths and the mix designers was inspiring. If you were carried at Colette, you were cool. If you had a launch of product or a book signing at Colette you were recognized by not only the fashion world but the international fashion consumer.”

The end of the Colette era is bound to raise question about the continued viability of such “concept stores,” which place an emphasis on attitude and discovery over the bottom line. (Colette famously never had a marketing plan.)

However, other concept stores, such as 10 Corso Como in Milan, which was founded in 1990 and has been on an expansion spree with stores in Seoul, South Korea; Shanghai and Beijing, and one to open in South Street Seaport in New York next year, have successfully navigated the new retail environment. The British store matchesfashion.com has transformed itself by focusing its business online.

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It is possible that the decision to close Colette is that rare thing in fashion, which is notoriously bad at succession planning and finds it almost impossible to let sleeping brands lie: an active attempt on the part of a globally recognized name to determine the end of its life span. If that is true, instead of being a cautionary tale for the industry, it may be yet another example of the store’s pioneering nature.

The industry accolades for Colette began almost immediately.

Bryanboy, the fashion influencer, wrote on Instagram, “Colette to me is the ultimate shopping (and research) destination in Paris, with their well-edited buys and support for many people whether it’s a big brand or a small entrepreneur or artist. When I didn’t have a lot of money to buy designer clothes, I used to buy my music compilation CDs from you! For a generation, Colette was the gold standard of cool.”

According to the company statement, also posted on Instagram, negotiations are in progress with Saint Laurent, the French luxury house owned by Kering, to take over the store location.

“We would be proud to have a brand with such a history, with whom we have frequently collaborated, taking over our address,” the statement said, adding that such a move could “also represent a very good opportunity for our employees.”

Francesca Bellettini, chief executive of Saint Laurent, acknowledged the history of the space, saying, “For the last 20 years, Colette has been such an iconic and prestigious project and destination in Paris. It feels natural to us to discuss the opportunity to take those amazing premises over in order to give them a second life.”

For the time being, however, the Colette team are taking pains to emphasize that until December, it will be business as usual. “Until our last day, nothing will change. Colette will continue to renew itself each week with exclusive collaborations and offerings, also available on our website, colette.fr.”

BUSINESS OF FASHION: Is Mulberry’s Turnaround Working?

BUSINESS OF FASHION | LIMEI HOANG

LONDON, United Kingdom — On Wednesday, British luxury handbag maker Mulberry reported a 21 percent rise in annual pre-tax profit, helped by demand for the new designs of its creative director Johnny Coca and a rise in online sales.

The company reported pre-tax profit of £7.5 million ($9.6 million) for the year ended March 31, up from £6.2 million last year, and revenue of £168.1 million. Sales from its online channels also increased by 19 percent, now representing 15 percent of its group revenue.

However, the results also showed that Mulberry’s overseas like-for-like sales fell by 3 percent for the 10 weeks ended June 3, and its domestic sales only grew 1 percent, less than in previous reporting periods, causing its shares to fall around 2.6 percent in early trading.

“It’s really a set of results in two halves,” said Neil Saunders, managing director of research firm GlobalData Retail. “There’s a reasonably encouraging set of numbers coming from the domestic business and I think there has been a bit of a pick up there in growth. Although it’s not what you would call stellar, it’s reasonable and it shows that some of the new lines have gained traction and interest.

“The international side of the business is a little bit less encouraging; that’s where Mulberry continues to struggle to carve out a presence in markets that are very crowded and very saturated. Especially as you’ve seen brands like Coach come back and revive sales, I think it’s becoming a little bit more difficult for Mulberry perhaps to cut through.”

They’re definitely going in the right direction, there’s just a little bit more that needs to be done.

The improvement in Mulberry’s profit and revenue comes as the company is in the midst of orchestrating a turnaround strategy to bolster the brand after an ill-considered attempt to radically elevate its offering backfired, alienating former customers without attracting new fans.

Since then, the company has worked hard to move away from turbulence of 2013 and 2014, a period marked by three profit warnings, hiring a new creative director Johnny Coca from French luxury brand Céline, and chief executive Thierry Andretta.

Andretta, who has worked at LVMH, Lanvin and Gucci, has helped to oversee Mulberry’s turnaround strategy which is focused on driving four pillars of the brand: product, brand, omnichannel and operations. The company also recently announced plans in May to adopt a "see now, buy now" model, a decision it says it hopes will drive further engagement with the brand and increase its relevance to customers.

