Latest / Financial Survival Network / The Future of the Luxury Retail Sector- Carl Gould #6103

Transcript

The Future of the Luxury Retail Sector- Carl Gould #6103 · Financial Survival Network

0:00
Well, they have to make it truly luxury. This is what killed Joseph
0:03
a bank. If you a call. When Men's Warehouse bought them, they
0:06
started to discount. They got on that slippery slope and they admitted that they
0:10
killed a luxury brain. You know people are smart shoppers. Now you need
0:14
to really have luxury. You need to really do luxury, and you know
0:20
you need to protect it by not discounting. You're listening to Carrie Let's's Financial
0:25
Survival Network where you get valuable information. You just can't find anywhere else to
0:30
thrive in today's trying times. You need the Financial Survival Network now more than
0:36
ever. Go to Financial Survivalnetwork dot com and get your free newsletter and gift.
0:42
Financial Survival Network now more than ever. And welcome you are listening to
0:51
and watching the Financial Survival Network. I'm your host, Carrie Let's. Hey.
0:56
Recently big merger and the luxury retail tail end of the market Sacks and
1:03
Nieman Marcus Sacks is no longer a SAX. It's owned by Hudson Bay Corporation.
1:07
I guess out of Canada. The interesting aspects of this merger, the
1:12
upcoming merger, It's not completed, yet it needs to get a couple of
1:17
approvals. Is that the other partners and junior partners involved. Number one is
1:23
Amazon and number two is Salesforce dot com. Our good friend Carl Gould is
1:29
with us. You find him at Carlgould dot com and if you've got a
1:33
question for him or myself, you can shoot me an email KL at Carrie
1:37
Lutz dot com. Carl, Welcome back. So it looks like all the
1:44
turmoil that occurred in the lower end retail segment that's kind of been rationalized by
1:51
Amazon. It's spreading to the luxury segment, which has been in the past
1:56
somewhat recession or consumer depress and resistant. What does this mean here, Well,
2:02
I think this is a pretty smart move by all involved because Walmart occupies
2:07
the value segment. Target occupies the mid sector mid segment of the sector,
2:15
and now we have somebody who is going after the luxury sector. So this
2:17
is a pretty smart move to create a powerhouse in that area. Bringing Amazon
2:23
in tells me that they're going to have a significant e commerce play and this
2:27
is really smart for Amazon to have a network of stores that can now solve
2:32
the last mile delivery problem for that. And we should mention that Nieman's went
2:38
bankrupt in twenty twenty, not really from an operational standpoint, but they were
2:44
owned by some hedge fund I believe, and the hedge fund leveraged it to
2:50
the hilts to basically take their investment out and get their profit up up front,
2:57
and then they kind of left it to the wolves. Yeah yeah,
3:00
And and look, retail is in a transformative you know period right now,
3:07
and it needs to find what it's going to be going forward. So that
3:12
was not the time to burden it with a lot of debt and pull cash
3:15
out. But you know, with it what they want, you know.
3:17
Yeah, yeah, so yeah, you know, like the hedge funds only
3:22
care about one thing and that's them. Look, and that's their job.
3:27
I'm not belittling it. But when it comes to a social consciousness or social
3:34
conscience, I should say, and they don't have any right right So for
3:38
sure, well, this this is a smarm move or in a stunt,
3:44
it's a smarm move for salesforce. And one salesforce comes in that tells me
3:47
that they're going to look to build an online community, they are going to
3:52
be looking to really add higher level services to the customer base, and all
3:58
of this works if they created they create a renewed and reinvigorated shopping experience.
4:06
If it's still boring to go into the stores, this is not going to
4:10
work. But if they create a great shopping experience, and this has a
4:12
lot of lakes. Once upon a time, when I was a working stiff
4:16
and I used to have to go to an office, I couldn't have the
4:19
luxury of working out of my own home. I was a Nieman shopper and
4:25
I even had my own personal shopper there, Mary Alina. I hope she's
4:29
still doing well in the White Plane store. And you know, I used
4:33
to spend you know, they the nickname of Nieman Marcus is needless markup.
