This is issue no. 134 of 180. The last issue had a 40.01% open rate with 8.08% of you going to this article on YETI's pending IPO. Snap, Inc.'s Spectacle site is one to behold.
If you're new to this list, I try to even distribute the daily intelligence between the following categories: data, brand, eCommerce, ad tech, fintech, and media. In some cases, these stories intersect and allow you to deduce the direction of certain trends within spaces that may affect your day to day mission as an executive within these spaces.
MEDIA: Glass was a failure for all the obvious reasons: they were extremely expensive and hard to use, and they were ugly not just aesthetically but also in their ignorance of societal conventions. These problems, though, paled in the face of a much more fundamental issue: what was the point? Oh sure, the theoretical utility of Glass was easy to articulate: see information on the go, easily capture interesting events without pulling out your phone, and ask and answer questions without fumbling around with a touch screen.
BRAND: On her watch, the company has introduced slimmer-fitting clothes, stiletto heels and a new line of athletic wear. Lands’ End has also opened pop-up stores in trendy shopping areas like New York’s Fifth Avenue and SoHo (most recently during Fashion Week), and tried to lend the brand a fashion aura by hiring a senior executive from luxury retailer Saks Fifth Avenue, Joseph Boitano, as chief merchant.
ECOMMERCE: Neiman Marcus, No. 36 in the Internet Retailer 2016 Top 500 Guide, also said it is adding e-commerce experience to its executive ranks. The retail chain hired Carrie Fisher, formerly Fossil Inc.’s chief marketing officer and head of e-commerce, to be its new chief marketing officer. Fisher replaces Wanda Gierhart, who left the retailer earlier this year. Fisher joined Fossil in June 2013. Fossil grew its online sales to an Internet Retailer-estimated $149.6 million last year, up 32.3% from $113.1 million in 2013, when Fisher started with the company.
MEDIA: It may be getting on in age, but emails have still got it, a retail executive said today in a presentation at The Shop.org Digital Summit in Dallas. Four out of five companies plan to invest more money and time in their email marketing campaigns next year, and David Cost, vice president of e–commerce and digital marketing for women, children and teen apparel retailer Rainbow Apparel Co., explained why that might be a good idea.
DATA: Google’s high-profile social network started off strong in June 2011, with a built-in advantage of visibility among most Gmail users. But the social network never managed to siphon activity away from Facebook. By 2014, Google+ underwent a series of leadership changes, followed by a massive redesign of the service. However, these moves failed to substantially enlarge the user base. Though Google+ is still in operation with an audience of about 111 million active users.
ECOMMERCE: The trend is obviously bad news for traditional retailers like Walmart and Target, which have both made big, recent executive changes on their digital teams amid stalling growth in the face of Amazon. But Amazon’s growing dominance is also an obvious problem for Google, which makes a fortune from selling ads alongside product searches. The one potential silver lining for Google: As fewer shoppers go directly to a retailer’s website, these businesses have to find new ways to get in front of shoppers.
ECOMMERCE: Since 2012, grocery delivery startups have generally seen a higher number of deals than meal delivery companies, but those deals were usually smaller. If activity continues at its current pace, 2016 will be the first year grocery delivery receives more funding dollars than meal delivery. This is partially due to inactivity by meal delivery’s largest players: China’s Ele.me and Germany’s Delivery Hero accounted for a significant portion of total funding to meal delivery startups in 2015, but neither has raised so far this year.
ECOMMERCE: Retailers in the US should not only be stocking store shelves and adding employees to their brick-and-mortar locations this holiday season. They also need to make sure their supply and fulfillment centers will be able to keep up with strong online demand in November and December. That’s because US ecommerce sales will jump 17.2% this holiday season, according to eMarketer’s holiday sales preview forecast (eMarketer PRO customers only).
BRAND: The decision to avoid using the Trump name for this new lifestyle brand seems to be a logical one, especially given the fact that multiple reports suggest the name may be hurting Trump’s hotel business. A survey conducted by Skift in May found the Trump name association to be a troublesome one for his hotel business. Out of 1,554 responses, 56.9 percent of respondents said they were less likely to stay in a Trump Hotel because of Donald Trump’s presidential campaign.
