Fashion Consort News Bytes

LVMH announced this week that their plan to buy Tiffany & Co for $16.2 billion dollars is now off. Tiffany’s responded with a lawsuit. Stocks fell for both companies in the aftermath, with Tiffany’s bearing the brunt of an 11% decrease.  While there are many different ways to break down this news, as it would’ve been the biggest takeover in fashion history, the fact that LVMH is blaming this both on Tiffany’s handling of Covid-19, as well as political instability between France and the US, is an important perspective to consider. First, Covid-19. America still struggles to get a handle on the pandemic. And without a national-level plan, the virus is moving from one location to another. This has made it very difficult for national retailers to develop a comprehensive plan. Instead, companies like Tiffany’s, are left to deal with issues on a geographic level. With states and even cities having their own laws and ordinances around containing the virus, retailers are forced to create more localized plans which draw attention away from more top down leadership and strategy. The impact on the bottom line is real—29% decrease in net profit in the case of Tiffany & Co. But this is not fully the responsibility of Tiffany’s. To blame them is to create a straw man. Second, political instability. Donald Trump announced 25% tariffs on French luxury goods in the spring, a tit for tat political maneuver for greater political purposes. In fact, the tariffs are a direct retaliation against French President, Emmanuel Macron’s taxes on Silicon Valley tech companies. While this is nothing new in politics, targeting luxury goods, and the luxury consumer, is rare, especially during a pandemic. But, from a less nuanced perspective, it’s striking against France’s largest international conglomerates, LVMH and The Kering Group. And these tariffs are completely out of Tiffany’s control. Now, that doesn’t mean that Bernard Arnault, president of LVMH, doesn’t have two very legitimate reasons to pull out of the deal. In fact, it is important for him to protect his shareholders, and the companies under the LVMH umbrella. However, it is interesting that Arnault is putting the blame on issues largely outside of Tiffany’s control. And what’s more, he is using the French government as the scapegoat. This isn’t helped by Arnault’s insider connections in the French government, which suggests something more insidious. This example of Tiffany’s is playing out in myriad ways across all levels of fashion retail as well as in other sectors. It’s a game of shifting blame and uncertainty—and underlies the need to establish a new balance between government, society and business, on a global level—all accelerated by the pandemic. How the Tiffany & Co. drama plays out, could define what this balance looks like in the near future. fashionconsort.com @fashionconsortagency

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Over the past twenty years, consumer-based businesses have had to contend with a major push towards digitization, and to find the balance between in-person and online transactions and experiences, with customers driving the overall experience. Omni-channel, UX (user experience) and CX (customer experience) have emerged as guiding principles for businesses, in order to stay competitive in a fast-changing marketplace. 

And yet, this shift has gone largely unnoticed by higher education institutions where a physical, in-person experience reigns supreme, and a thoughtful online experience is still an afterthought to administrators, or at best, a potential new profit generator on the side. 

To be fair, there was very little reason for administrators to take notice—nor professors—because an in-person education was still what students wanted and fought for. And limited physical space, meant universities could turn away students and hike up prices. 

However, in the past few years, US demographics have shifted, creating too much supply of universities in the market and not enough demand. For schools not in the higher echelons, such as Harvard and Stanford, conversations began to shift to reaching new students. For many, this meant a focus on international students from emerging economies such as Korea, then China. These students largely pay cash for their educations—as federal financial aid is not available to them—and were a big boon to schools. They also served to obfuscate the massive shifts happening domestically, leaving schools woefully unprepared for a crisis.  

Covid-19 struck in March and changed the equation immediately, forcing schools to digitize with no long-term plan in place, no real strategy. The issue accelerated when schools realized that fall was going to stay online. And beyond simply shifting content and learning to online, there was a realization that a whole new Student Experience (SX) had to be considered. For example, how do students engage in learning at home with other family members around? How do we ensure that all students have a personal computer and WiFi connection? What about time zones? How do we facilitate internships on a global scale, with disparity in which companies that are open to business, or closed? How do we create a school community? 

During this period of profound change, academic institutions that take the time to truly understand the needs of their students, and faculty, whether they are working or learning from home or on campus, will be in a better position post-pandemic. These institutions have much to learn from consumer-based businesses—their trials and tribulations—when it comes to a more omni-channel, personalized approach.