4:40
And you know, I was spending a fortune, you know, buying four
4:43
or five suits and jackets a year and all the other stuff. And then
4:46
one day I went there on sale and saw all the stuff I had bought,
4:50
you know, friar was like forty or fifty percent off. And then
4:55
I became a Niemen sale shopper. And then one day I up to their
5:00
outlet and Woodbury Commons in New York, and I found that, hey,
5:04
they don't have the latest and the greatest, but who cares. It's jackets
5:09
mainly I was in the jackets. Then it was in insursuits, and I
5:12
became a Niemen's outlet shopper. And then one day I was looking on eBay
5:15
and I said, wait a second, they got all that stuff there,
5:18
and it's a half of what it is at the outlet. And I became
5:21
a Niemen's eBay shopper, which I'm sure they loved, right, I mean,
5:28
and we're both boomers. I guess I'm a boomer. Maybe you're an
5:31
exert. You know, the whole concept of the workplace, evolution of hybrid
5:39
work home, all these things are making everything different now and how does it
5:47
work here? Well, they have to make it. Truly loves you.
5:50
This is what killed Joseph a Bank. If you a call. When Men's
5:54
Warehouse bought them, they started the discount, they got on that slippery slope
5:58
and they admitted that they killed a luxury brand. You know, people are
6:01
smart shoppers. Now you need to really have luxury, you need to really
6:06
do luxury, and you know you need to protect it by not discounting.
6:12
You know, during the auto crisis of two thousand and nine thirteen, Lexus
6:16
went out of its way to say, we are not going to discount on
6:19
automobiles, even if we sell less, because we were going to protect our
6:23
brand, and Lexus as a result, bypassed Cadillac and they became known as
6:30
the standard. And so if you truly give a luxury proper and you protect
6:35
your pricing and you protect your customers, they will respond and they'll respond positively.
6:41
But yeah, if you start discounting, everyone's onto that. The internet
6:45
already handles that part, you know. Yeah, well the only thing that
6:49
isn't discounted is the tailoring. Right when I paid full price, the tailoring
6:54
was included. Then when I started being a sales shopper, that was the
6:59
end of it. They charge you for the tailoring. And now, you
7:03
know, my tastes have changed, and I think that is what's happened a
7:08
lot, is that we're more casual. You know, I was an attorney.
7:15
I remember the day I was in a suit and tie every day,
7:17
every law off as I went to, everyone else was a suit in a
7:21
suit and tie. Then they started dressed down Fridays and then it was like
7:27
if you got caught in a suit or a jacket and tie at your law
7:30
firm. They knew that you were out there looking for a new job and
7:33
you were going to pay rice. I mean, it's just an evolution of
7:38
things. And yeah, you know, you go to other countries and they
7:41
still have the formality in Asia. You know, you go to Japan,
7:46
to China and they're all wearing suits. Now grant that they can make them
7:50
custom for ten percent of what a fancy suit at Neeman's costs. But everything's
7:58
changing here and now you can even get those suits made yourself. Not as
8:01
cheap as going there, but you can order it online and get your measurements
8:05
done and then they send you some reasonable effect simile for a fraction of the
8:11
cost. Yeah. I look, they're going to have significant challenges ahead of
8:15
them to prove that it's worth going back to their storms. Because you know,
8:20
there's two economies out there, Perry. There's the standardized economy and there's
8:24
a customized economy. And the standardized economy is anything that you know it's going
8:28
to work, you know it's going to fit it. You don't need a
8:30
consultation, you don't need to speak to an expert. You could order it
8:33
and buy it. And that's that's what the internet is great for. I
8:37
don't need to go out and shop for the paper. I know what I
8:39
want, I know it works, I buy it. Well. When I
8:41
need an experience, or I need consultation, or I need somebody's expertise,
8:46
that's where they have a chance. And if you look at Apple Storms,
8:50
if you look at even Microsoft stores, and you look at this, you
8:56
might. But the point is is that the interactic they're engaging, and you
9:01
want to go there, Shields Sports Store. I'm out here at Colorado.
9:07
I went into a Shields Sports store. They have a ferris wheel, bowling
9:11
alleys, an arcade, and they have a cafe inside of their store.
9:16
The place was packed with people of all ages experiencing things and buying. And
9:22
that's where you know, and Neiman Marcus isn't going to go in that direction,
9:26
of course, but they do have to make it interactive, and they
9:30
have to make it an experienced for their shoppers. And the other Thingnimon's used
9:33
to do. They used to buy me lunch in their restaurant for my birthday.
9:39
So in the hopes, of course that I'm going to drop more money
9:41
still and hey, you know, I'm not even talking about knockoffs now.
9:46
But I pride myself on my internet shopping prowess here, and if I really
9:54
want something badly, I'm going to find it out there somewhere, even if
9:58
I got to go to halfway around the world, Carl. So it's a
10:03
global anatomy. One thing I will say, Nieman's stores are always clean.
10:07
They're always orderly. It's not like you go into like certain other stores and
10:13
the stuff's piled up. But look, the most problem one of the most
10:16
profitable chains, Nordstroms. They've been closing stores every major retailer out there luxury
10:24
otherwise, maybe the luxury boutiques they can afford, like a Louis Utah to
10:30
maintain a store even if it loses money, Ralph Lauren, they can do
10:33
that. But the department store is they got to make money on every square
10:39
foot right exactly exactly, and you make money on that square footage in different
10:43
ways, and so they are going to have to reinvent the experience. Otherwise
10:48
this is just a bunch of you know, this is just a bunch of
10:52
companies coming together to lose money together. It's branding. Here, let's talk
10:56
about branding. You're a master brander, and you know the Niemen's brand.
11:01
They also owned Bergdorf, Goodman and Sachs brand. Actually, Sacks is not
11:07
as good a brand as Niemen, never was as profitable in their heydays.
11:11
But remember the Niemen's catalog and you used to run to it and they'd had
11:16
his or her flying saucers. Isn't her helicopters, isn't her as Rolls Royce's.
11:22
You know, we don't have paper catalogs for the most part, but
11:26
they might still send them. But I'm not on their list anymore. But
11:30
you know, it was an experience just to get the catalog even though nobody
11:33
bought that stuff, right, nobody bought it so well, look, Harley
11:39
Davidson makes more profit dollars off of their apparel than their motorcycles. Hey,
11:45
they're a motorcycle company that sold you on the lifestyle. They became a lifestyle
11:48
brilliant, brilliant, brilliant. Right now, there's a lot of different parways
11:54
Niemen and Sacks and Bergdoff could go, but they've got to they have to
12:00
reconnect with that, with that shopping and turn that into an experience. I
12:03
suspect they'll be consolidation. I suspect that they you know, you're going to
12:07
see smaller stores and less of them. But if they are, if they
12:11
are a great place to go, or they're intriguing, or there's specials that
12:18
you don't get anywhere else, it's gonna work. Hey, talk about experiences
12:22
you've been on an airline lately. I mean, I'm flying off to Vegas
12:26
today for the Freedom Fest conference. It's kind of a libertarian get together.
12:31
I have a lot of friends there, friends in Vegas. So I get
12:35
an update from Jet Blue at eight twenty seven am, talk about experience.
12:39
Here, your flight is delayed and now is departing at eight forty one instead
12:45
of eight ten. Then at ten thirty nine I get another text. Flight
12:48
is back on schedule, back on time, it's leaving at eight ten.
12:52
Then I get another one like just as we're speaking here at one sixteen,
12:58
update your flight it's delayed and now the party get nine to twelve. Now
13:05
should I be happy? I guess I should be happy. They're keeping in
13:07
contact with me. But now they are trying. Yeah, they're trying,
13:11
but but now they're they were back on schedule. So it's like Okay,
13:16
I got to change my right, I got to change my time frame now,
13:22
but then it's back and now it's not. Now. I don't know
13:24
whether you trust them or not, and whether like fifteen minutes before it's uh
13:28
uh, it's back on time. Come on down. I'm like, you
13:31
know, fifty miles from the airport here. Hey, you know they are
13:35
trying, and you know most of the airlines are doing similar things now,
13:41
but still when their service stinks, Carl, their service still stinks. They
13:46
still have to look, you know, when you have an ol adopoly or
13:50
a monopoly, when you don't have to have as good as SERTs. The
13:52
worse the brand, the better the service. The better the brand, sometimes
13:56
the worst service, you know. Oh yeah, yeah, well we're oping
14:00
for is a little bit of both. Yeah yeah, well, hey to
14:03
talking about the airlines like, you know, they have to care to some
14:05
extent because you get sued and the regulator is going to be breathing down their
14:11
throats, right, breathing down, no question about, no question about.
