Fine Jewelry: The Next Luxury Frontier?

JewelryI’ve been fascinated by the luxury space for a while now, and have been looking to invest in a luxury startup. Obviously, there have been a few notable successes in luxury ecommerce, including Net-a-Porter, Moda Operandi and Yoox, to name a few. But overall, the luxury space has been slower to adopt technology and create compelling online experiences that meet or exceed their offline store experiences.

My personal take is that it’s still early days for luxury, and we’re just now seeing luxury brands starting to maximize ecommerce, mobile and social buying. Luxury apparel and accessories brands have built their own ecommerce experiences, but participating with full price aggregators (Net-a-Porter, Neiman Marcus, Moda Operandi, as well as newer players like Orchard Mile) has been critical to brand building.

I found it interesting that fine jewelry hasn’t gotten the same attention from luxury online aggregators. Why? Because it turns out that fine jewelry is a hard business and very different from luxury fashion. It is a huge industry ($264b annually) made up of a few brands that have huge marketing budgets (Tiffany, Cartier, etc.) but only make up 12% of the total. And the rest are independent local boutiques and sites. Not to mention that about 60% of fine jewelry purchases are gifts (think bridal, anniversaries, Mother’s Day, Valentine’s Day, birthdays and more). Online sites that currently sell fine jewelry like Net-a-Porter rarely appeal to the man buying a gift for a significant other. And buying an expensive jewelry gift is a very different purchase process than self-purchase of a handbag or a jacket.

Which was why I was so intrigued when I met Jean Poh, founder of Swoonery, last fall. Jean told me about how she was building an online fine jewelry aggregator that uses a guided shopping experience based on machine learning to help shoppers buy a gift or self-purchase. And since Swoonery doesn’t hold any inventory (which can be the kiss of death for high price point items like fine jewelry), the business model made a lot of sense to me. When she told me about her vision, I was hooked and made an investment pre-launch. Swoonery launched on Sunday and I can’t wait to see how it shakes up the fine jewelry market. Check out the site at and let me know what you think. And btw, Jean was kind enough to share a discount code, in case you’re tempted – check it out below.

LAUNCH Giftcard

Why Investors Should Care about “Third Places”

I’ve been thinking a lot about the concept of “third places” recently, and particularly how startups are capitalizing on this non-tech based macro trend.

What is a Third Place?

Ray Oldenburg is widely regarded to have been the thought leader behind the concept. In his 1991 book, third places were originally defined as “the public places on neutral ground where people can gather and interact. In contrast to first places (home) and second places (work), third places allow people to put aside their concerns and simply enjoy the company and conversation around them. Third places “host the regular, voluntary, informal, and happily anticipated gatherings of individuals beyond the realms of home and work.”

The History of Third Places

Historically, third places were the village square, local park or the community’s religious institution. In post-war America, the shopping mall and movie theater became popular and ubiquitous third places. Remember when we all used to go to the mall just to hang out, meet friends and maybe get a snack at the food court? It was a social gathering place for a mostly suburban community. But not anymore.

Online = Third Place?

Then came online. Social media sites like MySpace and Facebook and then Twitter, Snapchat and Instagram allowed us to keep in touch with our friends digitally. Technology like Viber, What’s App, Skype, FaceTime, etc. let us keep in touch with far-flung communities. But were any of these really a true third place?

Online Isn’t Enough

Evidently, online just hasn’t been enough of a third place. At the same time as we’re see ever-better ways to communicate, interact and connect to people over online channels, there’s been a renewed demand for offline places – physical locations and events where people can connect again, IRL. A new third place. But this time, it’s not one size fits all. Our third places are now interest- and community/demographic-specific. That’s a huge opportunity for entrepreneurs and we’re starting to see that play out in these sectors:

  • Boutique fitness communities – You’ve heard of them all – Soul Cycle, SLT, CrossFit, and dozens more. All with devoted fanbases who are regulars and even sport their studio’s logos when not working out.
  • Activity-based places – One of the clearest examples here is Massachusetts-based PaintNite and its many sip and paint competitors all over the country that provide a fun, easy activity that groups of friends can do together in a physical space.
  • Co-working and co-living places – WeWork may be the best known co-working space, although there are plenty of others. Newer startups include co-living models that create communities for young people early in their careers (e.g., Founder House, Common, Krash).
  • Affinity-based places – Networking communities (e.g., Ellevate, Meetup) have been the start of this trend and they do offer physical events, but I’m guessing we’ll see more of these morph into physical locations. I know of at least one startup that’s working on this, and there are probably others out there.