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Over 50% of American universities are not opening their physical campuses this fall due to the Covid-19 pandemic. Over the summer, college administrators and faculty have been working hard to move their classes online. It’s a monumental and expensive task to digitize content that has always been part of a live classroom setting, whether it be lectures or studios, especially in such a short amount of time and with very little overall precedent or strategy. After all, what works in a live classroom doesn’t necessarily work online. For example, in a physical classroom a professor is able to “read the room” and adapt a lecture to keep students engaged over the course of 1-2 hours, with questions and break-out sessions. Most teaching is done in the classroom, and students are then expected to synthesize information outside of the classroom. Online, classes are mostly pre-produced in modules that consider every aspect of the “student experience.” For example, a lecture online should be developed more like a short 8 to 10-minute films, with a strong narrative arc, supporting images and thoughtful editing. These lectures are then punctuated by self-paced quizzes, assignments or readings, each building on one another. Inherently, successful online learning relies on what’s called a “flipped classroom” model wherein students engage asynchronously with content, whether it be lectures, readings, podcasts, or videos on their time, and then come together with the instructor and classmates in synchronous sessions to discuss and synthesize information. So, universities that are simply “cutting and pasting” the physical experience to online are really just teaching remotely. And while this still takes time and money, it’s completely understandable why students, and their parents, are not willing to pay the same tuition for this experience as opposed to the full, physical experience. It’s second-rate    at best and puts the onus of the experience on the instructor, many of whom have no experience teaching online. For universities that are developing and offering true, immersive online courses, the equation is much different, and will take time, expertise and financial investment. In fact, these types of courses will potentially provide more consistent, high quality learning to students, allowing instructors to focus less on delivering content and more on mentoring and engaging one-on-one with students.  And truly forward-thinking institutions, will begin to think less in terms of online and offline, and more in terms of a hybrid—or omni-channel learning experience—to provide students with much more thoughtful learning touch points across all modalities that can ensure a more flexible and personalized educational experience.

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Over the past 3-5 years, fashion retail has been going through what’s been coined “The Retail Apocalypse.” Long-held truths and traditions that had served retailers for over a hundred years no longer made sense, or needed to be tweaked, to integrate with online shopping, and overall digital technologies that have led to greater access to brands globally. In short, technology was facilitating supply in a world where demand hasn’t shifted—at least demographically speaking. Yes, fast fashion retailers, were able to convince shoppers to buy more, but even that has its limits. And now, with the Covid-19 pandemic, the apocalypse is no longer metaphorical. It is real, and the consequences of not fully shifting to a digital-focused retail operation is forcing companies to shift focus immediately or go out of business. Those companies that have the funds and expertise to make this shift will make it to the other side of the pandemic intact.  There are many lessons to be learned from retail in other industries. In particular, higher education. In many ways, fashion retail and higher education are quite alike. They rely heavily on physical service, experience and community. The sum of these three elements is a brand name—that carries social currency, and allows fashion brands and schools, in equal measure, to increase their prices, far beyond cost.  Both industries have engaged in building digital platforms, catering to a new generation of customers and expanding their reach and profits. But in both cases, the shift to online was largely for “looks” —to be seen as technologically progressive. Behind-the-scenes was something altogether different. Online shopping and online learning are largely misunderstood and therefore underfunded and understaffed. And the actual technologies driving their online activities are outdated. In both cases, the physical and online experience have been kept separate. Fashion companies hired “online staff” and universities hired “online instructors” —often second-class citizens. And yes, while there are some positive examples of collaboration and integration between the two, these are not the norm. In large part, this is due to executive leadership, that doesn’t fully understand online modalities, especially in terms of how it is now driving the physical experience. full integration with a physical experience. What’s more, they are not part of the generation of customers or students, who grew up in a digital world and who expect a fully connected, integrated, hybrid experience. Higher education is now forced to face head-on the online revolution that is completely re-shaping all learning modalities. And just like fashion retail, this is going to require a shift in hiring and staffing, building new expertise, a updated operational strategies. Except for the special few boutique schools—that are more in line with Hermes than Zara, higher education is now poised for a revolution, not an evolution. There is no simply no time for the latter. fashionconsort.com @fashionconsortagency

