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CK closing its Ready-To-Wear Business

The Phillips-Van Heusen-owned brand won't replace Raf Simons' 205W39NYC ready-to-wear line.

Calvin Klein is closing down its luxury collection business, closing its offices in Milan and making staff redundant in New York, according to a source. Michelle Kessler-Sanders, the president of the 205W39NYC ready-to-wear business, will leave the company in June 2019. Overall, about 100 people, or 1 percent of PVH's global workforce, will be affected.

After Calvin Klein parted ways with chief creative officer Raf Simons at the end of 2018, they said it was rethinking its approach to the luxury market, on a strategy that would “[offer] an unexpected mix of influences and moving at an accelerated pace."

In January, it was announced that the brand would close its 654 Madison Avenue flagship store, which Simons renovated in 2017, in addition to other changes, some of which came to fruition very soon.

The brand’s sales come from their underwear and denim lines, much of which is produced by third-party licensing partners. But chief executive Steve Shiffman still plans to develop what the source called "aspirational" products. The search for a new design director to lead that effort continues, but it's presumed that the designer won’t be as high profile as Simons.

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Gucci has a new Pop-Up Concept

Gucci is introducing a series of global, pop-up stores, designed to create even more reasons for customers to shop across the year. This is especially in regions where luxury brand may not already have a physical outpost. Target destinations over the next year include Chengdu, Sao Paulo, Taipei, Bangkok, Moscow, Mexico City, Dubai and many more across Europe, Latin America, the US, Middle East and Asia Pacific regions.

The Pop-Ups are called “Gucci Pin” and will each be open an average of five weeks. In some cases, shops will open and close over the course of a year in the same city or location, dependent on different occasions. Digital content will play a major role in keeping the customers hooked.

The first shop opened on November 5 in Hong Kong, and will be followed by Fukuoka, Seongnam, Paris and Denver in the first wave of openings throughout the month.

Gucci Chief Executive Marco Bizzarri said that the Gucci Pin stores will allow the brand to reach different consumer segments than it can with its brick and mortar stores. “We are therefore looking at Gucci Pin as a new map for new territories, combining an immersive digital activation to further enhance the physical experience,” he said.

The idea is simple, pop-up shops will feed the growing demand for constant newness, especially among younger consumers buying entry-level price point items plus with Limited edition runs creating a sense of urgency.

This strategy is especially important because Gucci’s sales growth have slowed down this year. The brand saw revenue increase 11 percent on a comparable basis in the third quarter of 2019, compared to 35 percent in the same period the prior year. But Gucci is still on track to reach its goal of €10 billion in annual revenue in the coming years.

The first wave is all about gifts for the holiday season. The second, opening in early 2020, will celebrate the Chinese New Year, later in the year, there will be a “psychedelic” theme, with products designed to reflect the concepts.

Asia is Gucci’s largest and fastest-growing region, so it’s no surprise that many of the first stores to open are in the region.

Looking forward to whats in store for Dubai and the rest of the Middle East.

The Retail Challenge

This article originally appeared on CNBC.

With the boom in e-commerce, there is huge a side effect: More and more goods getting returned, boosting costs for all retailers.

This can be ground shifting for small businesses.

According to a CNBC article, not being able to see an item in person accounts for part of the difference, but consumers also shop differently online than in-store. They may order multiple sizes or colors to try on at home, and then ship or take back what they don't want, with shipping paid for by the retailer, both ways in some cases.

With costs mounting, understanding why shoppers return items and dealing with the logistics is a key issue that retailers are only beginning to tackle. A number of new businesses are sprouting up in the USA to try and wrangle the problem for retailers. These companies say higher rates of online shopping and more lax return policies are factors contributing to the rise of returns. However, there are more options for what to do with the returns, which can help to keep tons of unwanted items out of landfills and save retailers' profit margins.

Average return rates vary by category, but clothing and shoes bought online typically have the highest rates with 30 to 40 percent returned.

Eric Moriarty, vice president of B-Stock Solutions, a liquidation marketplace said as e-commerce becomes a bigger percentage of retail sales, more returns will be coming back.