Mulberry’s results suggest its turnaround efforts are gathering pace. But are they enough to win back its legions of former fans, particularly at a time when the market for affordable luxury handbag brands is saturated?

“Mulberry’s turnaround remains on track with 2017 organic growth up 8 percent,” wrote analysts at Barclays in an early morning note. “Real progress has been made on product and factory efficiency, which led to a much higher gross margin than we had expected with these proceeds being reinvested into marketing,” they added, noting the progress the brand had made in the Asian market.

Its a view shared by Robert Burke, chief executive of advisory firm Robert Burke Associates, who believes the company is making some headway in tackling the challenges it faces in the fast-growing handbag market.

"I think it shows signs that its working but the consumer is moving extremely fast and the brands have to move just as fast today," said Burke. "The consumer is also much more well researched than ever before and they want to know and see and read, and it has to be in the forefront of their minds.

"The handbag market takes a long time when it comes to positioning, to establish a brand image," he continued. "It moves slower when it comes to consumer awareness and desirability. And people tend to be more brand loyal with handbags than when it comes to ready-to-wear. What’s happened in the last few years, is it seems that customers have focused on fewer and fewer brands, where there used to be a lot more variety in the market. It seems to be gravitating towards much bigger brand names. And that’s just a trend of the market."

But Saunders believes the company still faces a number of challenges, particularly as its international business has slowed and affordable luxury competitors like Coach and Michael Kors have struggled to regain market share lost to new brands like Mansur Gavriel.

Going forward, Mulberry needs to carve out more of an international presence, something chief executive Thierry Andretta has marked as a focus for the company as its UK retail stores account for 60 percent of sales. “International remains the focus,” Andretta said in a call with reporters. “We are still fine-tuning our network.”

“The brand still struggles a bit with its identity,” added Saunders. “I think there’s a case for it really trying to firm up in the international mindset, what Mulberry stands for, what position in the market it has.

“If people aren’t clear, it’s very difficult to sell through those products at the premium that Mulberry charges. They do need to really think about the brand image — and the marketing that goes with that internationally — to really get those sales up across some of those key markets that they’ve tried to expand into.

“They also need to look very carefully at what lifestyle image they’re projecting. It does give a brand more of a chance of succeeding, especially when the bag market is very crowded and very competitive. They’re definitely going in the right direction, there’s just a little bit more that needs to be done just refining and honing that brand.”

Mulberry need to look at signature bags and creating newness, adds Burke. "That is a critical point, creating that desire. Today creating that desire oftentimes is not just marketing, but connecting with the consumer and social media and marketing themselves in a different way. They can certainly play up on their heritage but they have to appeal to the new and be desirable."

NEW YORK TIMES: Bleecker Street’s Swerve From Luxe Shops to Vacant Stores

NEW YORK TIMES | STEVEN KURUTZ

Someday urban planners and retail executives may want to debrief Robert Sietsema. As someone who has lived at the corner of Bleecker and Perry Streets for 27 years, he has witnessed the rise and fall of a luxury shopping district that grew out of workaday surroundings in the 1990s and has left empty storefronts in its wake.

Bleecker Street, as Mr. Sietsema wryly noted, became “the epicenter of the designer-store revolution, whereby many of the old, functioning stores, like bodegas, laundromats and video stores, were replaced by shops selling $400 T-shirts.”

During its incarnation as a fashion theme park, Bleecker Street hosted no fewer than six Marc Jacobs boutiques on a four-block stretch, including a women’s store, a men’s store and a Little Marc for high-end children’s clothing. Ralph Lauren operated three stores in this leafy, charming area, and Coach had stores at 370 and 372-374 Bleecker. Joining those brands, at various points, were Comptoir des Cotonniers (345 Bleecker Street), Brooks Brothers Black Fleece (351), MM6 by Maison Margiela (363), Juicy Couture (368), Mulberry (387) and Lulu Guinness (394).

Today, every one of those clothing and accessories shops is closed.

Indeed, over the past year, Mr. Sietsema, the senior critic at Eater NY, has watched with mild schadenfreude but greater alarm as his neighborhood has undergone yet another transformation from a famed retail corridor whose commercial rents and exclusivity rivaled Rodeo Drive in Beverly Hills, Calif., to a street that “looks like a Rust Belt city,” with all these empty storefronts, as a friend of Mr. Sietsema’s put it to him recently.

In the heart of the former shoppers’ paradise — the five-block stretch running from Christopher Street to Bank Street — more than a dozen retail spaces sit empty. Where textured-leather totes and cashmere scarves once beckoned to passers-by, the windows are now covered with brown construction paper, with “For Lease” signs and directives to “Please visit us at our other locations.”

