Say Goodbye to 3 Major Retailers:  Piperlime, Jack Spade and Saturday!

Read about why they are closing and what we can learn from them below.

KATE SPADE NEW YORK

….is CLOSING Kate Spade’s Saturday & Jack Spade’s Brick and Mortar stores.

About the closures:

• Jack Spade is best known for its menswear, and specifically its cool messenger bags. While Kate Spade Saturday is best known for targeting a younger audience with lower price points, and vibrant colored weekend attire.
• In Kate Spade New York’s press release  (See full press release here) they stated that in their preliminary findings they discovered a 40% growth in sales. However, in spite of such great growth, which was a much higher rate than they expected, they’re cutting the two labels’  Brick and Mortar stores.
• The Kate Spade New York Company is refocusing the brand’s investment on geographic expansion into greater China with the Lane Crawford Joyce group, as well as re-focusing on its main label, Kate Spade New York, line of products. With the expansion into China it is anticipated to show an increase of 20% compared to 2014.
• The plan for the Kate Spade Saturday brand is to downsize into main Kate Spade New York stores. We think a good model may be akin to the Pink section of the Victoria’s Secret line. The Pink Collection within the Victioria’s Secret brand services a younger demographic, as well as a lower price point for its products. The Pink Collection also feels like a store within a store, so Kate Spade Saturday can easily transition as such. Many may notice that even department stores, like Bloomingdales and Nordstroms, are taking on this type of store within a store setup with the various brands they carry.
• On their website it states that they have a list of 6 stores across the US, while in their press release it mentions 16 stores and 3 with partnered store locations to be closing. We believe they must have already cut some stores and are to close all others by June 2015.
• The e-commerce websites for both labels will remain online:
  • Jack Spade will soon be sold exclusively through whole sale and e-commerce channels.
  • The KS Saturday e-commerce website will remain until it is fully incorporated and re-introduced into the Kate Spade New York brand.
• Kate Spade Saturday brand was targeted towards a younger demographic with its slower price and casual weekend style products.

• The brand will refocus on its main, larger, and higher-end parent brand KSNY. With the Pressure they have felt in recent quarters, they are refocusing on the increasingly competitive handbag and fashion retail segment.
• As for their brick and mortar stores: Jack Spade, of Kate Spade: currently houses 8 retail stores across the U.S. (http://www.jackspade.com/stores) & Kate Spade Saturday currently has 6 stores across the U.S. (http://www.saturday.com/on/demandware.store/Sites-Shop-Site/en_US/Stores-Find)

Gap Inc.,

… is CLOSING Piperlime.com e-commerce website.

About the closures:

• After what would seem to be very relevant and strategic initiatives; like having high profile guest editors like Rachel Zoe and Olivia Palermo, as well as implementing strong social media incorporation with their style feed section; it seems that consumers were just not that interested.
• Art Peck, Gap Inc.’s new CEO since Feb. 1st, says that having only represented less than 1% of Gap’s total revenue, Piperlime served as a great test run for ideas that can now be implemented towards more profitable regions.
• See Gap. Inc., press release about Piperlime closing here.
• Piperlime: currently has 1 physical store location (http://www.piperlime.com/products/piperlime-store.jsp) in New York, but is widely known as an exclusively e-commerce shop, carrying multiple brands.

What we can learn:

• According to the Washington Post article, with a lower price spinoff comes a dilution of brand’s identity and high market namesake; which in turn equals a thinner profit margin.
  • Because of such findings, we do anticipate that we will be seeing a larger number of  brands letting go of outlets and lower price spin-off labels.
  • The article also mentions Coach as a “cautionary tale” for other brands: showing the example of how Coach is trying to move back up in the retail market after it had chosen to open Coach outlets. Now Coach is facing difficulties due to the consequences of them opening up these bargain outlets. The exclusivity factor that often comes with high fashion brands with higher price points was lost and consequently the attraction to Coach products has somewhat faded.
• This may be a time in which larger and higher end brands are re-thinking outlet stores, flash sales, and spin-offsp; while instead, they may want to consider opting for collaborations, as a one time low-price option type of capsule collection. (As we have seen with such collaborations as Altuzarra for Target).
• With Kate Spade New York expanding its brand as a lifestyle brand…  in addition to opening the “Saturday” label… and
  continuing with the Jack Spade label; they just may have been too aggressive too soon. We believe that this refocus into the main KSNY lifestyle segment will allow the main Kate Spade New York to establish themselves stronger in their core segments of handbags and clothing, while listening to the consumers purchases as to where to expand their lifestyle segments incrementally and before opening up any more spin-off  stores.
• A good model for expanding on a label prior to opening up a separate label and store would akin to the Pink collection as a separate section of Victoria’s Secret stores. The Pink Collection within the Victioria Secret brand services a younger demographic as well as a lower price point of products. The Pink Collection also feels like a store within a store, which is what we are anticipating to see  for the Kate Spade Saturday products within the existing Kate Spade New York stores. Many may notice that even department stores, like Bloomingdales and Nordstroms, are taking on this type of store within a store setup with the various brands they carry.
• There must be something to the choice for expansion into the Chinese markets. With an estimated over 4.25 times the U.S. population, along with the potential of a large population with disposable income, it makes sense for more luxury brands to enter into China and Asian territories as Kate Spade New York plans to do.
• It seems that in the growing menswear market, closing Jack Spade stores would give Kate Spade New York a chance to re-imagine the Jack Spade label. While re-focousing and expanding the KSNY lifestyle brand it may also have a new corresponding re-focus for Jack Spade and will perhaps decide to open stores at a later time, but it’s unclear at this moment. The un-clearity is due to the fact that they’re not folding in the Jack Spade label as they are doing with the Saturday label. Thus, although it is hard for us to foresee the KSNY closing the Jack Spade Brand completely, that may not be off the table either.

HAPPY SHOPPING!

[For info on Piperlime closing, check out our breaking news post “01.29.15: Piperlime Will Be No More!“. If you want to read more about Brick and Mortar stores and the role they can play for a brand, check out “The Importance of Brick and Mortar Shops for Online Retailers“.]

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