So why should we as investors care? Because more and more, these businesses are investable and scalable businesses – and we’re missing out if we don’t pay attention.






Everything is Commerce. Yes, Everything.


E-commerce by Maria Elena via Flickr

I’ve been an angel investor now for about a year and a half. And since I primarily focus on fashion tech and retail, I tend to see a lot of startups that are attacking the next big thing in commerce, particularly in fashion e-commerce. I’ve seen a variety of pitches that have different takes on how commerce will evolve. Some recent examples:

  • “social is the new commerce” (e.g., let’s make social media more e-commerce friendly)
  • “content is the new commerce” (e.g., influencers are key to driving commerce)
  • “mobile is the new commerce” (e.g., m-commerce will eventually outstrip other channels)
  • “search is the new commerce” (e.g., image or contextual search is critical to e-commerce)
  • “discovery is the new commerce” (e.g., discovery tools are needed to narrow product choice)

And on and on. So who’s right? Clearly, social media and friend’s recommendations impact e-commerce as well as bricks & mortar shopping. Content (particularly that of style influencers, bloggers and celebrities) does help shoppers to make choices about what to buy and what trends are important – and we’re seeing more and more of these influencers develop their own product to sell, as well as curate from existing product. And more and more shopping is done via mobile, so I think everyone would agree that mobile is big. Lastly, with the Internet allowing proliferation of products and brands, it’s hard shoppers to find what they’re looking for – so increasingly sophisticated and targeted search and discovery tools will be needed.

But maybe it’s more than those things. Maybe it’s about shoppers who become sellers as well. I read about Poshmark today – the company is now seeing about 20% of their users turn into legitimate sellers (selling more than the items from their own closet). Or maybe it’s about the maker movement – a trend that uses advances in technology to allow everyone to create new products – which creates new retailers at the same time. Or maybe most commerce goes away and it all becomes about the sharing economy.

We don’t know yet how this will all shake out – or which startups and segments will ultimately win, and for which segments of the population (well, at least I don’t know). But in an increasingly commerce-obsessed startup world, I think for now, I’m going to say that everything is (or could become) the new commerce.

Apple Watch: The Wearable That Women Have Been Waiting For?

You’ve heard ad nauseam about the Apple Watch over the last week. The features, the function, and probably most of all, the design. Many think it’s stylish, some don’t (see here, here and here). Yes, the Apple Watch is lauded by men, who find it both functional and stylish, but will women embrace it? And if so, which women?

Chanel watch

Chanel Watch by Adrian Ruiz via Flickr

Watches Become a Daily Fashion Accessory

Let’s rewind to about five years ago. In the luxury market, oversized/boyfriend watches hit the market – this Chanel watch alone was featured heavily in press and ads, and ultimately sparked a slew of similar styles from competitors. Suddenly, watches were new again – not only a great Father’s Day gift, but an essential fashion accessory for women.

And women of all ages responded by collecting watches as they do handbags or shoes – in a variety of styles, sizes and colors. While luxury designer watches like Chanel were featured in fashion magazines, it was the affordable yet aspirational brands like Michael Kors and Marc Jacobs, among others, that became de rigueur for millennials and Gen X.

By 2012, with strong success in the category, lifestyle brands (Kate Spade,etc.)  and traditional watch brands (Fossil, etc.) responded with new offerings and styles, from rose gold and mixed metals, to various face styles (oval, round, square), bracelet/strap styles and even sizes (dainty watches recently made a comeback). Suddenly there were watches that fit every style and budget – from millennials to Boomers. By 2013, many fashion-conscious women owned a “watch wardrobe,” changing their watch daily, they way they change their handbag or shoes.

Introducing…the Apple Watch

Fast forward to today. Apple introduces the Apple Watch, with three styles (Apple Watch, Sport and Edition), two sizes and a plethora of customizable options – from colorful straps to rose gold. That’s a good thing, since watches have become a critical fashion accessory for women. But is it enough?

Who Will Buy the Apple Watch?

It’s a good bet that the Sport versions will likely appeal to young, millennial women – they’re young enough to have missed the Swatch watch and G-Shock crazes in the 80s and 90s, and the tech features will appeal to them. Cost may be an issue for many (the Apple Watch starts at $349) but millennials have been shown to spend on technology even when budgets are tight.