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The Covid-19 pandemic has had an outsized effect on fashion retail. Almost overnight, retailers were forced to re-focus most of their business online. Up until that point, total online sales only accounted for approximately 10-20% of most retailers’ overall sales.  This doesn’t mean that the remaining 80-90% of business was done in brick & mortar—it was likely a conglomeration of many channels or layers of channels. And this omni-channel approach mitigated risk in any one channel, especially e-commerce. But, all of the sudden, online was the only way customers could shop, and had to be everything to everyone. And while e-commerce, and digital engagement overall, has largely driven retail innovation in the past 20 years, not all multi-channel organizations had taken the time, or invested the money needed to fully optimize or take advantage of online as a sales channel. They didn’t fully understand that digital shopping, in effect, changes how we shop in general, or even how we engage with brands. In today’s world, there are myriad customer/brand touch points—and each channel has strengths and weaknesses to consider when considering the customer journey. Those brands that weren’t prepared to move expressly online, or brands who hadn’t considered this more complex approach to the client experience, were left exposed to the pandemic. A slew of bankruptcies have already riddled the marketplace, and will continue to do so, as the pandemic persists. With sales at an all-time low, there isn’t much time or cash to turn a business around. In many cases, this an accelerated “right sizing” of the market—something that would’ve happened over a longer period of time anyway. Neiman Marcus, Lord & Taylor, The Men’s Warehouse, J.Crew—they were all struggling long before March 2020.  But this is also starting to have an effect on brands who are in a stronger position. In the short-term future, these fashion retailers must focus on digital retailing as the key entry point for all omni-channel retailing operations, and then innovate how other channels—especially brick and mortar—support online. Re-thinking what stores are—whether it’s their footprint, or their service offering—will need to be multi-dimensional, localized and thoughtful. 

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Luxury fashion retailers have long relied on their storied histories to buoy themselves through times of trouble. In a sense, they have become too big, or at least too important to fail. And, we as customers, given their “importance to our social identities” are willing to give these luxury brands much more room to fail and recover. It’s something that the likes of Bernard Arnault or Francois Pinault, the CEOs of LVMH and The Kering Group respectively, understand unequivocally. In fact, it’s what drives their “portfolio” approach to the luxury business. When Gucci is “in” then it doesn’t matter so much if YSL is “out.” And in some cases, there have been brands such as Alexander McQueen that at one point was bleeding money, but was kept in the portfolio for prestige. McQueen’s extraordinary and extravagant runway shows served as a counterweight to more wearable, sellable labels. This portfolio approach has also meant that luxury brands have always had some wiggle room to be more creative, and not so tied to retail sales, or shareholder demands. This is indeed a positive, in a fashion economy that requires year-to-year sales growth. However, from a more negative point of view, it has hidden some of the problems that some luxury labels have contended with—from high turnover of creative directors, to low sales, and even the ramifications of major public communication fiascos. In the context of today’s culture wars, fashion luxury brands, have managed to put “foot in mouth” an astounding amount of times, and still manage to come through largely unscathed. There are many examples: Prada and Gucci’s blackface representations Dolce & Gabbana’s outright racist and anti-LGBTQ statements, Marni’s tone-deaf and culturally appropriated ad campaign, Jacquemus’ performative use of black models notwithstanding a mostly white organization, or Burberry’s noose on the runway… Customers will complain on social media, even like Diet Prada’s scathing posts…but then they continue to share that same content and shop these luxury brands notwithstanding. As Dior’s president Pietro Beccari stated, no matter the culture conversation, or the pandemic, “we have 20 million followers to feed on Instagram".” And why not, the repercussions are not there. And again, largely hidden within the portfolio system. But in an age where the rising consumer is demanding more authenticity and transparency, will luxury brands still get a way with this? Will they eventually meet the wrath of “cancel culture?” Will they be able to claim authenticity while continue to still build their brands on appropriated culture? On the backs of those who cannot even afford their products? After all, luxury fashion is a luxury—that can be satiated elsewhere. 

