If you make more than $350,000 per year, chances are, you favorite place to shop is Target, followed by none other than Costco! Even the most fashion conscious shoppers are pairing their $5,000 Hermes Bag with a $15 t-shirt from Target.
Leaders from specialty retailers leading the retail and luxury goods industry descended upon Harvard Business School on April 3 to talk industry trends past and future. Retail specialists such as Bloomingdale’s, Barney’s New York, and Bliss, were among those on campus for the first annual Retail & Luxury Goods conference.
Here’s a peek at some conference highlights:
Registration: Arguably the best part of the conference.
Goodie bags this year included a snazzy brown tote bag from Elie Tahari, a black, leather business card holder from IWC, hand cream and lip gloss from Bigelow, and an assortment of personal care items from Bath and Body Works.
Panel 1: Multi-Category Retailing
The major chatter among the panelists from Bloomingdale’s to Sears centered on the future of the department store. In the light of the recent consolidation in this industry there has been a shift in power from vendor to the retailer. The winner of the battle of the merged merchants will be the one most able to differentiate itself through the shopping experience and the breath of products offered, the experts agreed.
Panel 2: Multi-Channel Retailing
Panelists from Gap, Abercrombie&Fitch and Bath&Body Works highlighted the major advantages of having an online presence. Said the retailers, the online channel allows them to serve a different customer segment by offering extended sizes, buying convenience for those who can’t reach their stories, and 24-hour shopping. Anonymity is also a plus for some shoppers – especially for the slightly embarrassing purchases. Challenges of the new medium include higher return rates, challenges aligning the product assortments with that offered in stores, and potential sales cannibalization.
Lunch: Keynotes from Jim Gold, CEO Berdgorf Goodman
During his keynote speech, Jim shared with conferences guests his strategies on building a luxury brand in a retail channel. He highlighted Berdgorf’s three main strategies, which allowed the store to become a household name nationwide despite having only one store. First, Bergdorf carries the best, most exciting products and partners with designers to carry exclusives. Second, Bergdorf spends an incredible amount of money on its store windows. Interior designers, lighting specialists, and even architects team up to create an experience in all of its store windows. Finally, customer service in a luxury brand is vital to creating loyalists.
Panel 3: Growth Strategies in the Luxury Goods Industry
Executives from Bliss, Bumble&Bumble, and Mercedes discussed the delicate balance between “Masstige” – creating a luxury brand for the masses – and protecting brand exclusivity through scarcity. Major growth strategies included growing internationally, through private label brands, and pursuing alternative channels of distribution. Bliss is a great example of growing via alternative channels. Part of the Starwood Hotel group, Bliss displays its products in a “theft ready bag” in its owner’s high-end hotel rooms. As Bliss President Tyler Morse says, “We hope you take our products home and rub them all over yourself!”
Panel 4: Recent Graduates in Luxury Goods
In the first panel of its kind in conference history, recent HBS graduates now working at such luxury good staples as Neiman Marcus, Louis Vuitton, and Cole Haan offered their advice to students eager to break into the industry. They advised students to seek a role that is important to the business and argued that those who want to do finance should opt for an investment bank instead. This is an industry that favors labors of love. The alums urged students to be sure they identify with the product they are selling and to learn to position their prior experiences in a way that is attractive to retailers and luxury goods companies – perhaps easy to say and hard to do. Look for companies that are run by MBAs and those that offer rotational programs, which will provide exposure to the unique functions of retail.
Other highlights: Elie Tahari offers the panelists advice from the audience
Secretly hidden among the audience was Elie Tahari himself, the creator of the Tahari clothing line. Though he wasn’t a panelist, he was kind enough to share his thoughts and passions with the attendees. He advised students to work in a function that they genuinely love and to outsource the rest. For example, he loves to design, but has no desire to deal with supply chain. He hired someone from the outside to manage that function in his company.
Given the tremendous success of this year’s conference, we look forward to attending again next year, especially for the goodies!!