The more fashion-forward and expensive rose gold and gold versions will no doubt appeal to women in the global fashion industry. In fact, I would expect to see this version prominently featured Fashion Week street style images, in the press, worn by fashion bloggers, etc.

But I believe that for Gen X and Boomer women, the Apple Watch is probably less appealing – particularly after they’ve created their watch wardrobes over the last five years and aren’t looking for yet another one, no matter what features it offers.

So what’s my take? Well, the short answer is that the Apple Watch is probably right for some women (millennials, high fashion), but not nearly all – at least, not yet.



Closet Sharing is Here to Stay


Courtesy of Helene Mayer via Flickr

The sharing economy (also known as collaborative consumption) has been top of mind for many start-ups. Since the success of Rent the Runway, many fashion tech start-ups have been focusing on how to bring sharing to the fashion and retail world. Companies like Poshmark (sell and buy from others’ closets), 99dresses (fast fashion clothing swap), Gwynnie Bee (Netflix for plus size fashion) and Tradesy (sell your closet). There are also newer entrants like Kokoopa (rent your occasion-based apparel) and PeerSwap (offline clothing swaps).

Most of these sharing-based start-ups share a common target customer – the young millennial woman, a woman who is fashion-savvy, but doesn’t have the financial resources to buy brand-new items for every occasion and season, given the higher unemployment rates and lower wealth creation levels that millennials face right now. Which begs the question, what staying power do these start-ups have? What if the economy recovers? Will millennials go back to buying new items and give up sharing? When millennials become more established in their careers and families, will closet-sharing companies hit the skids?

It’s possible, but I don’t think it’s very likely – at least not for the top players in the space. One of the real benefits of the sharing economy is the eco-friendly aspect of closet sharing. For eco-conscious yet still fashion-conscious consumers, sharing closets is a way to mitigate the effect of fashion apparel production on the environment. With more and more media coverage of the pollution that apparel manufacturing causes, sharing closets has an environmentally friendly angle that will likely continue to resonate with many millennials – even if their finances allow a more disposable approach to fashion. Not to mention that shopping habits formed in your 20s tend to be maintained as you age into your 30s and 40s, which should help to keep sharing economy companies at the forefront for quite a bit longer.

So what do closet-sharing companies need to do to stay relevant to their customers over time? Instead of emphasizing only the financial benefits of using their services, they should also focus on the environmental benefits of sharing closets. As in any other sector, many of the smaller players in the market may be absorbed or shut their doors over time. But with the eco angle and creating shopping habits and loyalty around closet sharing, there is a real opportunity for closet sharing to stick around for the long-term, even as the economy improves.

Is Men’s E-commerce Over? Not Yet.


Men’s shirts, courtesy of Robert Sheie via Flickr

It’s been all about menswear for the last few years, as the US menswear market has been growing faster than the women’s market, both in stores and increasingly online. Mall-based retailers like J. Crew, Nordstrom, Lululemon, Coach and Lord & Taylor and more have beefed up their menswear sections to respond to increased demand for interesting and new viewpoints on menswear. Newly launched wholesale brands like Public School, Shinola and AXS Folk Technology are getting a lot of buzz, and the hype around many of these new brands is significant (Shinola was picked up by Nordstrom and Public School won the CFDA/Vogue competition). Even men’s underwear has been a growth category, growing 4% over the last 12 months. And don’t forget luxury designers: brands like Prada have announced a renewed focus on menswear, as have Bruno Cucinnelli and Bergdorf Goodman – the list goes on and on. Online, menswear e-commerce stalwarts like Bonobos, Mr. Porter, Jack Threads, Revolve Clothing and Need Supply have been successfully growing their businesses.

Conventional wisdom says that at some point, menswear growth has to slow and the industry will consolidate, particularly as the lines between e-commerce and bricks and mortar begin to blur. Pundits predict continued growth in the overall men’s category, currently projected to exceed $402 billion globally in 2014, which is good news for men’s e-commerce.

In fact, in just the last 12-18 months, there has been a real explosion of new e-commerce concepts and brands. Some examples?  Wits and Beaux, which, like many menswear sites, focuses on a very narrow category, in this case ties and socks. Others target a specific lifestyle like Hickoree’s, which embodies the Brooklyn hipster feel. Others focus on fit, using bespoke and made-to measure techniques, like Trumaker or Acustom. And then of course there is East Dane (owned by Amazon), offering every better and contemporary brand under the sun. There is even a new luxury watch rental site for men, Eleven James, based on the Rent the Runway model.