"In 2018, it will be somewhere in the area of $400 billion worth of inventory ... with $90 [billion] to $95 billion returned post-holiday," he said.

In the next several years, as e-commerce grows globally, "the amount of returns is going to be over a trillion dollars a year," Tobin Moore, CEO and co-founder of reverse logistics technology company Optoro, said.

More lax return policies

Another factor adding to rising returns is more relaxed return policies. As retailers fight for market share in an increasingly competitive industry, return policies are allowing longer windows to bring back items. Also, retailers are often accepting online returns in stores, even if the items were never sold at the store.

According to a Happy Returns survey, nearly three-quarters of Americans say returns are their least favorite part of shopping online, so an easy return system is crucial for retaining shoppers.

More items are returned during and after the holiday season than any other time of year. UPS estimates 1 million returns were made daily during December leading up to Christmas, largely from consumers that shopped early to take advantage of promotions and faster shipping options.

But once the returned goods are back in the hands of a retailer, less than half are resold at full-price, according to Gartner Research. That translates to retailers losing out on 10 percent of sales during the holiday season, a trend that has not improved over the last couple years, and is expected to get worse.

While returns are a big problem for retail, only about 30 percent of the country's largest retailers quantify its full cost and only 23 percent use some kind of technology or software to better manage it, according to Optoro.

In aggregate, "retailers are losing billions and billions of dollars on the way returns are managed," Moore said. "A lot of retailers can add 5 percent to their bottom line by better optimizing the management and resale of their returns."

Where does it all go?

"Many retailers end up throwing away over 25 percent of their returns," Moore said. "Holistically, that ends up being over 5 billion pounds of goods that end up in landfills a year from returns."

He estimates over the next several years that could swell to 10 billion pounds of returns in landfills around the world.

For the 75 percent that doesn't go to a landfill, the condition of the returned item, the timing of when it's returned, and its location are all key factors in determining what comes next. Some merchandise is inspected and immediately restocked. Some has to be sent for refurbishing or repackaging. Other goods go to a liquidation channel where the items are repurchased by a reseller or consumer. There are occasional scenarios where returned goods are taken apart and components are recycled, or even "upcycled," like turning shoes into a racetrack, Moore said.

Return scenarios have gotten more complicated. More relaxed return policies can mean shoppers return items after a season ends, making it hard to sell a winter coat in March, for example.

Plus, the internet offers retailers an "endless aisle." That means many items are sold online only. If those purchases are returned to a store, the retailer will have a few choices: ship it back to a distribution or processing center; try to resell it as a one-off item in the store; liquidate, donate or recycle it or throw it away.

About 70 percent of high-end apparel can typically be restocked and resold, Moore said. If it's a consumer electronics item or home and garden item that was sealed and isn't anymore, or has any data on it, it has to be repackaged, refurbished and wiped of data. Only around 30 percent of those returned items can go back into stock immediately.

Rethinking how returns are handled

According to a spokesperson for Amazon.com, "once we receive a returned product we conduct a thorough inspection to determine if it can be sold to another customer as either 'new' or 'used.' If sellable as new, it goes back on the shelf. If we determine it can be sold as used, the team takes the necessary steps to ensure it is a quality product that customers will be happy with once purchased. We work hard to reduce the amount that goes to liquidation."

Best Buy uses a number of methods to minimize the cost of returns, including selling open box items on its website and hosting a sales event for open box merchandise right after Christmas. The retailer also has a small number of Best Buy Outlets where open box and slightly damaged major appliances are sold.

B-Stock is another channel Best Buy uses to liquidate merchandise.

"Retailers are looking for new ways to make money and find margin," B-Stock's Moriarty said. "There are macro trends making returns increase over time, and there are better mouse traps out there today that make it less costly to handle a return."