“There’s graffiti, trash inside,” Mr. Sietsema said. “It’s horrible.”

Of the Marc Jacobs mini-empire on Bleecker Street, the only survivor is Bookmarc, at 400 Bleecker, which sells art books along with items like $80 smartphone cases. This used to be the site of the Biography Bookshop, where bookworms crowded into one another as they reached for volumes by James Boswell or Robert Caro on the overstuffed shelves.

If many of the high-end stores along Bleecker didn’t prosper as businesses, “they succeeded in transforming the area into a luxury retail neighborhood that feeds on itself,” said Jeremiah Moss, who has tracked the city’s ever-changing streetscape on his blog, Jeremiah’s Vanishing New York, since 2007.

Bleecker Street, Mr. Moss said, is a prime example of high-rent blight, a symptom of late-stage gentrification. “These stores open as billboards for the brand,” he said. “Then they leave because the rents become untenable. Landlords hold out. And you’re left with storefronts that will sit vacant for a year, two years, three years.”

How Bleecker went from quintessential Greenwich Village street, with shops like Condomania and Rebel Rebel Records, to a destination for Black Card-wielding 1-percenters, to its current iteration as a luxury blightscape is a classic New York story. It involves a visionary businessman, a hit HBO show, an Afghan immigrant, a star architect, European tourists, aggressive landlords and, above all, the relentless commercial churn of Manhattan.

In 1987, after learning about a store for rent from the owner of a Bleecker Street nail salon, Arleen Bowman opened a women’s clothing boutique under her own name at 353 Bleecker, between West 10th and Charles Streets. The space was around 300 square feet; she paid $1,500 in monthly rent.

“It was a time when everybody wanted stuff with fringe on it,” Ms. Bowman recalled. “And I was like the queen of fringe.”

Her neighbors included antiques stores like Pierre Deux, Treasure & Trifles and Susan Parrish; a pet store called the Bird Jungle; the Biography Bookshop; and Nusraty Afghan Imports, where an immigrant named Abdul Nusraty had been selling rugs, jewelry and antiquities since 1979.

“Each store was unique,” Ms. Bowman said. “Susan Parrish — she had the best vintage quilts and linens ever. It took me a half-hour to walk home because I stopped and chatted with everybody.”

After five years, Ms. Bowman moved to a slightly larger storefront next door, signing a 10-year lease for $2,500 a month, but all around her not much else changed throughout the 1990s. The tourist crowds, proliferation of fashion chains and sharply escalating rents in SoHo felt far removed from west Bleecker, with its tiny shops and close-knit vibe.

Ms. Bowman and her neighbors hardly noticed when, in 1996, Magnolia Bakery opened at 401 Bleecker, where the bird store had been. It was just another local business, like the bodega operated by Turks or the Greek diner Manatus.

But on July 9, 2000, Magnolia was featured on “Sex and the City,” in Season 3. The 30 seconds of Carrie Bradshaw and her friend Miranda eating cupcakes outside the bakery were all it took to turn the street. Soon, Magnolia was written up in British Vogue, and what Mr. Sietsema described as a “cupcake bouncer” was stationed on Bleecker to corral the tourist hordes who waited in lines that bottlenecked the block.

The Magnolia crowd in part convinced Robert Duffy, then the president and vice chairman of Marc Jacobs, that the company should open a store nearby. When a space became available on Bleecker and 11th Streets, Mr. Duffy, who lived in the neighborhood and dined regularly at the Paris Commune, outbid five other prospective tenants.

As Mr. Duffy told The New York Times back in December 2001, “If I could have 20 stores on Bleecker Street, I would.”

Like many people, Ms. Bowman believes the arrival of the first Marc Jacobs store, with its trendsetting clothes and clientele of fashion editors and celebrities like Sofia Coppola, was the tipping point. “Once Marc opened up, all the dolls wanted to be on Bleecker Street,” Ms. Bowman said.

Lulu Guinness, the British handbag designer, flew to New York to secure retail space in what had been an incense emporium. Fresh, the cosmetics brand owned by LVMH, took over a former beauty parlor. Ralph Lauren opened a men’s shop in 2003, a women’s store in 2004 and a Double RL outpost in 2005. Intermix, Cynthia Rowley, James Perse, Brunello Cucinelli, Coach, Mulberry, Tommy Hilfiger, Robert Marc, Olive and Bette’s, Jimmy Choo, Burberry, Gant and Nars all followed.