Which begs the question: is men’s e-commerce over? Have we hit the peak? How many more new concepts can the market really support? The answer is not yet clear, but if I had to bet, I would say we will see plenty of new menswear sites before all is said and done.


What’s Missing in the Mall? Great Spring Fashion.

It hasn’t been an auspicious start to the Spring selling season. One after another, middle-of-the-road chain retailers have described the environment as “difficult,” blaming weather, the economy and competitive price pressures. With the exception of high-end designer/luxury brands, the message has been the same – retailers are not particularly optimistic about the first half of the year.

It’s true that unusually cold and snowy weather has hampered the early spring selling season and the economy is still struggling (particularly at the lower end).  But I believe a big part of the issue right now is a real lack of new spring fashion trends represented in stores – in fact, it feels like most retailers are playing it safe. During a recent mall visit, most stores didn’t feel very “springy” as color palettes across the mall were neutrals like beige, black & white and some navy. After a few seasons of bright colors, neons and colorblocking, this spring’s looks feel pretty blah – so it’s no wonder women aren’t buying them.

It’s not there aren’t fashion trends this season, it’s just that they are micro trends with more segmented appeal. Some of the key runway trends for spring fashion include: pastel colors (especially pink), flare skirts, high-waisted pants, crop tops, sheer pieces, active inspiration, overalls, floral prints and metallics. While most of these trends are represented at high-end luxury/designer stores, few of them are visible at women’s apparel retailers like Ann Taylor, Gap, Banana Republic, Express and even Nordstrom.  Or they are a very small portion of the assortment, with basics and neutrals overshadowing the newness. For many of these retailers, certain of these micro trends are difficult to interpret for their specific customer base – e.g., can Banana Republic sell a crop top to a 40 year-old woman? And unlike previous seasons, there is no one overarching new fashion trend that every retailer has bought into (note: for the last few years the overarching trend has been bright colors, inescapable throughout the mall and clearly conveying to the customer that it was time to buy color).

spring trends

Overalls at Urban Outfitters, courtesy of Retail Eye

Even at teen or millennial focused brands, the current trends seem tough for retailers to interpret. Even typically edgier retailers like Urban Outfitters are struggling. However, the current micro trends should actually appeal more to these younger, edgier customers – so perhaps it’s just the retailers that are having trouble identifying and sourcing the right items featuring the right trends?

It’s tough to say why retailers are struggling with spring fashion trends this season. But one thing seems clear – since retailers don’t have a strong fashion point of view for the season, it’s much more difficult to get shoppers in the buying mood.

Rising Luxury Prices? No Problem, Say Today’s Contemporary Brands

Up, Up & Away Go Luxury Prices

There’s been a lot of talk recently about the rise in luxury price points, including the fact that a quilted Chanel handbag now costs about 70% more than it did five years ago (see here, here and here for more


Prada, courtesy of Herry Lawford via Flickr

examples and details). For now at least, the uber-wealthy aren’t balking at ever-higher prices for designer handbags, shoes, watches, jewelry and even apparel.

However, many aspirational shoppers that used to be able to splurge on a Prada bag every so often have been finding it much more difficult to do so. While aspirational shoppers are probably not particularly happy with the status quo, there is one group that is benefiting – contemporary brands.

A Little History on “Contemporary” Brands

Over a decade ago, brands that fit in the spot between “better” and “designer” were called “bridge” brands, but with the rise in designer brands, many of those bridge brands lost relevance and customers. But as designer brands started to rise in price (while the biggest price increases have been in the last five years, most designer items are significantly more expensive than they were around 2000), bridge brands came back – but with a new name: they are now “contemporary” brands.

Contemporary Brands: An “Aspirational” Option

Today, contemporary brands are an alternative to higher priced luxury designer brands, particularly in the accessories sector.

Kate Spade

Kate Spade storefront, courtesy of Ralph Daily via Flickr

Let’s take the handbag category as an example. Instead of buying a $2,000+ bag by Chanel, Hermes, Prada or Gucci, shoppers can now more affordably splurge on Tory Burch, Marc by Marc Jacobs or Kate Spade at less than $1,000.

Other brands that benefit from higher luxury prices?  Some big ones that are reaching up into the contemporary space including Michael Kors and Coach and even smaller, growing brands like Rafe, Longchamp, Rebecca Minkoff and Pour La Victoire.