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[Joshua] Organizations are struggling to find ways to engage in authentic conversations with their employees and their customers. Often, they resort to long-winded emails, or written public statements, that are meant to “cover all angles” in one fell swoop. At best, these attempts go unread; at worst, they are too simplistic, or too full of legalese, and show a lack of authenticity. In an age where employees and customers expect transparency, especially around shared mission and values, these forms of communication are not optimal. The most effective way to communicate is in person, face to face, eye to eye, where intent and action are more nuanced and more empathic. This has always been a struggle for companies with far-flung reach, and this issue has only amplified during the Covid-19 pandemic, where employees are less likely to be together. And this is likely to be our new collective reality, far beyond the current crisis. So, what should organizations do? There is no one clear approach, however brands should be looking for platforms that provide more intimacy. Already, Zoom has replaced the traditional phone call, because it is a visual medium. Another emerging modality is podcasts—whether they’re specifically for employees, customers, or both. Because they are typically listened to while driving, cleaning, working out or even relaxing, they create a more intimate space to share ideas and personal experiences, discuss complex concepts and disseminate information, all while building community. Here’s Phil, a Fashion Consort associate, and podcast development expert: [Phil] I spent a lot of my career working in IT and Technology. And while I knew I was building systems that were supporting important work at the companies I worked for, I had very little connection to that work, and the people that were using the tools I was creating. Without connecting to the larger organizational community, I felt left out, and ultimately, I burned out. [Joshua] Podcasts are typically delivered by subscription, via smart phone, completely disconnected from emails, and other forms of communication that are characteristically more work and task related. And, because they are so focused on the human voice—they can be a much less stressful way to communicate. Here’s Phil again: [Phil] I left the tech world, and then soon thereafter started a podcast that focused on the intersection of the fashion and LGBTQ communities. For me, it was a passion project, a disconnect from corporate life. But it has since made clear to me how powerful the podcast medium is! I am now working with clients, small and large, to connect employees and customers in more meaningful and human-centric ways, in support of their values, all through podcasting! [Joshua] For more information on how to incorporate podcasts in your organization, I recommend reading Phil’s article, “Podcasts, A Corporate Opportunity” which can be found on the Fashion Consort website. Just click on News. Also, be sure to listen to Phil’s podcast, “Transition of Style,” available wherever you listen to your favorite podcasts. fashionconsort.com @fashionconsortagency

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Fashion brands are struggling to engage in meaningful and authentic conversations around the Covid-19 pandemic, the environment and the Black Lives Matter movement. Even with the best of intentions, written statements in the form of press releases and social media posts, lack authenticity. In many cases, their words and images are performative, void of any true action. In other cases, they expose white, patriarchal privilege, inherent bias and a past full of mismanagement, inequity and even racism. Fashion brands find themselves in a particularly precarious position as an industry that is both an artistic expression and a consumer product. It is both form and function. This tension has always existed, but not so tenuously as in this moment; ironically, fashion is now fully exposed. Luxury fashion brands are especially fraught, their refined designs, and the rarefied worlds created around them, are meant only for an exclusive few. It’s this exclusivity that drives up prices, exponentially over the years. And as consumers are demanding more transparency from fashion brands, they are also realizing the extent to which they are paying to create this world of exclusivity. Quality, being as subjective as it is, is particularly out-of-balance when it comes to luxury products, as the cost of goods is so drastically different than the retail price. With this in mind then, what genuine bonafides do these brands even have to speak about social issues at all? Wobbly at best. And yet, this shouldn’t, nor can it be, an excuse. Fashion after all is not inherently evil, it is merely a manifestation of our social values at any given time; the zeitgeist. And since these values are changing, right now in cataclysmic ways, so must fashion. This means seismic shifts in how fashion does business—a categorical house cleaning from the cotton fields to stores and to the landfills, that rethinks sustainability from an environmental and human perspective. This will take an immense amount of time and effort. So, instead of spending energy on empty promises, crying in guilt, or being defensive…look inward and start systematically rebuilding a new fashion industry. There is a whole generation that is ready to embrace a more diverse, more just, more inclusive fashion industry. fashionconsort.com @fashionconsortagency

