When it comes to deal making, 2017 may be the year that the footwear and the apparel giants start to raise the stakes and send a message to the rest of the industry that business will never be the same again. Internet competition and an ever changing consumer landscape are sending even the best fashion firms to the table at a dizzying pace to strengthen their own brands. Is this a good thing for the fashion world and even more important the consumers?
In the past several months, several brands have changed hands with Caleres buying out Allen Edmonds, Marc Fisher purchased Easy Spirit and Steve Madden purchased Schwartz & Benjamin early this year. In an attempt to secure an even stronger foothold as they stave off competition from giants such as Amazon, Walmart has been picking up digital companies such as Jet.com, ShoeBuy and Moosejaw and even a large presence in the fashion world such as Kate Spade has been rumored as being up for sale and fashion giant Michael Kors and Coach has been mentioned as possible suitors for the well known company.
Do giants like these, who both have a huge presence in the retail world, have to look for ways to improve in the e-commerce world, and in the case of Michael Kors, does purchasing Kate Spade help in either or both areas. Does this purchase help keep the Kors brand as a luxury giant? Apparel and accessories is now the #1 category for digital commerce, surpassing computer hardware for the first time last year. Does Kate Spade help Michael Kors at all in this area?
Kate Spade was once a part of Fifth & Pacific Cos., which had formerly been called Liz Claiborne. Kate Spade became the shining star of the company, while the other brands stumbled. These other brands were then sold off by Liz Claiborne, including Juicy Couture, until the company was just left with Kate Spade. In addition to its own retail stores, Kate Spade’s brands, which also includes men’s label Jack Spade, are sold in department stores such as Saks Fifth Avenue and Nordstrom. The company also has outlet stores, where some of its merchandise is sold at reduced prices. Since the Fifth & Pacific company was re-branded as Kate Spade, after the sell-off of its other brands, its sale has been a topic of industry speculation. The brand has instead become a lifestyle brand, selling everything from apparel to home goods, and has plans to quadruple its revenue to $4 billion annually.
While undoubtedly a fashion giant, Michael Kors has had some ups and downs dealing with the ever-changing world of retail and the penchant for retailers to discount everything. Does the possibility of the purchase of Kate Spade help solidify the retail presence and bolster there e-commerce footprint? It seems to me that the Kors presence is already so large in the women’s side of fashion and accessories that potential growth may be slower and smaller on its own and adding a new growth driver, such as Kate Spade, can only help. As a consumer, I can only imagine how much growth both lines can achieve and how many new and exciting creations can come from such an acquisition.
I think that from a Michael Kors Co. perspective, it really makes a lot of sense. They add a new line and expand their retail and online presence and possibly new ideas for each others line(s). This obviously is a plus for consumers, as it gives them more offerings to choose from at different price points and from a retail or an online preference. Is this the directions other houses may choose to go? Is the creation of a “super house” a good thing? I believe that it is the direction that many will go in as they each strive to be competitive in the world of fashion.