Magic Day 1 2017 A February 22 2017 - Deborah Weinswig · 3 February 22, 2017 Deborah Weinswig, Managing Director, Fung Global Retail & Technology [email protected] US:

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DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

Top 10 Takeaways from Day 1 of Magic 2017 TheFungGlobalRetail&TechnologyteamisinLasVegasthisweektoattendtheMagicconference,whichcoversthemen’s,women’sandchildren’sapparel,accessoriesandfootwearmarkets.Here,weshareour10keytakeawaysfromtheevent.

1) PanelDiscussionwiththeDisruptorsModeratedbyDeborahWeinswig

2) TheTrumpTradeTeam:MemberBios

3) TrumpandTrade

4) ConsumersDemandingFewer“Rules”inRetail

5) RetailersShiftFocustoRetailFundamentals

6) PriceConsistentlyaKeyConsiderationinPurchasingApparel

7) FootwearIndustrySeeingDramaticChange

8) WhySpeedMatters

9) AuthenticityisParamountinSocialMedia

10) WGSNHighlightsTopTrendsforFall2017

1.PanelDiscussionwiththeDisruptorsModeratedbyDeborahWeinswigDeborahWeinswig,ManagingDirectorofFungGlobalRetailandTechnology,moderatedapanelofretailleaders,includingAndyBallard,CEOofQuadAnalytix;TomGlazer,PresidentofGiGiNewYork;JulieVargas,DirectorofDigitalSolutions,AveryDennison;NealKusnetz,FounderofRobertGrahamandBoardofAdvisorsPerchInteractive;andYaelVizel,CEOofZeekit.

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Source:FungGlobalRetail&Technology

Muchofthediscussioncenteredaroundtechnologiestoimproveretailandtheretailexperience,specificallyintelligenttaggingandZeekit’snewplatformwhichallowsconsumerstobrowseretailcatalogsandthento‘try’eachoutfiton.Giventhatretailislessstraightforwardthanithasbeeninthepast,thegarmentisthemostconsistentpartoftheexperience.AveryDennisonworkedwithRebeccaMinkofftocreateuniquetagsforhandbagsthatturnedintoaninvitationforthebrand’sfashionshowthenextday.UserfeedbackonZeekit’snewplatformsaidthatitnevergotboring—consumerslikedlookingatthemselves,turningitintoagame—andwasentertaining.

2.TheTrumpTradeTeam:MemberBiosWeattendedapaneldiscussionfeaturingJonFee,SeniorCounsel,Alston&BirdandDavidSpooner,Partner,Barnes&Thornburg.AccordingtoForbesmagazine,PresidentTrump’stradeteamis“themosttradehostileandpotentiallydisruptivegrouptooccupytheWhiteHouseinmorethan100years.”

RobertLighthizer,USTradeRepresentative:RobertLighthizerwasDeputyUSTRunderRonaldReaganandhasledaninternationaltradepracticeatamajorUSlawfirmforthepast30years.HeisharshlycriticalofUStradewithChina,Chinese“mercantilism”andallegedcurrencymanipulation.LighthizeradvocatesharshlawenforcementactionagainstChinathroughantidumpingandcountervailingduties(AD/CVD).

WilburRoss,CommerceSecretary:WilburRossisaUSbillionaireinvestorknownforleveragedbuyoutsofdistressedbusinessesinthesteel,coalandtelecommunicationindustriesandsellingthemataprofit.In2004,hecombinedbankrupttextilecompaniesConeMillsandBurlingtonIndustriestoformInternationalTextileGroup,whichhesoldtoaprivateequityfirmin2016.In2008,Rossopeneda$100milliondenimmillinNicaragua,thencloseditforalossin2009.RossclaimsthatVATsemployedbyotherWTOmembershurtUSexportsandcharacterizesthemastradebarriers.

PeterNavarro,HeadofthenewWhiteHouseNationalTradeCouncil(NTC):PeterNavarrorecentlydirectedadocumentaryfilm“DeathbyChina”basedonthebookofthesamename.NavarroarguesthattradewithcountrieslikeMexicoandChinaisazero-sumgame,andarguesthatmassivetariffsagainstChina,MexicoandVietnamarenecessary,andwillcauseUSmultinationalsto“onshorenewfactories”,movingthemto“Charleston,Detroit,Houston,OklahomaCity,Savannah,YoungstownandToledo.”HeproposesthateliminatingtheUStradedeficitwillmathematicallyincreaseUSGDPbyanequalamount,raising$1.74trillionintaxesinadecadeandoffsettingtheeffectof

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Trump’sproposedtaxcuts.GeorgeMankiw(economistforGeorgeW.Bush)andPaulKrugman(economistandcolumnistforTheNewYorkTimes)saythisviewisinconsistentwitheconomics.

