Luxury & Fashion Biz News: January 15th, 2010 (Saks regroups, Katy Perry Smells, White Collar style, and the Unvarnished Truth behind those positive holiday retail sales numbers)

1.) Saks Fifth Avenue Closes More Stores, Regroups:
“According to a press release, the company closed its Saks Fifth Avenue stores in Mission Viejo and San Diego, CA; Southampton, NY; Portland, OR; Charleston, SC; and Plano, TX in 2010 in addition to the Denver, CO store to be shut down in March . . . Despite the short-term hit that is taken when closing a branch, some think that it’s better for the brands to close them down instead of making little profit. However, it makes one wonder if the closing of retail locations mean a decline of luxury sales in general.”

While other analysts are praising Saks for making judicious (though painful) cuts that might just save the retail brand overall, with Saks reporting that revenue in stores open for at least a year increased over 11% in December, with the best-selling items including women’s and men’s apparel, shoes, handbags and cosmetics.

Of course, “revenue” doesn’t mean “profit”, so while their overall sales may have been up, it doesn’t mean the retailer is out of the woods yet; hence, the recent announcement of the closing of the Denver store scheduled for the beginning of March, 2011.

*NOTE 1: Friend and blogger Marin Untiedt, who lives in Denver, contacted me immediately after hearing the news of the Denver Saks future demise and wailed, “Now where am I going to purchase my Armani Eyes to Kill mascara?!!” E-commerce, Marin. E-commerce.

The Charleston Post and Courier is reporting that the Polo Ralph Lauren store will be closing its downtown Charleston location on January 22nd, just six months after Saks Fifth Avenue pulled out of the area, though both Polo and Saks are opening discount outlet shops in the Charleston Tanger Outlet Center.

Which is encouraging from a retail analysis standpoint, as it gives visible evidence that brands are beginning to understand their markets better . . . or, at least, rethinking the “open a high-profile location everywhere, regardless of demand” strategy (Crystals Shopping Center in Las Vegas, anyone?). Speaking of rethinking and outlets, lower-end retail chain Target is planning on opening 21 new stores in 2011.

But there’s already some rumblings among retailers wondering if brick-and-mortar stores are even necessary anymore, what with increased consumer activity online, and especially on mobile devices: “With more shoppers adopting online shopping, the well-dressed 800-pound gorilla in the corner was the question: Is there still a place for brick-and-mortar stores? . . . ‘The consumer wants to get stuff how and when they want it,’ said Saks Fifth Avenue’s Steve Sadove. ‘You have to be playing on every format. You can’t do everything, but ignoring Internet and mobile is silly. Maybe that means one year you can’t open as many stores as normal, but the returns we are seeing from the Web are worth it.'”

*NOTE 2: The National Retail Foundation reports that “Of the people who say they have used their smartphone to shop this holiday season, more than one-quarter (26.0%) have used the phone to make an actual purchase. Nearly one-third (32.5%) are specifically using their phone to receive text messages with special offers and 34.6% are reading what their peers are saying in customer reviews. It seems locating store hours or locations (50.7%) and perusing their options by browsing for gifts (60.2%) are the most popular ways shoppers have used their phones thus far.”

In fact, David Dorf, Director of Technology for Oracle, makes some bold predictions for the way our mobile devices will impact our future selves: “The next generation of smartphones will be equipped with NFC chips that have the potential of storing loyalty data, coupons, and payment information so we’ll probably stop carrying around wallets. (The mobile phone will probably replace our house and car keys as well.) In the distant future, mobile phones with morph into wearable computers and augmented reality will be the norm.”

So, really, a luxury-specific retail chain like Saks doesn’t *need* those physical locations in Charleston and Denver, as long as they still serve those areas via readily accessible e-commerce. Plus, e-commerce only websites like Gilt Groupe, Rue La La and Haute Look have educated consumers to the practicality and validity of shopping online, so much so that Gilt Groupe has spread beyond its original designer apparel and accessories mission statement and is now offering vacations, cars and home furnishings (Rue La La and Haute Look, too).

*NOTE 3: David Wachs, president of Cellit Mobile Marketing, cautions brands and PR pushers to ignore the mobile branding hype and focus on the mobile branding realities, instead (i.e. engaging the customer), while BizReport writes that “Around 14% of shoppers accessed a retail website through a mobile phone but almost all did so to look up a price or track down an item and not to make a purchase” yet “Smart companies of all types are starting to take mobile applications seriously.”

