Luxury Comes to Harvard
On March 28th, 2007, over 275 participants gathered to hear a diverse set of perspectives on topics ranging from online retailing to the customer experience during the 3rd Annual Retail and Luxury Goods Conference.
With gift bags filled with goodies from sponsors such as Elie Tahari, J. Crew, and Bliss, retail and luxury enthusiasts eagerly filled Spangler auditorium to hear the keynote speech of Caryn Lerner, President and CEO of Holt Renfrew & Co., Canada’s answer to Neiman Marcus.
Lerner began, “Some trends are hit or miss, but a Harvard degree looks good on anybody.” As she chronicled her career, Lerner credited her father for always pushing her towards a path of excellence and as a major contributor to her success in the world of business. Beginning her career as a struggling actress, she eschewed a position at Yale Law in order to take on a role in the executive training program at Bloomingdale’s, where she spent the next ten years of her career. She worked up organizations such as QVC and Escada USA, and took a calculated risk when she recently uprooted her family to move to Canada to take on new successes at Holt Renfrew. Lerner has led important changes in re-branding the franchise by putting it at the forefront of fashion by mixing established and emerging brands and improving customer experience through an extensive $60 million re-modeling of their stores. Questions from the audience touched on important points from green initiatives in the retail industry, which is a concern on many retailer’s radars, to how to provide compelling incentives for employees.
“We focused on expanding the panels this year to shed some light on the broad spectrum of management issues that affect the retail and luxury goods industries,” said Alexis DePree of the Retail and Apparel Club. With over 27 speakers and panels on Online Retailing, Private Equity and Retail, The Customer Experience, Luxury Brands, Brand Reinvention and Turnaround, and Beauty and Fragrance, Aldrich was bustling with activity.
Gail Zauder of elixirAdvisors moderated the panel on private equity, which offered an investor’s perspective of the retail sector. Discussing the current resurgence of private equity investment in retail, Colin Welch, Head of European Investment Banking at Lehman Brothers, emphasized that retail is the one area of the economy where you can track your results every week, making it a challenging environment in which to operate. John Tudor, Principal at Bain Capital remarked that private equity investors look for industries that have stable cash flow and due to factors such as the sustained period of consumption growth in the US in recent years, fast and efficient sourcing from China, and the increased use of technology in managing inventory has transformed the industry from a volatile cash flow sector to a place for attractive investment.
The Luxury Goods panel touched on a variety of different topics, such as the definition of luxury, the most commercially successful luxury brand, and an in-depth evaluation the concept of mass marketers expanding by partnering with luxury designers. While Olivier Cardon, President of Roche Bobois North America was skeptical of such agreements, citing the over-licensing of certain luxury brands in the 70s and 80s, such as Pierre Cardin, others such as Imran Amed, Founder and CEO of Byesse, a retail investment firm, cited successful collaborations between parties such as Viktor & Rolfe and H&M to show how both brands can benefit. Founder and CEO Peter Som offered an entrepreneur’s perspective on the debate by observing that the market is over-saturated with the “high-low” phenomenon and remarked that while it was successful for forerunner Isaac Mizrahi with Target, it is no longer a way to differentiate a brand. Instead, he noted, there are other complementary partnerships that can help to build a brand such as a NYC luxury condo project he recently completed.
Another topic of controversy centered on how to harness the power of “Web 2.0” to benefit the luxury industry. Ahmed, also the author of a blog on fashion, explained that many consumer buying decisions are being made on the internet, and as a result, luxury retailers should have a stronger web presence. However, Roberto Vedovetto, Chairman of European Luxury Goods at Lehman Brothers, said although there have been success stories, such as that of online retailer, net-a-porter, it is still too soon to tell whether the web will be a strong force in the luxury goods market.
In the panel on brand reinvention, Margot Brunelle, VP of Brand Marketing and Public Relations at J. Crew, spoke of her company’s strategy to focus on the “price-quality relationship” by obtaining materials from the best sources, such as cashmere from the Loro Piana mills and Italian leather for J. Crew accessories. Yonni Mrejen, VP of Retail operations at Lacoste, summed up his firm’s strategy as looking beyond the “crocodile” and trying to re-position the brand as more of a lifestyle brand that encompasses a wider spectrum of ready-to-wear and accessories. Kimberly Jetnil, VP of Wholesale Sales at Escada USA, said that their approach is to have 70% of their offerings reserved to appeal to their core audience of loyal customers while 30% is devoted to attracting new potential customers that could become loyal customers in 10-15 years.
Over lunch and chocolate mousse martinis in the Williams Room, the keynote panel, consisting of executives from TJX Companies, Loro Piana, and Neiman Marcus Direct, touched on job opportunities for MBA graduates in the retail sector. When asked where MBA graduates should start in order to launch a successful career in retail, many of the panelists agreed that it is important to begin at the Assistant Buyer level, since the retail industry requires one to start at the bottom in order to get to the top. Miguel Simoes (NB) observed, “I thought it was interesting that they said that people need to adjust their career expectations if they want to fit the retail industry. Perhaps they should think of adjusting theirs regarding who they can aspire to recruit.”
Courtney Shaver (Partner NE) said that “Overall, I thought it was a really enriching conference. It made me think about brands in a totally different way and I liked that panelists were not afraid to disagree.”