Lawrence Lenihan. Office hours by appointment. DESCRIPTION

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1 Next Gen Fashion and Retail MKTG-GB Wednesday 6:00-9:00 PM Fall 2016 Jeffrey A. Carr 802 Tisch, (office hours by appointment but I m pretty available Mon-Thurs.) Phone: (212) jeffrey.carr@stern.nyu.edu Lawrence Lenihan llenihan@stern.nyu.edu Office hours by appointment DESCRIPTION The retail industry will undergo more changes in the next 10 years than it has in the past 100. Driving this change is the Internet as it connects brands directly to customers, changing every element of the traditional distribution channels. In this future, creator-driven brands will be preeminent and the conversation between creator and customer will determine business success. Traditionally, this conversation has been held in a brand s store or on behalf of brands by their retailers and distributors. Now, this conversation is held directly with customers every second of every day through innumerable direct and indirect online and offline channels. At the same time traditional media, primarily magazines (Vogue, Elle, InStyle, etc), are all struggling with these new channels and their role in creating fashion brands. The role of business is straightforward: amplify the connection that the brand has with the customer and multiply the number of connections. Using lectures/discussions, case studies and industry guest speakers, we will explore these changes across the business architecture with a specific focus on brand channel strategy and the changing relationship with third-party channel partners. While the course perspective and case material is brand centric, the traditional retail channel business model will be examined extensively to understand the enormity of the changes facing channel leaders today and their role in the fashion brand of tomorrow. The course is organized around the elements of these new channels to customer and the Amplify/Multiply business architecture. Guest lecturers will come in most weeks to discuss a particular aspect of channel including multi-brand department store, specialty retail as well as vertical mono-brand retail across physical, digital, and alternate venues. The course will include a study of channel economics, known as traditional retail math as part of understanding the relationship between brands and third-party retailers. As part of this learning, the role of full-price vs. constant discount promotions and the accompanying 1

2 economic drivers of product gross margin and operational expenses will be examined in the context of creating the new businesses of tomorrow. OBJECTIVE The goal of the course is to prepare students for a world in which the existing channels of fashion commerce no longer work for new entrants and companies must adapt to succeed. We will review all elements of this new business architecture and groups of students will focus on real-life case studies. VALUE PROPOSITION Upon completion of the course, participants will have a foundation from which to evaluate the channel opportunities and technologies that will drive fashion commerce. LEARNING OUTCOMES Improve your familiarity with the following subjects: Structure of existing and new channel options You will complete a market review of retail players by archetype, complete with understanding of economic drivers including product margins, traditional buying calendars, and key metrics for various channel players. Critical elements of brand formation You should understand key concepts and principles including the connection to the customer, the conversation with that customer, the creation of the Calendar that manages the operations of a business in unison to drive to the needed outcome. Key channel concepts that brands must master We will study and apply the key concepts of this architecture to understand channel strategy from launch through growth phase and how brands compete and win against much larger incumbents with established channel infrastructure. Examples of the successful application of Amplify/Multiply We will study companies where specific channel strategies operating under the Amplify/Multiply architecture have been successful as well with those currently testing and measuring channel effectiveness at different phases of brand building. ASSESSMENT Attendance and Participation: 20% Conceptual Assignment (A1): 15% Analytical Assignment (A2): 15% Final Project (A3): 50% More details on the nature of the assignments, due dates, and other administrative issues will be provided on the first day of class. 2

3 DETAILED SCHEDULE* # Date Topic Notes 1 9/21 Amplify/Multiply: an Overview Creator-driven vs Business-centric Architecture The architecture of the successful brand in 2025 Situational analysis of the Fashion Commerce landscape The Fashion Commerce Taxonomy The Channel Playbook None 2 9/28 Product and Brand: The Role of Channel Brand Strategy and Execution Channel Strategy from launch through growth phase Brand Bible and messaging across channels Product Arcs Channel data into unified design/development process Product Lifecycle Management Tools Tom Patterson, Founder and CEO, Tommy John Read: Warby Parker: Vision of a Good Fashion Brand 3 10/5 The Conversation Customer connection dilution/distortion by channel Calendar as the center of business strategy Wholesale buy calendar and sell-through data Operational Impact of unsynchronized channel data Read: H&M: The Swedish Fashion Discounter in USA 4 10/19 Traditional Retail Channel Unit economics of Retail Math, are they here to stay? Competitive landscape for multi-brand retailers Integration of e-commerce Retail channel IS a brand Customer experience Richard Baker, CEO Hudson Bay Read: SAKS: Shocking the Fashion Industry Supply Chain 5 10/26 Offline and Online Unified messaging Role of wholesale Time-delayed aspecific data vs. real-time data Role of physical stores Yael Aflalo, CEO and Founder of The Reformation Read: What Matters Most in Internet Retailing 3