If that sounds like too many fashion brands to squeeze into a five-block stretch, consider that landlords converted ground-floor apartments into storefronts to meet the demand for space.

The gentrification of the meatpacking district, where Jeffrey New York opened in 1999, spilled into the far West Village, turning the area into a shopping and dining playground. When Richard Meier’s first glass residential towers on Perry Street were completed, in 2002, it hastened the continuing change of the Village from Joe Gould’s scruffy bohemia to a prestige address for bankers and movie stars.

It was around this time that Janet Russo, a clothing designer, and her husband, Bill Jacklin, an artist, both longtime Village residents, sold their townhouse on Bank Street to Mr. Duffy. She felt the Village had changed, she said, “to the point where I wouldn’t want to live there.”

But, she added, she didn’t foresee the effects on Bleecker Street, where she used to scour the antiques stores for inspiration and household items like curtains.

“I’m not so sure Marc and Robert knew, either, that what they started was this crazy thing,” said Ms. Russo, who lives in Connecticut with her husband. “I don’t think anybody really anticipated what happened.”

If some of the residents had trouble adjusting, everything was great for the landlords and the luxury brands, at least for a while. Busloads of potential shoppers were deposited on the street during “Sex and the City” fan tours. Each Christmas, Santa Claus made an appearance at the Marc by Marc Jacobs boutique, posing for Polaroids with the well-groomed children of these new Villagers.

Who knew whom you might spot shopping on Bleecker Street — Sofia or Scarlett or Mary-Kate and Ashley? Or even Carrie Bradshaw herself, since the actress Sarah Jessica Parker lived in the neighborhood.

Bleecker Street, said Faith Hope Consolo, the chairwoman of the retail group for the real estate firm Douglas Elliman, “had a real European panache. People associated it with something special, something different.” Ms. Consolo, who has negotiated several deals on the street, added: “We had visitors from all over that said, ‘We’ve got to get to Bleecker Street.’ It became a must-see, a must-go.”

Early on, Ms. Consolo said, rents on the street were around $75 per square foot. By the mid-to-late 2000s, they had risen to $300. Those rates were unaffordable for many shop owners like Mr. Nusraty, who was forced out in 2008 when, he said, his lease was up and his monthly rent skyrocketed to $45,000, from $7,000. Brooks Brothers Black Fleece took over his space at the corner of Bleecker and Christopher Streets. Other exiled businesses included Toons Thai restaurant, Leo Design and the beloved Biography Bookshop, which secured a new space east of Seventh Avenue and renamed itself Bookbook.

By 2012, only a few old-timers remained, including Ms. Bowman, who, through a lucky break, had renewed her 10-year lease in 2002, just before the street took off. But when she called her landlord to renegotiate, his quote — $35,000 a month — all but ended the discussion. She closed, too.

“My space was taken over by the Organic Pharmacy,” she said. “It has nothing to do with being a pharmacist. They sell high-end creams, and they give facials.”

And then? Blowback. While quirky independent stores couldn’t afford the new Bleecker, it became apparent over time that neither could the corporate brands that had remade the street. An open secret among retailers had it that Bleecker Street was a fancy Potemkin village, empty of customers. Celebrities shopped there because they wouldn’t be bothered. The “Sex and the City” fans lining up at Magnolia and snapping photos of Carrie’s stoop weren’t willing or able to fork over $2,000 for designer heels.

“Jimmy Choo — I never saw anybody in the shop,” Ms. Bowman said. “I don’t get it. Who’s buying this stuff?”

Robert Burke, the founder of a namesake luxury consulting firm, said Bleecker Street was “a vanity location — meaning it’s more about the image than about retail sales or foot traffic.”

At a time when shoppers are buying online and fashion brands across the industry are hurting, “the challenging business environment makes it less interesting to do vanity locations,” Mr. Burke said. Especially when the cost to operate them keeps rising, with landlords on Bleecker Street demanding as much as $800 per square foot in recent years, according to Ms. Consolo.

“What happened in the last year is the retailers started to push back,” she said. “They weren’t getting the foot traffic. They stopped renewing, and the vacancies started to roll.”

Now that many of the big fashion brands have pulled out, what will become of the west end of Bleecker Street? Is it possible for shop owners like Ms. Bowman and Mr. Nusraty, who is practically waiting in the wings around the corner on Christopher Street, to lease affordable space there again? It’s unlikely. As indicated by the languishing storefronts, landlords are willing to hold out.