MEDIA: Facebook at Work, privately tested by large companies for more than 18 months, will pin its moneymaking ambitions to being as addictive for employees as it is for regular social media consumers. The wider launch of the product, which will look to provide companywide communication tools rather than just team-based chats, will happen within weeks. Facebook at Work includes regular Facebook features like News Feed, Groups, Messenger, Events and Live Video.
BRAND: Under Armour Inc.’s new collection, UAS, is a departure from the company’s athleisure roots, which might not be for everyone. And that’s a good thing. “[W]e believe the critical takeaway is that Under Armour is looking to extend its reputation beyond athletic gear and into your everyday wardrobe,” Nomura analysts wrote in a note published Monday. “…[A]lthough some runway items may draw puzzled looks… in our opinion, the majority of showcased product is not intended to sell en masse anyway.”
DATA: Previous studies have found that some devices — we’re looking at you, Fitbit — can spew out dangerously inaccurate readings, which isn’t great. Accurate or not, it may all be completely irrelevant. New research published in the Journal of the American Medical Association finds that wearable fitness trackers don’t seem all that helpful in helping users lose weight. The study looked at nearly 500 overweight individuals working to lose weight over the course of two years and found that those who used a wearable fitness tracker didn’t fare any better than those who went the traditional route.
Last Word: Why Kit and Ace is Failing
Just this morning, news of Kit and Ace's failures hit Columbus, Ohio. The Vancouver brand's one and only storefront closed down just meters away from where one of the tech fashion industry's pioneers - Mizzen+Main stood in it's early days.
So, what did Kit and Ace do wrong:
I walked into my first Lululemon showroom in 2008 with my wife and Olympic bobsledding gold medalist - Steve Mesler. Considered an elite ambassador, he introduced many in the upscale area of Houston, Texas to the brand. Between 2008 and 2012, Lululemon benefitted from a surge in sport from elite fitness practitioners (though the brand was focused on yoga lovers). The ambassador circuit, both elite and otherwise, was a very powerful conduit for influence marketing. The explosion of CrossFit as a consumer culture amplified the Vancouver brand throughout North America.
In 2012, Reebok (who realized what CrossFit was doing for Lululemon) signed an exclusive licensing deal with the functional fitness company and almost overnight, Lululemon's market cap began to stumble, ultimately peaking in 2013. And of course, Reebok began it's change in fortunes.
This is the Cliff Notes version of things, sure. But as the Kit and Ace brand rolled out, many of the same tactics were employed.
Smaller showrooms, reminiscent of $LULU's U.S. takeover in 2008.
Hiring "artsy, well-connected, cool kids" who have connections with urban promoters. In Lululemon's model, these were fitness instructors.
Expensive clothing, no discounts.
In-store community events.
The product based retailer erred in judgement was five fold.
Chip Wilson has never once acknowledged that the growth of his first company received a 70's skateboard era, Vans-like boost by an unexpected consumer segment. If I recall correctly, he discouraged further adoption.
The shirts were 'tech cashmere' but the 50/50 blends were inferior to existing startups who manufacture technical button downs.
There was a need to wear Lululemon in their early days, the clothing was superior for those who move and sweat. There was no need for Kit and Ace's approach to technical wear.
The rollout was much too fast. And apparel wars are never won by speed; they are won by superiority and longevity.
The gray / white / black tops were so distinctive that matching them with non-K&A apparel was very difficult for early adopters.
Now, I'd be short-sighted to call this a eulogy. It is not, they will be around for a long time but missteps like this are hard to recover from.
As we’ve already covered here at Lean Luxe, even the most ambitious modern luxury firms, Warby Parker and Everlane, to take two examples, are fully focused on building out their North American retail presence first. But even Neil Blumenthal et al understand that too many stores too quickly poses a huge risk. Warby Parker has 37 stores in the US and Toronto to Kit and Ace’s 60 worldwide. (Plus, many of Warby Parker’s are shops within preexisting boutiques, rather than stand alone Warby Parker stores.) Everlane, fanatically focused on online sales, just opened its first location this summer, having been firmly opposed to opening any permanent bricks-and-mortars up to that point. Both Everlane and Warby Parker will celebrate their seventh anniversaries in 2017. Nearly a decade old, they’ve taken a gradual, methodical approach to physical retail. So it’s odd that at just two years old, Kit and Ace has felt the need to do the opposite, especially given the proven power of online sales.