Gilt Groupe is even announcing a first-ever partnership with the USA Network for a tie-in to the ‘White Collar’ television series: “The event will be curated by the show’s season one and season two costume designer, Stephanie Maslansky, and will take place at on Wednesday, January 19 … and will last for 36 hours . . . This sale will be a total of four sales, three sales that will consist of clothing and accessories and one that is experiential through Gilt City, paying homage to New York City, where the show is based and offering dining and entertainment opportunities.”

For a look at what ‘White Collar’ style means (and why Gilt Groupe would see value in partnering up with the USA Network) check out the fan-created video clip below — the show is like one long menswear commercial for Wall Street types. Warning: the clip is hyper-edited, so just treat it like a rapidly moving photo-spread and you should be fine . . . I think:

21st Century Rat Pack style — just add martinis and stir

Speaking of Gilt Groupe, they’ve been busy lately with a new round of financing ($50 to $100 million), the roll-out of a full-priced menswear e-shop (which adds oomph to the partnership with ‘White Collar’) and plans for a potential public stock offering in 2012. And all without a single brick-and-mortar store to its name.

In related news: another retail trend that follows pop-up shops, e-commerce and mobile applications, is the store within a store: “In many cases, the larger store operates the store tucked inside, while in some instances it maintains a landlord-tenant relationship. The trend now gaining traction in the U.S. has been popular for years in Asia, particularly in high-end Asian department stores.”

The article uses JC Penney and Macy’s as two prime examples of the mainstreaming of the store-within-a-store trend. Penney’s launched in-store Sephora shops in 2006 and now has 231 Sephora locations in their stores, with plans to open up another 75 in 2011 while also including shops by MNG by Mango and Call It Spring by Aldo.

Sunglass Hut leases space from Macy’s, with 240 Sunglass Huts presently in Macy’s stores and plans for a total of 670 by spring. Macy’s is also partnering with Ralph Lauren for special in-store boutiques, some featuring special flooring, walls and fixtures with Ralph Lauren trained sales associates manning the shops.

2.) Tumblr Takes All This Fashion Stuff Seriously:
“Tumblr, the image-heavy platform beloved by top fashion bloggers like Tavi Gevinson and Jessica Quirk (What I Wore), is focusing more of its energy on the fashion industry … sending more than 20 of its bloggers to New York Fashion Week . . . About eight hail from New York, but the rest will be flown in for the nine-day event. They’ll receive complimentary flights, accommodation, and will be whisked off to lunches, dinners, and cocktails with a roster of to-be-confirmed brands and designers. And of course they’ll receive access to several New York Fashion Week shows, says Rich Tong, Tumblr’s newly-annointed fashion director . . . To make the bloggers’ coverage of events and shows even more visible, Tumblr will host a real-time feed of their content at, mixed in with content from other ‘media partners.'”

Facebook is a giant, sprawling network with more than 500 million active users, and Twitter is bigger than anyone really knows with “75% of its activity occurring outside via third-party desktop and mobile clients”, so Tumblr faced a choice — try to go big against the already huge social media giants, or specialize.

Rich Tong saw a niche that Tumblr was already carving for itself — the social media destination for fashion hungry users — and decided it was best to just pick that ball up and run with it. While global brands will be live-streaming their upcoming Fashion Week shows on Facebook, and editors and journalists will be Tweeting their opinions as runway shows unfold, Tumblr will be publishing its very own original Fashion coverage, positioning Tumblr as one of the top destinations for style coverage during New York’s hectic week of never too many hats, shoes and gloves.

3.) Pop Star Katy Perry Wants Us All to Smell . . . Her Concerts!:
“Katy Perry is creating an ‘aroma’ especially for her 2011 European tour. The ‘Teenage Dream’ singer is planning a spectacular stage show for her tour next year and is determined for it to engage all the senses of her audience . . . She said: ‘It’s going to engage all the senses, so we’re looking into alternative stuff like smell. We’re talking to a couple of companies at the moment about creating an aroma for the performance.'”

Which is just brilliant branding, really, because not only will her audience members remember her concerts through sight and sound, but they’ll also have a particular, specially created scent that will embed the live-tour experience even deeper into their subconscious. So when Perry’s fans are playing their Katy Perry CD at home, or listening on their mobile devices, they can spray the room (or themselves) with the concert scent and relive the emotions of the live experience all over again (it’s commonly believed that the sense of smell can trigger emotional responses even before our cognitive functions kick in to identify what it is we’re smelling).