Ms. Consolo, the real estate agent, noted the number of newish beauty boutiques on Bleecker, including Sisley and Aesop, as well as long-term tenants like the perfumer Bond No. 9 and the beauty brand Fresh. The future of the street, she said, may be as “beauty and lipstick alley.”

Other companies have swooped in to fill some of the vacant storefronts, opening pop-up shops, signing short-term leases or risking a longer stay. Many are foreign brands looking to raise their profile in America, like Orla Kiely, an Irish designer, and Enfold, a Japanese line that opened on the street last fall.

Elad Yifrach, the founder and creative director of L’Objet, an upscale décor brand that opened its first New York store last fall in one of the former Coach outposts, believes the area still has retail magic, despite the recent hard times.

“Bleecker is quintessential West Village,” he said. “The most beautiful townhouses are around there. The street needs to go back to bringing a cool factor, things that will inspire the audience.”

For many longtime Village residents, what the street is missing is not a cool factor but the essential mix of businesses that makes a neighborhood function. On a recent afternoon, Marjorie Reitman, who has lived in the Village for 43 years and who was out on Bleecker Street walking her neighbor’s dog, Walter, reflected on the street’s mercantile past.

“I remember when I first moved down here,” she said. “There was a hardware store owned by an elderly couple, a grocery store, a newspaper store.”

She was standing in front of ATM Anthony Thomas Melillo, a clothing boutique that opened in February to sell $115 “destroyed wash” T-shirts and other garments. The store had no customers, and the front door was open, allowing the air-conditioning to pump out into the street, something Ms. Reitman lectured the young sales associates about.

“That’s the attitude: ‘I have money, I can pay the fine, I don’t care,’” Ms. Reitman said.

The original Marc Jacobs store on Bleecker that started the boom was next door with its windows blacked out. Ms. Reitman had an idea for that space and the other empty stores that dot Bleecker Street like missing teeth in a very expensive mouth.

“They should all be pot shops,” she said. “Seriously. I’m not kidding. I can’t imagine what else could go in and pay the rent.”

VOGUE: When Models Become Fashion Designers

VOGUE | ELIZABETH HOLMES

There is a long-held line of thinking in the fashion industry: if, after a runway show, the models try to take the samples home with them, the collection is sure to be a hit. If they aren’t interested? Not so much. “Models have always been a good barometer of fashion,” says luxury consultant Robert Burke.

Indeed, it stands to reason that the famous faces who spend their days lingering in ateliers and serving as real-life clotheshorses would pick up a thing or two about garment making along the way. But here is the question for today’s It Girls: does that experience, coupled with a recognisable name, help a model become a successful fashion designer?

Alexa Chung is the latest to try her hand, with a highly anticipated clothing line launching this week, earning considerable buzz; suggesting an outsize interest in her creations.

For that buzz to translate into a successful fashion label, a model must make the difficult jump from tastemaker to entrepreneur. There is a reason we have seen a rise in the number of collaborations between models and designers, like Gigi Hadid and Tommy Hilfiger. Those partnerships offer the model a chance to use her expertise, and her social media prowess, while benefitting from the team already in place at an established design house", Burke says. “Models tend to have not had any formal training,” he adds. “Starting a clothing line from scratch is a very different - and very expensive - venture.”

“Having a recognisable name helps get your foot in the door, but to go the distance the products have to really work,” says Elizabeth Hurley, who launched Elizabeth Hurley Beach in 2005. The model-actress-designer, and longtime spokesmodel for Estée Lauder, uses her various platforms to promote her line. “I get to talk about my beachwear when promoting movies, TV shows and cosmetics and vice versa,” she says.

Liya Kebede, a mainstay on magazine covers and catwalks around the globe, says her modelling experience gave her “insider knowledge” and “opened doors” when she started Lemlem, a collection of woven and embroidered clothing for women and children inspired by her native Ethiopia. “It was still a challenge and a huge learning experience,” says Kebede. “Having that background as a starting point, though, and understanding the ins and outs of the industry, was definitely useful.”

Celebrities infiltrated fashion’s ranks long ago, successfully parlaying their notoriety into blockbuster businesses (see: Jessica Simpson). “A celebrity’s name on a label effectively fast-tracks a new fashion brand - shaving off as much as 10 years to develop widespread recognition,” writes Teri Agins in her 2014 book, Hijacking the Runway: How Celebrities are Stealing the Spotlight from Fashion Designers. Victoria Beckham and The Row’s Mary-Kate and Ashley Olsen have even won over skeptics on the designer level.