Higher Luxury Prices = Contemporary Opportunity

Contemporary brands recognize the opportunity to lure shoppers to a more affordable, yet still aspirational form of luxury.  Michael Kors, Kate Spade and Coach have all recently announced growth initiatives to capture more of this growing market in the handbag, shoe and accessory space. And it’s not just the contemporary brands seeing the potential in this space. Some designers are using their diffusion lines (e.g., Red Valentino, B by Brian Atwood) to take advantage of the contemporary market as well. Luxury price increases show no signs of slowing in the near future, which bodes well for aspirational contemporary brands – in accessories, apparel and more.

Fashion Meets Activewear for Spring

There’s a new look for spring and it’s a hybrid of fashion and activewear (sporty fashion? fashionable activewear?) and it is officially everywhere. It started with sporty looks all over the runways for Spring Fashion Week, continued with active/fashion hybrid looks at retail stores and entire “sporty” sections on traditional women’s websites like J. Crew – which include traditional activewear items like yoga pants paired with classic pieces like blazers. Even Nordstrom has gotten into the act: check out this recent email from Nordstrom which features fashion items that walk the line between active and fashion. A recent visit to Intermix featured windows that highlighted sporty/fashion crossover looks and fabrications that are typically seen on activewear (like mesh) sprinkled throughout contemporary brands (see image below).

But it’s not just women’s apparel brands that have started to blur the lines between active and fashion. Traditional activewear retailers have gotten into the act as well.  Recently, Lululemon launched its &Go line that features activewear that doubles as street clothes, with some early success. Adidas is also seeing strong results not only with the resurgence of Stan Smith footwear styles (particularly during Fashion Week), but also its Stella McCartney collaboration.


Fashion/active looks at Intermix

None of this should be surprising as activewear has gotten more and more ubiquitous over the last five years (see this post for more details).  From teens to moms, women have been wearing their activewear for more than just working out or going to the gym. The new twist that for spring is that these hybrid looks are not quite for working out and not quite dressy, but a blend of both, which means they can be worn really almost all the time. And that means that women can choose to shop a traditional apparel retailer to buy their spring looks or they can choose an activewear brand, making competition for spring wardrobe dollars even more intense.

While this spring’s fusion of fashion and activewear is a seasonal trend, we’ll be watching to see if women embrace it – which could have implications for the way women dress not just this spring, but in the seasons beyond.

Why Bricks & Mortar Retailers Need Pinterest

Remember the good old days when store windows were a primary marketing vehicle and traffic driver? Store windows included mannequins, props, signage, visual imagery – all to create a lifestyle brand feel, and transport the shopper into the world of the that particular brand.  Barneys NY became particularly noted for their windows, and the holiday windows in major cities like New York were a tourist attraction (and still are, to some extent).  However, as the recession forced stores to cut costs and payroll, only flagship stores received all the trimmings of elaborate window displays. Other stores had to depend on visual banners and a few mannequins.

At the same time, mall traffic saw declines – even the last holiday season showed a 15% decline in shopper foot traffic. With fewer people at the mall and fewer elaborate displays or the store payroll to maintain them, store windows have become less important.

Enter Pinterest.  A few savvy retailers have figured out that Pinterest strategies can take the place of store windows (and catalogs, and even some traditional advertising). The best Pinterest boards create a lifestyle that is relevant to both the brand and its target shopper, and create the aspirational brand feel online.

Who’s doing this well?  By a wide margin, Nordstrom, with over 4.4 million Pinterest followers is winning in the fashion space. With 66 boards featuring product images, how-to’s, trends, wedding ideas and travel images, Nordstrom creates an aspirational, luxurious feel on all its boards that isn’t just about selling items but developing the brand.  And it’s not just fashion brands that have been able to build big followings – Lowe’s is another retailer that has taken advantage of the DIY and home-related interest in Pinterest boards to develop a following of over 3.5 million people.


Nordstrom’s Pinterest Board via Pinterest

While aspirational brands are usually thought of as most suited for Pinterest given their high quality images, it’s not just the higher end brands that are utilizing Pinterest boards to gain large followings – Forever 21, the fast fashion teen retailer, ranks higher than Tory Burch (see chart below).

But most major retail brands have not done enough to make Pinterest a key part of their marketing and brand strategies.  And if they don’t take advantage of Pinterest, they face a windowless future.