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We are at a tipping point in our nation. More than ever, it is clear that our systems are inherently racist, built by, built for and fully empowering white people to the disadvantage of people of color, most specifically black Americans. This systemic racism, often invisible, has ensured consistent lack of access to equal education, jobs, equal pay, homes and business capital for black people. It has led to higher rates of police brutality, incarceration and even death. George Floyd is just one of many in these past few months alone that has been brutally murdered for simply being black. We must now look inward, in our communities and our businesses, in our institutions of learning and governance to change the system, to right those wrongs. It will be a painful process, and one that will require a great amount of self reflection and vulnerability. But we must rise to the occasion, especially if we are in roles of leadership. For white people this absolutely means using our white privilege to provide that same privilege to everyone, no matter the color of their skin. For me, this means rethinking how and what I teach—to go beyond our euro-centric fashion system. It means advocating for more parity in the fashion system, an industry that is primarily led by white males, by facilitating training and challenging broken systems—systems that favor white hires, white promotion and therefore white leadership; systems that commodify black culture, but but don’t profit black people. It also means putting my money where my mouth is when it comes to my buying power, beyond simply calling companies out and then moving on once they’ve posted a press release and apology. That’s not good enough and won’t lead to real change. These issues are difficult, but must be addressed now. In March 2020, Fashion Consort began production of “Retail Revolution” a podcast that engages experts in discussions about fashion retail. Our focus was on the fast changing world of fashion retail, especially during the pandemic. Our goal was to provide a space to consider a new way forward for retail, that values authenticity and innovation. And now, this conversation extends far beyond the pandemic, to the revolution that must take place in the fashion industry around issues of racial justice, equity, diversity and inclusion. Today, as part of News Bytes, we are sharing a special episode of “Retail Revolution” that begins to tackle these issues. We hope you’ll join us for this 40-minute conversation, and then share your own voice. Learn more: www.fashionconsort.com Follow us: @fashionconsortagency

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The Covid-19 pandemic has forced much of the world’s white-collar workforce to work from home. Early on, companies scrambled to find ways to support remote employees and to develop new workflows that incorporated everything from Zoom meeting protocol to digital office hours. For many employees and employers, this shift to “work from home” has been an ongoing learning process, full of trial and error; a re-evaluation of long-held traditions around efficiency and productivity, and the thin line between home life and the office. While companies and employees continue to evaluate best practices, it seems that Americans are generally positive about working from home. According to Zapier: 65% feel their productivity has increased, 80% say they can better manage interruptions from co-workers, 77% say they’re finding new times to be productive outside of the normal 9-5 hour work day, and 80% enjoy being able to see their family during the workday. So, considering these statistics, what will work look like as stay-at-home orders are lifted? Will Americans be ready to return to the office? It’s likely a yes and no situation, largely dependent on how a company approaches the situation. Organizations that rely heavily on in-person work environments will need to communicate these needs and expectations clearly, and then provide proof that they are doing everything within their power to ensure the safety and wellbeing of their employees. This also puts the onus on the organization to prove that working in-person is necessary and not due to intransigent thinking. After all, employees are now more aware than ever that working remotely is possible. Organizations that are unclear in their communications, even if they are generally open to remote working arrangements, will likely see employees err on the side of returning to the office notwithstanding health concerns. This lack of communication leads to inconsistencies from one manager to the next and creates fear and mistrust among employees. What’s more, so much of American office culture centers around “being seen” as proof of value to the company, whether that’s working long hours or skipping vacations, that unless companies change this intrinsic culture, employees will certainly fall back into old habits, regardless of inefficiencies. Finally, organizations that are supportive of a more remote or hybrid work arrangement, and communicate expectations to employees clearly and concisely, will likely see employees take advantage of the opportunity, without fear of discrimination. This approach will need to consider each role and department individually, recognizing that there is probably not a one-size-fits-all solution. This transparency ensures employees will have room to make decisions about their health and comfort without recrimination, while still allowing them to be successful in their jobs. In conclusion, it’s in a company’s best interest to develop a clear plan now to address employee expectations as the economy reopens. And if this plan includes a flexible or hybrid approach between the office and home, it should include assurances that there will be no discrimination between those who work at the office versus those who work from home, if employees are meeting their goals and objectives. This might also be the opportune time for companies to tackle some of the bigger issues that have plagued them, including gender and race inequities, increasing commute times, lack of sufficient and affordable office space and overall work/life balance. 

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