4 6 11/2 Retailers, Resellers and Distributors Partners vs Gatekeepers Wholesale as brand strategy vs revenue strategy Hayley Barna, CEO & Founder, BirchBox Read: Turning Buzz Into Gold 7 11/9 Channel vs. Energy Celebrity Community Media Kelly Cutrone, Judge America s Next Top Model Read: VOGUE: Defining The Culture of Fashion 8 11/16 Physical Stores Why do they matter? What will they look like? The store of the future Rachel Schectman, CEO of Story Read: The Integrated Store: A Case Study of Multi- Channel Retailing in the UK Fashion Industry 9 11/30 Channel and Pricing Role of price Signals of price Synchronization Read: Risks and Benefits of Selling Luxury Goods Online: Should Chanel, the Icon of Timeless Fashion Open an E-Boutique? 10 12/7 Systems and Infrastructure The technical architecture of the future of commerce Back-end/Front-end How it changes organizations Read: The Problem with Most Fashion Tech Startups 11 12/14 The Channels of tomorrow Convergence of physical, virtual, alternate Activity-based retail Data-driven mobile-based targeting Entertainment, hospitality, media as critical skills Geir Magnussen, Former CTO of AppNexus, Former Chief Architect of Gilt Read: The Future of Retail Clothing: Will UNIGLO Turn the World Japanese? & Why Are We Ruining our Best Young Companies? 4

5 12 12/21 Pulling it All Together: The Brand of 2025 Industry Panel: Morty Singer, CEO of Traub Associates Jeffry Arronson, former CEO of Oscar de la Renta Alexis Maybank, Founder of Gilt Groupe Glen Senk, former CEO of Urban Outfitters Student Project Projects due Course Readings Cases 1. Warby Parker: Vision of a Good Fashion Brand (HBS Case , Revised, September 19, 2012). 2. H&M: The Swedish Fashion Discounter in USA (IBS Case , 2004) 3. The Integrated Store: A Case Study of Multi-Channel Retailing in the UK Fashion Industry (A) (Case no , 2012) 4. SAKS: Shocking the Fashion Industry Supply Chain (Case Reference no. GS86, 2012) 5. Risks and Benefits of Selling Luxury Goods Online: Should Chanel, the Icon of Timeless Fashion Open an E-Boutique? (Case Reference no , 2013) 6. VOGUE: Defining The Culture of Fashion (Case Reference no , 2013) 7. The Future of Retail Clothing: Will UNIGLO Turn the World Japanese? (Case Reference no , 2013) Industry and Academic Articles 1. Lenihan, L.D. (2014) The End of the Billion Dollar Brand from The Business of Fashion. 2. Lenihan, L.D. (2013) The Problem with Most Fashion Tech Startups from The Business of Fashion. 3. Lenihan, L.D. (2013) Why Are We Ruining our Best Young Companies? from The Business of Fashion. 4. Bell, D., J. Choi, and L. Lodish (2012), What Matters Most in Internet Retailing Sloan Management Review. 5. Blum, B. and A. Goldfarb (2006), Does the Internet Defy the Law of Gravity? Journal of International Economics. 6. Dreze, X. and A. Bonfrer (2009), Real-Time Evaluation of Campaign Performance, Marketing Science. 7. Goldfarb, A. and C. Tucker (2011), Online Display Advertising: Targeting and Obtrusiveness, Marketing Science. 8. Goldfarb, A. and C. Tucker (2011), Search Engine Advertising: Channel Substitution When Pricing Ads to Context, Management Science. 9. McKinsey and Co. (2012), Turning Buzz Into Gold. 5