[Expert Talk] The business of fashion and retail with Stefaan Le Clair from Berenike Global Fashion Management (Part 2 of 2)

This episode is part two of our industry talk on fashion and retail. And it follows on from our discussion in the previous episode released two weeks ago. In this episode, we looked at the rise of Direct to Consumer brands, and how technology contributed to this trend; the truth surrounding online and offline retail, the challenges faced by department store and then circling back to considerations of franchising and licensing which were first introduced in the last episode. Finally, we conclude our discussion by zooming out to a more general discussion on overall industry trends.

Our expert guest is Stefaan Le Clair, the Managing Director of Berenike Global Fashion Management. Stefaan’s past industry experiences include being the VP of Retail Europe at Espirit Group, the CEO of denim brand Lee Cooper, the General Manager of Hudson’s Bay Benelux which is also the parent company of Saks Fifth Avenue, the CEO of Galerie INNO which is a department store chain in Belgium. 

Key highlights from our conversation

Direct-to-consumer brands: do-it-all Vs excel-at-all
Direct to consumer brands have the ability to communicate directly to end consumers instead via third parties thus it is easier to maintain distinct brand entity. However, when it comes to distribution channels, it is rare to see brands who do-it-all become a specialist in all the channels. So, brands have to strike a fine balance between do-it-all but not excel at all aspects and outsource certain elements to more experienced partners.

Online and offline are doomed to be married forever
The cliché discussion of “is offline going to die in favour of online?” or “is online going to die because of lack of profitability?” is unlikely to yield useful conclusions. What is more important is the wishes of consumers which depend very much on the type of product and the emphasis on convenience.

Certain products such as mid-level premium luxury brands and lingerie work better in offline settings with the involvement of salesperson while for certain product categories, online offer the opportunity of wider product assortment which is difficult to achieve offline. So, it is important for brands and retails to be present in an omni-channel environment with a blend of online and offline channels.

The key to the future of department store is social
Department store is a complex business with very huge surfaces and wide selection of product categories. It has a negative reputation today because it has never changed. The future of department store rests on its ability to recreate the social element of being a gathering place for people, working place, eating place or even a sleeping place – a place where people come to experience something, to have an “event” feeling at certain moments. Successful examples of ILLUM and Selfridges are highlighted.

Licensing and franchising remain a viable business model
It is important to recognise that it is difficult to excel in all aspects of the business. It can be beneficial to find a partner with complementary skillsets. This is especially true for geographical expansion where local network and expertise are crucial. As a brand owner, one needs to ensure that you have a good contract in place to guard and police your brand DNA.

How technology helps fashion and retail companies
The first major role technology plays in advancing fashion and retail companies is on consumer data and insights. The second role it plays is in helping businesses to become more agile and flexible so to respond to ever changing consumer demands. These two roles are most critical when evaluation the usefulness of a technology to fashion and retail brands.

Top 3 sub-segments with high growth potentials are highlighted
Travel retail is the fastest growing sub-segment before Covid-19; however, its development post Covid-19 remains unclear. Sustainability related sub-segment remains popular due to the rising environmental concerns worldwide. And hospitality is going through disruptive changes driven by the search of unique experiences.

Should we be worried of unprofitable retail unicorns?
The drive to provide consumers with a 360-degree experience can stand in the way of profitability in the short-term. However, in the long term, the combination of the right leadership and the right vision together with technology can help to fight a profitable battle just like what we observed in the case of Amazon.

Content at a glance with time-code

(01.34) The rise of Direct to Consumer brands
(05.02) Online vs offline retailing channels: convenience factor, type of products
(15.13) Are department stores dead? What changes do they need to implement to survive in the future?
(22.39) Licensing and franchising as a business model to grow
(28.28) Technology trends or applications in fashion and retail
(33.13) High growth sub-segments within fashion and retail are highlighted - travel and sustainability
(36.55) Unicorn discussion: is it reasonable to valuate retail unicorns as tech unicorns?

Episode links
Berenike Global Fashion Management: https://www.berenike-gfm.com/bio/
ILLUM: https://illum.dk/en