Anine Bing, who started her Los Angeles-based namesake line in 2012, says her time in the industry was more of a hinderance than a help. “I had to work extra hard to prove myself in the business with colleagues, other designers, even friends of mine,” says the Danish-born, Swedish-raised Bing. Despite her loyal following, she says, “it took awhile for people to not just see me as a model, but as a designer as well, and as someone who was running a legitimate business.”

Bing recognised a need for street-style staples, the kind of seasonless and versatile basics that she herself relied on, like distressed denim and leather jackets. So she pressed on, turning to social media to spread the word. “I put a lot of time into growing our Instagram,” she says, “and getting followers excited about new products.”

It also helps to have influential friends. The “Ambassadors” page on Bing’s website is a chic compilation of other models wearing Anine Bing: Kendall Jenner in a lace bra, Cara Delevingne in a “Bing” tee and Gigi Hadid in black booties. Alessandra Ambrosio makes multiple appearances in Bing’s jackets, including a black cropped suede style and an olive green army jacket.

“I tried not to focus on the challenges so much and instead tried to see it as an opportunity, since I had pretty unique insight into this world,” says Bing. “I now have such a stronger understanding into how this business works.”

BUSINESS OF FASHION: WHAT'S NEXT FOR DKNY

BUSINESS OF FASHION | LIMEI HOANG

After acquiring DKNY for $650 million, apparel firm G-III has cut a series of deals that could initially raise brand awareness and sales, but ultimately damage the label's premium image.

When G-III announced in July 2016 that it would acquire Donna Karan International from LVMH for $650 million, industry insiders wondered what the old-school apparel company — best known for licensing big-name brands — would do with DKNY, the diffusion line that became the core of the fashion house when Karan stepped down and closed her high-end label in 2015.

Since G-III closed the deal in December 2016, it has unveiled a wholesale-focused strategy that flies in the face of current retail trends favouring the direct-to-consumer model, raising the question of whether its approach is a long-term solution or a short-term fix.

Just this week, the company announced a licensing agreement with Calvin Klein and Tommy Hilfiger owner PVH, which will develop a new DKNY brand, DKNY Sport for Men. The first collection will debut in Spring 2018 and be sold in department stores across the United States and Canada.

At first blush, the partnership appears to be downright sensible. “There are a lot of synergies with DKNY and Calvin Klein and Tommy Hilfiger,” says Robert Burke, chief executive of advisory firm Robert Burke Associates. “PVH knows those businesses really well and G-III knows how to produce the product.”

But according to analysts, the move is just a short-term solution to raise DKNY’s brand awareness, and could limit brand control in the long term.

“When you have these kind of partnerships, neither side has perfect control,” says Neil Saunders, managing director of research firm GlobalData Retail. “For some middle-of-the-road kind of brands, that’s fine. But I always think for high-end brands, or more expensive brands, the whole point is that there is a sense of creative direction and brand story behind them that needs close control.”

The new licensing deal follows G-III’s partnership with Macy’s, announced in March, to exclusively sell DKNY women’s apparel, handbags and shoes. “The biggest push from department stores is to have exclusive product,” says Burke. “It’s the only way they are going to be able to compete against each other and all the other online competitors like Amazon and Shopbop.”

A spokesperson for G-III could not be immediately reached for comment, although the company has expressed plenty of confidence in its approach in recent months. “We believe that Macy’s is the ideal partner as we implement our strategy for DKNY to be the premier brand in the world for women’s apparel and accessories,” Morris Goldfarb, chairman and chief executive of G-III, said in a statement announcing the Macy’s deal.

But G-III’s Macy’s deal could actually prove counterproductive, argues Saunders. “I don’t think DKNY has the pulling power of other brands in the market among large swathes of customers so I think that exclusive deal has really limited their exposure,” he says. “[This is] good from the point of view they are not driving ubiquity, but it’s not great from the point of view of driving sales.”

Saunders believes G-III needs a much tighter distribution strategy that is built around the DKNY brand and its own stores, as seen with Coach and Ralph Lauren, which have pulled back from wholesale. “It is more complicated and slightly more expensive but I think in the long run it's likely more successful,” he explains. “The fact that they haven’t done that, signifies to me that what they really want is a kind of a quick win.”

The wholesale strategy could even be described as “dangerous” for a premium brand like DKNY, Saunders warns. “I think you get into devaluing the brand. DKNY actually is not that strong. Overall, they are probably going to get more sales out of [this strategy]. But for the long-term of the brand, I’m not sure it’s quite so sensible.”