fashion and luxury retail - the next 10 years
TRANSCRIPT
FASHION AND LUXURY RETAIL:THE NEXT 10 YEARS
RESONANCE
We partner with talented brand creators who deeply connect to passionate customers with an incredible and relevant product. Together, we will build the great fashion brands of the future by celebrating their cre-ative design talent and supporting it with successful venture capital company-building experience, deep fashion industry insight, unique manufacturing ex-pertise and an opinionated vision of technology.
Our vision for technology is simple: it will transform the fashion industry and, with our unique insight gained through our member companies, we will build the systems and platforms to power our cre-ators and then hone these systems to drive these changes to the entire fashion ecosystem.
LAWRENCE LENIHAN
Co-Founder and Co-CEO, Resonance
Founder of FirstMark Capital
Chairman, Norisol Ferrari
Board Member:Tommy John
TuckerJCRT
RunthroughBody Labs
Virgin Mega
@LAWRENCELENIHAN@CREATORDRIVEN
Note: Includes Resonance, personal and
FirstMark Investments.
RESONANCE IS A LOT OF EXPERIENCE
BRANDS >
Flow Commerce
MEDIA > SERVICE >
INFRA-STRUCTURE >
RESELLERS >
WHAT FOLLOWS IS OPINION.
But we are betting our money and reputations
on these opinions.
LUXURY AND FASHION WILL CHANGE
[Oxymoronic] Luxury
Brand Loyalty
Business
Marketing
Mass Consumerization
Economies of Scale
Ecommerce & Omnichannel
Retailer as Gatekeeper
Sustainability Marketing
True Luxury
Value
Creators
Connection
Specificity and Intimacy
Economies of Small
Commerce Convergence
Retailer as service provider/partner
Sustainability Accountability & Verifiability
THE NEXT 10 YEARSTHE PAST 10 YEARS
LUXURY
An inessential, desirable item that is expensive or difficult to obtain.
I have it, you don’t!Or better...
Pronunciation: /’l kSH( )rē/e e
[OXYMORONIC] LUXURY
Mass luxury.
Affordable luxury.
Accessible luxury.
IS THIS BAD?
No, if you are honest with yourself that it’s marketing and
positioning.
Yes, if you really think you’re in the luxury
business.
THE FUTURE ISABOUT VALUE
Luxury is a value purchase.
Brand loyalty contingent on brand product value.
“High/low” is proof!
Every brand must be a value brand.
ScarcityUniquenessInability to duplicate or create again.
ConvenienceEasier, Simpler, TimelierLess hassle.Avoidance of unpleasantness.
QualityQuality of Materials.Quality of Construction.
PriceEconomicsValue based on price/performance.Cheaper, better, faster.
ExperienceThe Emotion.The Feeling.The Bond.The Belonging.The Service.
DETERMINANTS OF VALUE
BUSINESS, CREATORS & HERITAGE
Luxury is about creation.
Creation is discontinuity. Business is trend. There is a difference.
Business exists for Creators. Not the reverse.
Heritage is about the spirit and embodied value of a brand’s original creator.
Craftsmen create heritage.Age does not create heritage.
CREATORS CREATE HERITAGE. Heritage of tomorrow is from the creator driven brands of today.
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CREATOR DRIVEN
Marketing driven
Data driven
Margin driven
Accountant driven
Lawyer driven
Growth driven
IN THE FUTURE, THE CREATOR
IS NOT A WIDGET
IN BUSINESS, BUSINESS
IS A WIDGET IN CREATION.
Talent driven
Vision driven
Excitement driven
Energy driven
Experiential driven
BUSINESS DRIVEN v
s
It’s not an ad campaign.
It’s not Rihanna, Kim, or anyone else.
It’s not a $50MM flagship.
It is your direct relationship with your customer.It’s bi-directional.It’s product. It’s experience and engagement.It respects a customer’s intelligence.It celebrates a customer’s loyalty.
A LUXURY BRAND IS A CONNECTION
IN THE FUTURE, THE WORLD WILL BE ABOUT SMALLER
AND MORE SPECIFIC.
THE END OF THE BILLION DOLLAR BRAND
By definition, market sub-segments are smaller than market segments!
As a brand tries to broaden its reach away from its core customer, it is attacked by
more-focused, even “nichier” competitors
By trying to mean something to more people, the luxury brand
means less to anyone.
Divergence Of Customer Profile Away From Core
Core Customer Profile
Out-niched by better-focused new entrant!
ECONOMIES OF SMALL
The shift from large mega-brands to small, specific brands will disrupt every facet of the fashion industry.
Value will be created in small, not big. Being big will shift from advantage to disadvantage.
Economies of Small are driven by speed, technology, data, deep knowledge and precise execution from the beginning of a brand’s existence.
In Economies of Scale, the race to big masks broken processes that can be fixed and optimized at scale. Economies of Small optimizes business processes from the beginning. The age of “Mini Zaras”.
In Economies of Scale, the key unit of measure is “%”. In Economies of Small, the key unit of measure is “x”.
DEFINITION:
The capture of the economic advantages of being big by companies who are small.
COMMERCE CONVERGENCE
OMNICHANNELSeamless integration across different channels.
Stores as fulfillment centers.Schizophrenic customer and brand identity.
COMMERCE CONVERGENCE Seamless customer relationship.
Stores as energy points.Singular customer and brand identities.
BRAND
CUSTOMER
BRAND STORE
WHOLESALE
ECOMM
SOCIAL
MOBILE
AGGREGATOR
BRAND
CUSTOMER
CONNECTION
RETAILERS IN THE FUTURE
The abuse will end. Perhaps after big retail ends.
A re-examination of purpose: gatekeeper or service provider?
Address disconnect between value added and value taken.
Biggest opportunity: move from an income statement business to a balance sheet business.
The era of “Plausible Deniability” ends.
Talking the Talk will end. The Walking starts. (The Pushing too!)
Technology will drive accountability and verifiability.
Not a feature, not a strategy – sustainability must be inherent in every aspect and action of every brand.
Government mandates AND social mandates.
Sustainability requires real commitment and real infrastructure.
REAL SUSTAINABILITY ARRIVES
The future will be increasingly complex.
The future will be increasingly fast.
The mix of talent needed to succeed will be different.
The technology to enable these changes does not really exist.
SO, SMALL BRANDS ARE THE FUTURE, BUT…
VC backers don’t understand retail.
Retail backers don’t understand technology and how the industry will fundamentally change.
FUTURE CORPORATE GIANTS
Will embrace the shift from Economies of Scale to Economies of Small.
Realize that success will not be driven by shared overhead/back office. Success driven by shared data, insight, capability, technology combined with capital and the ability to leverage a vast electronic and physical infrastructure.
Can manage hundreds of brands.
Will not be afraid to harvest brands because they are always planting new ones and all infrastructure and people can be repurposed easily and quickly.
Key metrics in the future:• Cost of Failure and Time to Failure.• Multiple of invested dollars.
10 PREDICTIONS
“Flash” brands. Here today, gone tomorrow.
The words “Ecommerce” and “Omnichannel” leave our vocabulary.
“Mass customization” does too because it becomes ubiquitous (finally).
Mass limited editions and dynamic collaborations means scarcity is no longer the purview of luxury.
Golden age of supply chain driven by technology innovation leads to production adjacent to consumption.
Demise of big retailers.
Rebirth of big retailers as service providers and brand platforms.
Highest Luxury dominated by niche brands.
Today’s luxury giants struggle, contract, re-focus then succeed (but at the loss of billions in sales).
Economies of small: new corporate giants that manage and drive hundreds of brands.
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