Want to know more about Pinterest strategies employed by major retailers including Nordstrom’s in-store Pinterest initiative? Contact us or leave a comment below.

Nordstrom 4.4 million followers
Lowe’s 3.3 million followers
Lululemon 1.9 million followers
Anthropologie 434,000 followers
Sephora 285,000 followers
Pottery Barn 222,000 followers
Kate Spade 185,000 followers
Victoria’s Secret 171,000 followers
Forever 21 144,000 followers
Urban Outfitters 129,000 followers
Tory Burch 120,000 followers
Neiman Marcus 90,000 followers
Williams Sonoma 89,000 followers
Macy’s 84,000 followers
Gap 68,000 followers
Kohl’s 45,000 followers
American Eagle 42,000 followers
Ralph Lauren 40,000 followers
JC Penney 33,000 followers
Aeropostale 32,000 followers
Express 18,000 followers
Ann Taylor 18,000 followers
Loft 16,000 followers
Banana Republic 15,000 followers

Note: As of 3/15/14. Methodology includes primary account followers. Does not include ancillary accounts.

Don’t Call it a Comeback: Experiential Retailing

A few years ago, experiential retailing was touted as the answer for bricks and mortar stores to compete with online retailers. Some high profile examples like Terrain (the garden/café/store concept owned by Urban Outfitters), Metropark (a clothing chain with DJs spinning during the weekends) and REI (sporting good retailer offering climbing walls in-store, among other activities) were billed as the new future of retail – and a way to beat the ease and convenience of e-commerce.  But in the past few years, the hoopla around experiential retailing has taken a back seat to more of-the-moment buzzwords including mobile and omnichannel.

But guess who’s back? That’s right, experiential retailing is back – but in a new way, aimed at making bricks and mortar stores “gathering places” for shoppers, not just shopping places. Some recent high profile examples:


Nordstrom storefront courtesy of Nicholas Eckhart via Flickr

  • Nordstrom launched a cocktail bar in its Bellevue store. Sure they’ve always had a café and coffee bar in most stores, but not a true cocktail bar. Habitant launched in July as a test, and Nordstrom may roll the concept out to more stores in the future.
  • Restoration Hardware recently revised its store designs and included a wine bar, pub and billiard room in its new Boston flagship store. These and other non-retail elements are being added to other stores as well as more of the new format stores are rolled out.
  • Urban Outfitters is launching a new concept store in Williamsburg area of Brooklyn, featuring a variety of pop-up shops, apparel and a restaurant and bar with rooftop dining. Slated to open in winter 2014, the multi-floor store will be a new addition to the Urban Outfitters portfolio of brands.

It remains to be seen if these types of add-ons to the traditional retail store will result in sustained improvement in store traffic and revenues (for other ideas on how stores can compete, see here). But at least bricks and mortar retailers are not going down without a fight.

Three Things Malls Need to Do Right Now


Shopping mall, courtesy of Jorge Franganillo via Flickr

Every year around this time, retailers announce store closures – many of which are mall-based.  This year is no different, with mall-based retail chains including Abercrombie & Fitch, Sears, Macy’s and JC Penney announcing store closings – on top of store closures in 2013.  And with mall traffic declines expected to continue as e-commerce gains, it wouldn’t be surprising to see more retail operators downsize or close stores.  And that has made many experts predict the death of the shopping mall. But is it really game over?

Let’s face it, Mall of America’s expansion plans notwithstanding, it’s going to be tough for mall operators, even in A or B malls, to fill all the empty slots in their malls this year – and continue to drive traffic.  Most A and even many B malls have already expanded food options, added play areas, tried weekend fairs and farmers markets, hosted fashion shows and encouraged mom-and-pop retailers to open stores (e.g., eyebrow threading, shoe repair).  But all of these options are really just a stopgap.  So, what should malls be doing to maintain their relevance in an increasingly e-commerce oriented world?

Embrace the Pop-up – Short-term pop-up shops (either marketing-related or commerce-related create a lot of hype in big cities. So why shouldn’t malls use their extra space or empty storefronts to host an ever-rotating cadre of pop-ups to drive excitement in the mall?  Sample sales are another option – and existing retailers in the mall can even contribute.

Bring Online Offline – Sure, some shopping malls offer free wi-fi, and others promote their own mall apps.  But that’s not enough.  Bringing select e-commerce retailers into the mall (like eBay, Amazon or Etsy sellers) – via a pop-up shop, marketing promotion or showroom would help to create more buzz and local excitement at the mall.