3.TrumpandTradePresidentTrumpsaysWilburRosswillrenegotiateNAFTAwithMexico.PresidentTrumphasmentionedchangingtheNAFTAautomotiverulesoforiginandthedisputesettlementmechanism,buthassuggestednootherspecificchanges.Intermsoftradetariffs,thereareseveralwaysPresidentTrumpcouldimposetradetariffs,including:1)Section201safeguard(aglobalsafeguard);2)Section232oftheTradeExpansionActof1962(tariffsifimportsthreatennationalsecurity);3)theInternationalEconomicPowersAct(authorizesthePresidenttotakeextraordinarymeasuresifa“nationalemergency”withrespecttoathreat);4)BalanceofPaymentsAuthoritysurchargeofupto15%foruptofivemonthsintheeventofaBOPcrisis);and5)self-initiationoftraderemedycases.Inall,noneofthesethingsaregoingtohappeninahurry,socompaniesandretailershavetimetoplanhowtheyaregoingtoreactandadapttoanumberofdifferentscenarios.

4.ConsumersDemandingFewer“Rules”inRetailWeheardfromseveraldifferentretailersandcompaniesinvolvedintheretailspacethatconsumersnolongerwanttobetoldhowtodressandwhattowear;theywanttochooseforthemselves.Theywantmoreflexibilityandanincreasedeasinessabouttheirwardrobe.Someexamplesincludeseasonlessclothing,wherevelvetandbrocadearefeaturedinsummerstylesandpasteljacketsareshowninwintercollections,andmicroseasonsintermsofhowoftenproductisflowedintostoresratherthanthemoretypical,fall,winter,springandsummer.Someconsumertrendsarealsoshiftingtoandrogynouslookswhicharelessfocusedonmoretypicalgenderstylesandmoregenderneutral.AccordingtomarketresearchfirmNPD,themostsuccessfulshoebrandshaveseasonlesssilhouettes,includingstrappysandals,peeptoes,bootiesandslingbacks.Forexample,thesekeyseasonlesssilhouettesgrewinaleastthreeoffourquartersin2016,particularlypeeptoeboots,whichgrewby70%inthefallseason.


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5.RetailersShiftFocustoRetailFundamentalsAccordingtoDovCharney,ownerofLosAngelesApparelInc(andformerCEOofAmericanApparel),“theproductisnotdead.”Retailersneedtofocusonofferingcompellingproducttoconsumers.Fastfashionisnotthebeallendallforconsumers.AccordingtoCharney,GenZiswelleducatedintermsoffashionandapparel,theyaremoreintelligentthanpreviouscohortsandtheydonotwantpoorqualityproducts.Amidincreasingcomplexityandchangeintheretailspace,theproductitselfiscomingbackintofocus.Thereisrenewedimportancebeingplacedonofferingadifferentiatedproduct,particularlyasAmazonandotheronlineretailershaveallowedconsumersanincreasedlevelofpricingtransparency.Thathasresultedinmorechallengesforretailersandbrandsthatoffercommodityproductsand/ortrytocompeteonprice.Retailersneedtoboosttheemotionalcontentoftheirproductsandexperiencesinordertobetterengagewithconsumers.

6.PriceConsistentlyaKeyConsiderationinPurchasingApparelspendinghasremainedchallengedwith2.9%ofconsumerspendingdoneintheapparelandfootwearcategory,downfrom3.5%10yearsago.Thatcouldbeinpartdrivenbylowerpricesinthecategory,butconsumersalsohavemorespendingalternativessuchastechnology(whichinsomecasescomeswithamonthlyrecurringbill)aswellasfoodandeducation.Thefactorsthatmattermosttoconsumersarefitfollowedbypriceandthenstyle.Thatisunchangedoverthepastseveraldecades,andisconsistentformen,womenandacrossdemographics,aswell.Intermsofprice,consumers,inmanycases,havebeentrainedtowaitforsalesandtowaitforpricestogodown.Some70%ofclothingpurchasesareplannedandarenotimpulsebuys.