Not to mention that it’ll be yet one more piece of concert merchandise to sell as people stream out the doors after the show.

Martin Lindstrom writes in his book “Brand Sense” that our sense of smell is the one sense we can’t turn off, and that given this fact, brands are surprisingly underutilizing scents and odors as a means of establishing a foothold within consumer awareness: “In the way impressions are stored in the brain,” he writes, “if you trigger one sense, it will lead to another, and then another . . . a whole vista of memories and emotions can instantaneously unfold . . . Teenager’s sense of smell is 200% stronger than that of adults beyond middle age. Given the fact that children influence an astounding 80% of parents’ purchases, appealing to the sense of smell becomes increasingly important.”

And just guess who Katy Perry’s target audience is? Uh-huh, teenagers to very young adults. Those with precisely the fine-tuned sense of smell. Parents, get your credit cards ready for when Katy Perry comes to town . . . and for when this particular type of entertainment and corporate branding becomes more common.

Katy Perry — smells like bubblegum and cotton candy

UPDATE: The Daily Mail UK reports on research claims that the more alive our sense of smell, the more alive we ourselves are: “Scientists from Rush University Medical Center in Chicago found that the more everyday odours a person can identify, the more likely they are to be alive several years later.” It’s good to be alive and smelling!

An August, 2010 article on Bloomberg News mentioned that scent branding was the next big step for the big fragrance labs like IFF and Symrise, stating that “Researchers believe that ambient scenting allows consumers to make a deeper brand connection . . . Credit Suisse, De Beers, and Sony have all been experimenting with ambient scenting in their retail spaces” and that Rolls-Royce even took a chemical snapshot of the smell of their classic 1965 Silver Cloud and now applies this odor to the underside of the seats of each new car that rolls off the assembly line.

Feeling manipulated yet?

Yet this type of all-sensory branding is why Abercrombie & Fitch hoses down its store mannequins every morning with its classic Abercrombie & Fitch cologne. The shops can’t just look and sound like A&F, they create an indelible emotional experience for consumers by also smelling like Abercrombie & Fitch.

Scent branding is so “cutting edge” right now that aging rock stars like Bryan Ferry (and lesser wattage movie stars like Gerard Butler) are recognizing its value and publicly musing about jumping on the scented train. Though maybe about forty years too late for Ferry, I think.

4.) The Unvarnished Truth About the U.S. Retail Economy, brought to you by Howard Davidowitz, chairman of Davidowitz & Associates and a retail analyst for over thirty years:

“30% of the consumers in America are responsible for these sales — the whole thing”

He makes some key points about all the hype we’re now hearing from retail reporters and CEO’s about an economic recovery: he reminds us all to be careful of the hidden agendas behind the rah-rah positive reporting, notes that 46 million people are on food stamps, and that the only reason holiday sales looked better in 2010 was because the stock markets did so much better in 2010 than in 2008 and 2009, helping a small group of financial bankers, lawyers and accountants to carry the entire economy — but that this is unsustainable in the long-term.

*NOTE 4: Now I understand why luxury brands have run screaming for China.

I think it’s important for the average consumer to hear what Davidowitz is saying about the true state of the American retail sector, especially when he gets into the topic of how the increase in online sales and mobile shopping is going to impact the retail landscape and essentially devastate the commercial real estate market, sending shock waves throughout the rest of the economy: “We’ve got 21 square feet of retail space for every man, woman and child in this country . . . with the explosion of online sales, what happens to all the retail malls and tons of shopping centers that are marginal? . . . Huge changes are going to be taking place in the next five years as people continue to shop online . . . it’s going to be the biggest retail change we’ve ever seen.”

The video is twelve minutes long, but it’s twelve minutes of your time well-spent.

In more positive news, the recent election of so many Republicans to the U.S. House of Representatives has changed the balance of power in the U.S. House, removing Henry Waxman as chair of the House Energy and Commerce Committee, which means that the onerous Safe Cosmetics Act of 2010, which pretty much threatened to destroy the independent and small-business soap, perfume and skin care industry through expensive and alarmingly vague over-regulation, might be forever shelved.

That’s one piece of good news that transcends politics.