Issue No. 207: Push it.

I’ve made some careful changes so far and I believe that it’s improved how many of you interact with 2PML on a daily basis. For one, I’ve reduced the number of letters from five per week to a more sustainable (and digestible) three per week. The percentage of readers who clickthrough to external articles (my measure of success) has risen from 23.1% to 31.2% in the last 20 issues. Additionally, the overall open rate rarely falls below 50% now, a good sign.
To build on this, I am planning a few additional improvements that will go into effect no later than Issue 240. For one, the next two partnerships will be announced: an eCommerce behemoth and a $1B+ venture capital fund. I’m extremely proud to have rounded out the longterm partners for this project. However, here are few improvements that will better serve you:
Update no. 1: Once per week, there will be a subscription-based, long-form analysis of the week’s newsworthy advancements in eCommerce, brand, or digital media. Professionally written, edited, and delivered to you before Saturday brunch.
Update no. 2: For the readers who want access to that content, there will be a custom-built forum for you to communicate with one another or even contribute content of your own.
Update no. 3: As such, 2PML will be hiring an analyst for the weekly long-form product. Email me for info: web@2pml.com
Many readers use 2PML to influence decision-making in the fields of retail, investment, and business / fashion journalism. The upcoming private community and weekly content will provide another platform for no more than 600 leaders to consume and communicate with their peer groups.
Any questions? Ask away

See more of the issue here.

Issue No. 183A: Ways and Means

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LAST WORD: A RETAIL DELEGATION TRAVELS TO WASHINGTON

The Ways and Means Committee issued  this Jan 24th statement on the same day that a 100+ member delegation of retailers from Columbus, Ohio traveled to Washington to address the potential pitfalls that all (foreign-manufactured) major retail brands will face when this tax reform is enacted. The NRF-backed delegation included the Columbus-based brands: DSW, Ascena, Abercrombie & Fitch, and Value City. Columbus is also the headquarters to retail brands like: Victoria’s Secret, Bath and Body Works, La Senza, The Limited, and Express. The collective concern of Columbus’ retail delegation is palpable.

A major retail senior financial analyst submitted the following to 2PML:

Obviously this is a long way from being law, but I’m worried. It’s not cut and dry. Lot of retailers that may finish goods in the US use imported intermediate goods. This impacts everything.”

It’s an interesting time for fashion retail in the United States. While “Modern Luxury Companies” are thriving (they are extensively covered in LeanLuxe), it’s hard to ignore the many variables that will affect their ability grow. For one, the young brands that manufacture in Asia will have a complex set of issues to address.

For existing domestic manufacturers, the impending policy is a favored one. These startups and heritage brands have been managed to grow on gross margins of 45% vs traditional retail gross margins of 80-90%. Think everyone from Mizzen+Main to Filson, Red Wing Shoes, Gitman Brothers, and L.L. Bean. Brands like these will benefit from these tax reforms. But it’s not all fun and games when a projected six million American retail workers will be affected by these pending regulations.

The fashion industry’s low margins have punished companies such as the recently sold American Apparel, which tried to sell affordable, mass-market clothes while offering its employees living wages. The share of domestically produced clothing in the U.S. in 2015 was 2.7%, down from 10.2% in 2005 and 46.2% in 1995, according to the American Apparel & Footwear Assn. Over the same period, apparel consumption has grown more than 60%.

“There’s absolutely no possibility of fashion making a reentry to the U.S.,” said Bjorn Bengtsson, a professor at Parsons School for Design in New York. “The reason is labor. Most U.S. manufacturers are having tremendous difficulty finding skilled labor. We have to train people. But even then, salaries are not going to be as low as in countries like Bangladesh and Myanmar.” David Pierson, Chicago Tribune

eCommerce will very quickly become the go-to investment to reduce costs for many of these companies, large and small. As costs to manufacture rise, the retail workforce and their real estate will shrink.

However, these shifts could be a boon for digital advertisers and media agencies. But as mall retail continues to dive, as consumers shift to Amazon, etc. for retail, who knows how many of our great retail brands will maintain throughout the impending transition from bricks to clicks and foreign-made to domestic.

See more of the issue here.