Invest in Flexibility – One of the biggest issues with malls today is their fixed layout – which makes it difficult to bring in non-retail, non-food options. With fixed store layouts, shoehorning office cubicles, gyms or doctor’s offices into the current spaces is just too difficult or expensive.  But if malls could over time reconfigure at least some of the space into areas with flexible wall and flooring arrangements, they could attract more non-retail businesses that could drive more foot traffic.

Of course, there are also plenty of malls that need a facelift, are saddled with irrelevant retailers or just are poorly located.  For those malls, there are no easy answers. But for the remainder, the time is now – before it’s too late.


Will Millennials Go Back to the Mall? Not Really.

millennials don't shop in malls

A not very busy King of Prussia Mall, courtesy of Richard Owens via Flickr

Do you remember the days that teens used to come to the mall not only on weekends, but after school? It’s hard to believe but true – up until about 2008, American teens regularly came to the mall, armed with a parent’s credit card or cash.  They would hang out, shop, eat and watch movies with their friends.

Then came the recession. Parents took back the credit cards and cut back on spending even for key seasons like back-to-school.  Many teens were unable to get summer or part-time employment so they didn’t have any of their own cash to spend.  Not surprisingly, teen retailers like Aeropostale, American Eagle, Abercrombie & Fitch and Hollister struggled.

At the same time, teens started using social media to be, well, social.  Instagram, Snapchat, Facebook, Twitter and more became the way teens communicated instead of hanging out at the mall after school or on weekends. And there were plenty of fashion blogs, new e-commerce retailers and fashion sites like Polyvore to browse without leaving home.  Suddenly, it just wasn’t as important to physically be at the mall.

Fast forward to today. Those teens that ditched the mall?  Well, they’re in their 20’s now and they’re still not going to the mall that often – a recent study found that even now, they are hitting the mall once per month. Let’s face it, this generation is just not a bunch of mall rats. All those years of going online to be social and browsing online has had its impact – millennials still find other ways to shop and browse.  And why not?  Online millennials can browse and buy from the e-commerce sites of traditional retailers as well as those with no to limited store presence like Nastygal, Modcloth, Madewell and more.

So will millennials actually ever go back to the mall in the way that malls are hoping?  Sure they’ll go when they need to try something on, or to see a movie, or for dinner.  And malls aren’t giving up on them by any means. But it’s doubtful that malls will get this generation of 80 million young people to think of the mall the way previous generations did.  And that spells trouble for the mall.

Women’s Activewear: Not Just About Yoga Anymore

women's activewear yoga

Courtesy of Benjamin J. DeLong via Flickr

In the 1980s it was leotards and legwarmers. In the 1990s, it was running gear. But for the past 10 or so years, it’s been yoga pants. Ah…yoga pants. Those ubiquitous black stretchy pants paired with a moisture-wicking tank or hoodie.

In fact, the explosion of yoga and yoga pants launched a slew of women’s activewear brands and retailers in the US: Lululemon, Athleta, Sweaty Betty, VSX by Victoria’s Secret…the list goes on and on. The yoga boom also energized the big names in the activewear space – major brands like Under Armour and Nike launched highly successful yoga lines, as did Gap with its GapFit brand.  Even kid’s retailers like The Children’s Place began offering yoga pants. If you are a retailer in the yoga business, it has been a great run for a long time.

women's activewear cross-fit

Cross-fit, courtesy of Christina Gloger

But now things are changing – not that activewear is going away. Actually, the women’s activewear market grew 9% in 2013 and is expected to keep growing at a similar rate in the years ahead.  But the key is that it’s not only about yoga anymore.  It’s about activewear appropriate for a variety of activities. Newer fitness trends including spinning, CrossFit, bodyweight training, HIIT (high-intensity interval training) and more are expanding the market for women’s activewear.  And accordingly, brands and retailers are taking notice.  Reebok is now the official activewear sponsor for CrossFit, Soul Cycle has launched its own line of spinning-related apparel, and Nike has made running a primary focus at its retail stores. Both Under Armour and Nike have also made the women’s activewear business a key growth focus for the years ahead. Even Target recently re-launched C9 by Champion to be a full-fledged activewear brand.

What does that mean for retailers in the activewear space for 2014?  It’s a great niche to be in – as long as they remember that it’s not just about the black yoga pants.

Bricks & Mortar vs. E-commerce? The Winner is…

You’ve seen the stats – the 2013 holiday season showed 12% growth in e-commerce and a slowdown of 15% in mall foot traffic.  Put them together and the answer is obvious. E-commerce wins and stores and malls everywhere die a slow death, right? Well, maybe not.

First, people who like to shop like to go to the mall (or downtown shopping neighborhoods, lifestyle centers, etc.).  Yes, even millennials, the smartphone-happy generation, still like to shop in physical stores.  And with fit technologies still in their nascent stage, many apparel purchases in particular are just plain easier in person.  And sometimes you just need something today – not in five to seven days, and not even in two days.


Second, bricks and mortar retailers are not going easy into that good night. They’re fighting back and using mobile, social, e-commerce and omnichannel strategies to do it. A few recent examples:

  • Sears just launched a drive-through feature at its stores to pick up items purchased online
  • Gap recently launched a “reserve-in-store” feature in select stores that will soon be available throughout the entire chain. “Order-in-store” is also about to be tested.
  • Neiman Marcus launched a new e-commerce app for smartphones which also prominently features store-specific sales associates and in-store events that help to drive shoppers to the stores.

Mall of America, courtesy of Kimberly Robyn via Flickr

And don’t forget that e-commerce sales are the bright spot for many of these bricks and mortar retailers including Gap, Nordstrom and even J.C. Penney – all of these retailers have recently called out e-commerce growth even while stores have seen declines.

Third, malls are also working to drive foot traffic by becoming neighborhood centers – adding more and better food options, hosting elementary school art fairs, bridal expos, farmers markets and more.

Last, e-commerce is going old school. Many pure play e-commerce retailers are experimenting with pop-ups, showrooms and even full-fledged stores to expand their reach and give shoppers a physical experience.  A few examples:

  • Bonobos – Launched stores and wholesales its clothing at Nordstrom and Belk
  • Warby Parker & Bauble Bar – Have experimented with pop-up shops
  • Blue Nile – Testing “showrooms” at Nordstrom

Well, it’s not that cut and dried.  While many stores and malls may close over the next ten years, we suspect that most will morph and adapt to bring elements of e-commerce and mobile into their four walls, and e-commerce retailers will increasingly use stores to expand their reach and brands.  The good news?  Shoppers will get the best of worlds. The bad news? There will likely be many painful moments between now and then.

Are Millennials and Traditional Retailers A Mismatch?

We’ve all heard about the millennials – at 82 million strong in the U.S, they’re the key demographic for retailers – especially as they are projected to reach $1.4 trillion in annual spending by 2020.  We’ve also heard that millennials dress too casually for work, and are relatively frugal.  But what happens as they get older?  Does this generation take such a different approach to dressing that traditional retailers can’t satisfy them? Are millennials and traditional retailers a mismatch?


Millennials, Courtesy of Erin Nekervis via Flickr

Look at the evidence.  The youngest of the millennial generation is just at post-college age now.  They’ve aged out of the classic teen brands (e.g., Abercrombie & Fitch, Hollister, American Eagle) – but even when they were teens, many chose alternatives including Forever 21, Urban Outfitters, Free People and Wet Seal – not to mention TJ Maxx and other off-pricers.  Why?  Well, the economy of course – teen spending has been depressed for a number of years and few can afford to buy luxury items – or anything at full-price (especially when there’s a new hot tech item to buy).

But it’s not just the economy.  It’s also a fashion shift – one that has moved millennials from “outfit dressing” (e.g., a head-to-toe look) to a more personalized approach where young women buy a number of different items from different brands and then put them together in their own way – not only personalized, but also in many cases deliberately mismatched.  Want proof?  Take a look at the “ugly-pretty” outfits on HBO’s hit show Girls. Or the mannequins wearing mismatched combinations at Urban Outfitters. As well as the extraordinary success of Nasty Gal.


Mannequins at Urban Outfitters


What does that mean for traditional retailers as the millennials age into their 30s and 40s? Brands like Gap, Ann Taylor, White House Black Market, New York & Co. and Banana Republic are not going to be the millennials’ brands of choice – these women likely won’t dress in that way. But it’s not all bad news. There are a few traditional retailers that are embracing the personalized/mismatched approach – including Saturday (by Kate Spade), J. Crew and Madewell– which means it can be done. The question is, can other retailers follow suit? That remains to be seen.