B-Stock builds individual online marketplaces for retailers or brands to sell returned, liquidated or excess merchandise in bulk quantities to certified resellers. Moriarty said the volume of inventory sold on its site grew 100 percent from 2017 to 2018. In addition to Best Buy, B-Stock clients include Walmart, Amazon, Macy's, Lowe's, GameStop, and J.C. Penney, among others. While B-Stock offers the option for warehouse storage of merchandise at CH Robinson warehouses throughout the country, B-Stock never takes financial ownership nor logistics control of the inventory being resold.

"Typically, our clients get a 30 to 80 percent price increase from how they used to do it," Moriarty said, even in the online auction website format B-Stock sets up for the retailers. Retailers can restrict where a reseller can sell items. For example, they can require resellers to export the merchandise. Moriarty said much of the inventory is resold on Amazon, eBay or in other small local stores.

Optoro sells software platforms to retailers and brands that identify the best option for maximizing the value or lowering the cost of returned items on a case-by-case basis. Options could include restocking, refurbishing, liquidating, donating or recycling. Its clients include Target, Under Armour, Jet, BJ's Wholesale Club, Staples, and Groupon. Optoro also has its own liquidation channels, Blinq.com, for liquidation resale to consumers, and Bulq.com, for liquidation resale to resellers.

"We can increase a retailer or brand's return recovery amount, in many cases, by 25 percent. If it is items that are not going back in stock, we can double or triple the recovery in some cases," Moore said.

Happy Returns offers technologies and logistics at nearly 300 U.S. locations to allow online purchases to be returned in person when the retailer doesn't have a physical store. Direct-to-consumer brand start-ups like Everlane, Untuckit and Rothy's work with Happy Returns, which has put its so-called return bars in malls, on college campuses and even stores like Sur La Table and Paper Source. Happy Returns packages it up for the shopper, sorts the returns by retailer, then ships in bulk to return hubs less expensively than the postal service offers.

"In aggregate, Happy Returns sees a cost savings upwards of 25 percent for our retailers," said Happy Returns' Sobie. He attributes this to the combination of hard cost savings of its network compared to shipping and the soft savings of lowering customer service inquires.

While there are technologies to reduce returns like 3D body scanning and other fit innovations, "it's not working," Sobie said.

Keeping shoppers happy is harder to quantify, but extremely valuable.

"Returns is a battleground for customers," Moore said. "It's a way to win more customers, to get them coming back and to get data so that you know how to better stock items and better make items for your customers as well."

Versace sold!

Michael Kors ( Capri Holding ) is in the process of buying Italian fashion house Versace for a value of approximately $2.12 billion, including debt, the company announced on Tuesday. That's 2.5 times the brand's current revenue. The primarily cash deal is expected to close in the fourth quarter of 2019.

In a presentation released to investors, Capri Holdings, outlined its plans for Versace, including increasing its global retail footprint from 200 stores to 300, building out e-commerce and expanding men's and women's accessories and footwear.

Under the new organisation, John D Idol will remain chairman and chief executive of Capri Holdings and also chief executive of the Michael Kors brand. Versace chief executive Jonathan Akeroyd will continue on, as will creative director Donatella Versace.

“This is a very exciting moment for Versace,” she said in a statement, adding that her brother Santo and daughter Allegra's stake in Capri "demonstrates our belief in the long-term success of Versace and commitment to this new global fashion luxury group."

“I am proud that Versace remains very strong in both fashion and modern culture. Versace is not only synonymous with its iconic and unmistakable style, but with being inclusive and embracing of diversity, as well as empowering people to express themselves," she said. "Santo, Allegra and I recognise that this next step will allow Versace to reach its full potential."

This will position the accessible the conglomerate, which acquired high-end shoemaker Jimmy Choo in July 2017 for $1.2 billion, to take a bigger slice of the high-end luxury market.

Versace is a world-famous name part of popular culture, but has been struggling to grow its business of similar scale for years. With the brand running losses from the late 1990s to 2011, the family sold a 20 percent stake to Blackstone in 2014 — a deal that valued the fashion house at $1.4 billion.


Top Models of 2017

Some of the other winners included: 


Kaia Gerber - Breakout Star Women

Alton Mason - Breakout Star Men

Cameron Russell - Social Media Star Women

Luka Sabbat - Social Media Star Men

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