14:15
On the other hand, they've got power, especially the top three and the
14:18
top you know, the three biggest airlines in the country are in order,
14:24
Delta America and United And you know, a lot of the problems they have
14:31
are due to the government. Because the mandatory retirement age is sixty five.
14:35
They tried to raise it to sixty seven. They haven't been able to do
14:39
that. I have friends, accomplished pilots that you would trust your life to
14:43
that you have, and they had to get out at sixty five, although
14:46
they're allowed to fight fly charters. And then you know, the government at
14:52
the same time increased the minimum of flying time that these pilots had to have
14:58
to be on these planes, which I think is a good thing. But
15:01
something's got to give here. And in the end, the airlines, you
15:07
know, they got insatiable demand right now, but that could change on a
15:09
dime, and good Yeah, you know, what are you supposed to do.
15:13
I mean, they're really stuck and all they could do is push their
15:18
catch up. Yeah, it's going to take a while for them to catch
15:20
up because the demand is off the off the charts right now. Totally,
15:26
totally, totally. Just as as I like to say, these are first
15:31
world problems, but they're also third world problems because the third world is serviced
15:35
by the first world and as a result, our problems become their problems,
15:41
and their problems become our problems. And I guess there's an analogy to it.
15:45
Like in retail. You know, brands are still valuable, but brands
15:50
have to put forth value. I mean yeah, like and that's so.
15:58
Yeah, go to pon Bea. Women are buying you know, five hundred
16:02
thousand dollars dresses, you know, so obviously you don't have to sell too
16:06
many of them to make your rent. But you know, with the costs
16:11
with inflation and everything else going up, you know, they're forcing these stores
16:17
and everybody else to consolidate. Yeah, for sure, for sure, and
16:21
we're going to see more of that. So all right, so thanks Carry
16:26
consolidation. But hey, AI, let's see. They also mentioned in the
16:30
press release about niemans. I'm meant to address us with you because we have
16:33
talked about it before. AI, all right, that you're going to have
16:37
instead of mary Alina, my personal shopper, you're going to have virtual or
16:44
artific AI mary Alina who will be saying, hey, Carry, I got
16:48
this great jacket for you here and it's on sale. Let me send it
16:52
out to you now, right right, there's going to be and right now
16:56
you've heard AI companies have been there. Someone just cut a deal for Burt
17:03
Reynolds's voice and another major stars. Boy, MARYL, I think Marilyn Monroe
17:10
as well. Yeah, right, right right, you know, and there
17:11
and so you'll have Marilyn Monroe as your personal shop. You'll have Burt Reynolds
17:15
as your concierge. You know, if Marilyn Monroe thinks I'm worth her time,
17:22
then hey, she can shop for me any day of the week.
17:26
Carl, Right, exactly, exactly. Hey, appreciate you coming on helping
17:30
us unpack these changes that are happening. They're happening so fast, and really
17:37
there's nobody at the wheelhouse managing these changes, which is what capitalism's all about.
17:41
Hey, Carl, tell us where we find you again? How we
17:44
connect with you on the web? Sure, on the web Carlbool dot com
17:48
or Carl three sixty c A R L three six zero dot com. All
17:52
right, and the links in the show notes of this interview on Financial Survival
17:56
Network dot com. When you're there, just click through you get right to
17:59
Carl's And while you're there, please sign up for your free newsletter. Barl.
18:03
I always love talking to you, always love getting your perspective. We'll
18:07
talk to you again real soon. Thanks, Kerry really appreciate it. Thanks
18:10
for listening to Carrie Letz's Financial Survival Network, your solution to today's trying times.
18:17
For the latest, go to Financial Survivalnetwork dot com. Financial Survival Network
18:22
now more than ever,