7.FootwearIndustrySeeingDramaticChangeAsthetitlefortheNPDpresentation“AnIndustryinTransition:FootwearYear-EndReviewandLookAhead,”suggests,thefootwearindustryischanging.Footwearcontinuedtogrowby1%in2016,levelingofffromthepastfewyearswhichsawgrowthat6%in2015.Women’sfootwearrevenueisdownby1%,whilemen’sfootwearisupby2%andisnowalmostasbigasthewomen’smarket.Thekid’sfootwearmarketisalsogrowing,with15%ofthemarketandhalfofthevolume.Additionally,consumersareshowingstrongpreferenceforleisurefootwearoverdressandperformancefootwear.

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8.WhySpeedMattersAccordingtoBrittonRussell,ChiefSupplyChainOfficeratCharmingCharlieInc.,thereareseveralbenefitstospeed,includingtheabilitytoreacttotrends,althoughthatistheleastbeneficialtoaretailer.Moresignificantare:1)theabilitytoknowwhat’sinyourstorewhenyouareplacingorders;and2)theabilitytounderstandwhichproductreallyresonateswithyourcustomer.Itislessabouttrendsandmoreaboutyourcustomer.Insomeareasofthebusiness,speedreallymatters,forexample,inseason,whereitcanimpactaretailer’sopentobuy,whileinothercasesithasnoaffect.Inaddition,thebenefitsofspeedarenotlinear.

9.AuthenticityisParamountonSocialMediaDuringthepanelsession,“SocialMedia,BestPracticesforyourBrandInfluencer,”DemiMarchesasaidthatconsumersarerespondingtorealcustomerswearingclothes.Brandsthatshehighlightedasdoingagreatjobofthiscuration/contentmixisReformation.Brandsthatarecapturingthe“everyday”“typical”girlandarewomenthateveryonecanrelatetoarealsoexperiencinghighengagementfromfollowers.MarchesasaidthatwhenshecreatedherbrandonInstagram,shewasfreshoutofcollegeso“mydemographicwasme.”Understandingtheaudienceisveryimportantandstayingauthenticwiththefirstclickisimportantforconsumerstofeelengagedwiththebrands.Thefirst12postsonInstagramarethebrand“lifestylebook”takingusersonanarrative.Theinfluencersallemphasizedtheimportanceofrepresentingthebrand’sauthenticself,andthatlifestylecontentisverysuccessful.Duringthepaneldiscussion,“HowInfluencerMarketingisBecomingMoreIntegrativeThanEver,”VicStylessaidthataudiencesconnectwithrealstoriesandengagementishigherwhenshesharesinformationaboutherlife,herbreakups,etc.Followershavebecomeacommunityoffriends.


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10.WGSNHighlightsTopTrendsforFall2017FashiontrendforecasterWGSNidentifiedseveralmajortrendsforfall2017,including:1)blurringgenresandcategorieswhichincludehigh,lowstyling,balancingluxuryproductswithlow-pricedgoodsaswellasgenderbendingandandrogyny;2)trans-seasonalandseasonless—forexamplepastel-coloreddustercoatsforfall;3)minimalmaximalismfeaturingtoneddownvolume,ruffles,notalotofprints,andfluidandrelaxedlooks;4)downtownfemininity;5)80sinfluence,whichincludespowerdressingandblazers;6)modernutility;7)thriftedeccentricity,whichwasinspiredbytheGuccieffectinamoreladylike,grown-upway;and8)FarEastinspired.

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DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.comShoshanaPollackSeniorResearchAssociate

ErinSchmidtResearchAssociate

HongKong:8thFloor,LiFungTower888CheungShaWanRoad,KowloonHongKongTel:85223004406London:242-246MaryleboneRoadLondon,NW16JQUnitedKingdomTel:44(0)2076168988NewYork:1359Broadway,9thFloorNewYork,NY10018Tel:6468397017FungGlobalRetailTech.com

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Magic Day 1 2017 A February 22 2017 - Deborah Weinswig · 3 February 22, 2017 Deborah Weinswig, Managing Director, Fung Global Retail & Technology [email protected] US: