Shaz Kahng

Get to $1MM in Sales for your Fashion Brand with Wholesale! Everyone wants to get into Saks, Anthro and Revolve and other large retailers, but one BIG question to ask is: Can you afford to do wholesale? It’s crucial to understand the margins for wholesaling your line. Typically, you'll need to give wholesale accounts a generous margin for them to make money. At Alala, we use aim for a 60-65% margin when pricing for wholesale and then a 2.25-2.5x markup from wholesale to retail. If you don’t have strong COGS, you might end up losing money going wholesale, especially when factoring in other costs like warehousing and shipping. Get your COGS under control before considering selling to other stores. At the very least, try to break even initially. More insights coming soon! Subscribe to my Substack for weekly newsletters about how to grow your fashion brand to $1MM in sales. #Wholesale101 #Margin #COGS #FashionBusiness

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AI in Retail: Bridging the Gap Between Ambition & Readiness for Generative AI I recently spoke with Michelle Pacynski, Ulta Beauty & Mike Dupuis, SPARC Group LLC about this topic. Before diving in, I find it helpful to ground the conversation in recent data: 1. According to a recent Forbes estimate, the AI market size is expected to reach $407 billion by 2027. 2. A global Accenture study (July) highlights that: - Companies with strong digital capabilities (data, cloud, security, etc.) are reinventing 2x as many functions with AI & are expected to drive 2x the value creation. - 50% of executives believe they can scale generative AI across their enterprise within 6-12 months, but only 13% are confident they have the right data strategies & digital capabilities to fully leverage GenAI. Why the gap? These insights set the stage for a deeper conversation. Here are some key themes we explored: 1. AI integration frameworks they've adopted: - Assist, Augment, Automate – This framework has helped categorize the 15-20 AI pilots running at any given time. It has especially reduced the pressure to automate everything right away, allowing teams to focus on assistive & augmentative use cases first. 2. Real-world AI implementation examples that required process changes & KPI definition: - Leverage GenAI from your SMS partner to create new audiences & test custom messaging. Process changes included: new workflows for both internal & external teams. KPIs: # of new customers acquired & conversion rates. - Launch a GenAI conversational experience during peak sales to manage case loads, while ensuring real humans are available for more complex queries. Process changes included: customer query routing & escalation procedures, with KPIs focused on # of cases resolved to satisfaction, incremental revenue from case resolutions etc. 3. Keeping up with the evolving world of AI: a) Follow key professors like Ethan Mollick & Stefano Puntoni b) Stay close to the VC community to learn about emerging applications & how people are thinking about the future c) Access to product engineers & innovation through involvement on Boards (e.g., Cordial) d) Attend key tech events like CES and SXSW. 4. How AI can transform retail, from customer experience to back-end operations: - Use weather data to inform inventory buying & planning, ensuring customers get the products they want in the channel they prefer. - The retailer that best uses GenAI applications to develop personalized & on-brand communication with customer segments will create the most value. c) Empower consumers to virtually try on products & learn more about them, both online & in-store. Finally, some questions to consider: - I wish consumers knew AI… - I wish regulations did… - I hope someone develops… There’s no doubt that AI is omnipresent, but achieving meaningful impact requires strong digital strategies, partnerships, and a sharp focus on data governance. #AI #Innovation #Transformation #Leadership

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According to National Retail Federation's Jack Kleinhenz, Ph.D., despite key factors in retail and consumer such as trade, immigration, regulation, tax and spending policies, "there is good reason to expect healthy economic growth in 2025". Read on below for more from Chain Store Age's Marianne Wilson: https://lnkd.in/gTVqUZCQ

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#HotTake: Retail stores aren’t a shortcut to success. Retail offers bigger POs, visibility, and cash flow Yet, it doesn’t ensure brand sustainability Case in point: JLo Beauty Despite celeb status and prime placement at Sephora, She faced challenges resulting in a US exit Retail alone doesn’t secure loyalty or repeat sales Placement isn’t guaranteed forever For lasting success, think beyond the retail PO Some markers of a sustainable brand include: Authenticity, community, differentiated formulas, and true fans Building a lasting brand legacy requires more than a retail presence – 👋🏾 Hi, I’m Monique, a former retail buyer turned beauty industry advisor who helps emerging brands ready to scale at big retail. If you are ready to scale and invest, book a discovery call, and let’s see if we can work together.

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#BlackFriday happens differently in NYC; generally a bit later, and more focused on fashion and footwear than big box. And it happens outside - block by block. A few thoughts following the 10 miles (15,000 steps) I spent in most of Manhattan’s major shopping districts. Foot traffic was mixed. Core midtown / 5th Avenue (48-57th) was bustling (mostly with foreign tourists) and prime Soho (Broadway b/w Prince & Broome) was packed. But 1-2 blocks further and the crowds thinned out. The Flatiron to Union Square triangle (5th Ave & Broadway) was pretty sparse, as were its stores, and the Union Square Holiday Market, which is often gridlocked with people, was only moderately crowded. Further downtown, Westfield WTC was only moderately busy, with more people eating than shopping. Turning to retailers … for every store that was crowded, there were plenty that looked no busier than a typical weekend. Edikted wins the “longest line” award, with 100+ teen girls (and some parents and boyfriends) queuing. The North Face was one of the few other stores with a line. Abercrombie & Fitch Co. and UNIQLO were both packed (in Soho as well as 5th Ave). The biggest surprise was Macy's. The Herald Square flagship was #WallToWall on the main floor, and quite busy on many of the others. On the flipside, Nike and Apple were notably quieter than I expected (I’ve seen lines at each in years past), H&M and Zara both seemed pretty flat, and the Nordstrom flagship was downright empty (in fairness, I was there on the early side — 11:30am). On the whole, I would say we’re in for uneven performane. The macro sentiment is closer to #HoHum than #HoHoHo and you can see the brands that appear to be separating themselves from the pack. And as we all experienced, most of the Black Friday deals started long before the day itself, and a LOT of the shopping has shifted online.

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"The consumer [is] being mindful about how they’re using their dollar and purchasing power, knowing they have so many choices." As the data comes in from #BlackFridayWeek, it's about as mixed as I saw on the streets of NYC. The quote above is from Michelle Meyer, Chief Economist at Mastercard, which reported spending growth of 3.4% (15% online and 0.7% in-store) on Black Friday. Adobe Analytics, which only tracks online spending, reported sales growth of 9%, driven by "bigger-than-expected" discounts. And it's important to remember that: (1) "Black Friday has transformed from a stand-alone day ... to a monthslong campaign of discounts;" and (2) "The ease of online shopping has meant fewer Americans go out to stores on Friday, even as it remains one of the busiest days of the year for retailers." https://lnkd.in/ehEA_9B3

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The average return rate for online apparel stores stands at 24.4%.

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"Really good retailers are re-thinking the purpose of the store." And it's about time! In 2018, I co-authored an IBM Institute for Business Value white paper on how #retailers needed to reTHINK their stores. It started with the idea that #stores still matter, but they need to play different roles than they had in the past. Six years (and one pandemic) later, we're seeing the difference between stores that "sell stuff" and stores that create a "treasure hunt," offer "experiences [customers] can't find online," fulfill online orders for pickup (BOPIS), shipping (BOSS), and local delivery (BOLD), and provide a place to see, touch, and feel products before making a purchase. The framework we developed (in the comments) is as relevant today as it was then.

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👟🌟 Exciting insights! Dive into the latest findings from the 2024 Spring U.S. Footwear Consumer Survey by AlixPartners & Footwear Distributors and Retailers of America (FDRA), showing a strong shift towards athletic shoes this season. As consumers prioritize branded stores and seek out promotional deals, the landscape of footwear spending is evolving dramatically. Discover how these trends are reshaping the industry and what it means for your brand. Full details in this insightful article by my colleagues Ryan Poole and Bryan Eshelman! #FootwearTrends #ConsumerBehavior #RetailInsights #AlixPartners #WhenItReallyMatters https://lnkd.in/evaHipdA

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Here are some interesting stories from the world of retail for Thursday, June 6: 🧘🏽‍♀️ lululemon beat Wall Street’s earnings and revenue estimates, but issued weak second-quarter guidance as it contends with a slowdown in the Americas, its largest market. 👕 Hanesbrands Inc. will sell Champion to Authentic Brands Group in a deal worth up to $1.5 billion with performance incentives. Authentic owns brands such as Reebok, Forever 21 and Quiksilver. 5️⃣ Five Below cut its outlook for the year, warning that its core low-income shoppers were facing an outsized impact from years of inflationary pressures. It posted an unexpected decline in same-store sales for the first quarter. 👙 Victoria’s Secret & Co. said it was encouraged by demand for its bras, sleepwear and other clothing in May, but the company said it was exercising restraint amid continued caution more broadly among the US consumer. 🏪 Foxtrot intends to reopen several locations in Chicago in the Gold Coast and Old Town neighborhoods. The news comes after Foxtrot and Dom's Kitchen & Market closed on April 23. 🌳 Dollar Tree Stores Tree said that it had started a formal review of strategic alternatives for Family Dollar, which it said could include among others, a potential sale, spin off or other disposition of the business. 💵 Walmart is now offering bonuses to its hourly employees in the US., the company announced Wednesday. The longer an associate has been with the company, the higher the associate's bonus potential, to a maximum of $1,000. 📚 In a blow to publishers and authors, Costco Wholesale plans to stop selling books regularly at stores around the United States, four publishing executives who had been informed of the warehouse retailer’s plans said Wednesday. 🚚 Albertsons and Uber have launched a new food rescue initiative that aims to address food insecurity and food waste in several major US cities. The program donates surplus food from the grocer’s stores to local nonprofits. 📸The TJX Companies, Inc., parent of TJ Maxx, Marshalls and HomeGoods, said it’s equipping some store employees with body cameras to thwart shoplifting and keep customers and employees safe. 🍔 McDonald's lost a European Union trademark dispute over the Big Mac name after a top European Union court sided Wednesday with Irish fast-food rival Supermac's in a long-running legal battle. ✂️ The Bank of Canada's decision on Wednesday to cut interest rates from 5% to 4.75% is expected to provide financial relief to Canadians and encourage consumer spending. 🧳 Shinola and Filson parent Bedrock Manufacturing Company has appointed Steve Katzman to the role of CEO and Kevin Wertz as chief marketing officer. 🇦🇺 ALDI Stores Australia is moving into the insurance sector, with the launch of a series of homes and contents, car, and landlord products. #retail #retailnews #economy #DailyRetailNews

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Two pieces of this puzzle in the latest Target announcement that one is expected, but the other not.. https://lnkd.in/dggcGST7 1). Adding another executive who believes Target has a "clear strategy", his words, when clearly they do not.....(grocery strategy is a mess, in stocks are an issue, in store morale and labor a problem, and no clear path to resolve the check out issues created last year). 2). This recent hire has absolutely no retail experience and they are looking forward to being immersed into retail....his words. Adding another CPG executive, this one from Pepsi, who will add 0 value to right sizing their retail strategy unless Target has found the one person who can quickly transition from CPG to retail. Historically that's an issue without existing strong retail leadership which Target already struggles with. "Expected", hiring another CPG person because of the current leaderships past behavior..... "Unexpected", due to their current woes lacking a sound retail strategy that will most likely now continue.....

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What do the recent Q2 results from footwear and sporting goods retailers tell us about the direction of retail? (We don't really have public outdoor retailers, so footwear and sporting goods are the closest proxy.) THE TREND IS UP Every major footwear retailer except Famous Footwear saw quarter-over-quarter improvements in comp sales, indicating a thaw in consumer spending... at least as it relates to athletic footwear. Most reported that apparel was still tough. The other encouraging sign was that 4 of 6 reported improved margin rates, indicating that they didn't use promotions to drive those comps. MERCHANDISE MATTERS It's clear that the customer is willing to pay for the hotter brands and styles -- On, HOKA, New Balance, adidas, etc. Retail chains with the right assortments are winning. STORE EXPERIENCE MATTERS The chains that are investing in their store experience like JD Sports Fashion, Foot Locker, and DICK'S Sporting Goods are outperforming. The impact here is twofold: first, it's drawing in customers; second, it's drawing in the hot brands and assortment that want to be in a higher-end experience. So what does all for this mean for the #OutdoorIndustry? Hopefully, the thaw being felt in athletic footwear will translate into the broader outdoor industry. Certainly, many outdoor retailers have already jumped on the bandwagon by adding On, Hoka, Vuori, etc. That should help retailers weather the storm, but not the core outdoor brands like Vasque Footwear that have been pushed off the store shelves. What are outdoor folks seeing out there? If you want to see more analysis about the #OutdoorIndustry, please like and follow or connect: Eoin Comerford.

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Another AVN season in the books (exhale). Not surprisingly, 72% of brands faced some level of challenges within their negotiations compared to 15% citing collaborative or efficient AVNs. 14% haven’t resolved their AVNs yet. According to our benchmarking, negotiating favorable terms is the #1 challenge brands face during AVNs. What challenges did you face within your AVN? And are you curious how your Amazon AVN experience, terms, and profitability compare your peers? Join me and Martin Heubel next Tuesday 6/25 where we’ll dig into the full results from our AVN Wrap-Up survey of 250+ brands. Register here: https://lnkd.in/eAD48b_g We’ll be covering: ✅ AVN intensity ✅ 2024 trade term %s ✅ AVN impact to brands’ margins ✅ Key profit levers for the year ahead ✅ and a chance to ask ALL your AVN questions! A must-attend for 1P vendors. See you there!

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Complex and major initiatives often require an increased focus on initial expectation setting and managing expectations during the change. Also, a potential reminder that Wholesale can be an important channel and that many times a Both/And solution can surpass an Either/Or. Meeting a wide variety of customers using the Reach of E-commerce and Wholesale partners AND including the touch/experience at Nike Stores as well as stores in areas that may not easily be served by existing Nike Stores ( ~300 in the USA and ~1,000 globally). Your thoughts? Excerpts: Dive Insight: Nike’s Consumer Direct Offense and Acceleration plans are coming under attack in a new class action lawsuit that alleges two of the brand’s top executives misled investors about how successful the strategy was. “Throughout the Class Period, Defendants repeatedly touted the purported strength of Nike’s business model, and in particular, the claimed success of its digital and direct-to-consumer strategies to produce sustainable growth, while downplaying the significant competitive pressures facing the Company,” the lawsuit reads. The lawsuit recounted Nike’s efforts to ditch wholesale partners in 2020, which continued into 2022 in a much-discussed shift away from Foot Locker, as well as the retailer’s subsequent return to many of those partners when its DTC strategy didn’t deliver as intended. Indeed, on the back of disappointing sales results, Nike late last year rolled out a cost-savings plan aimed at driving growth and profitability. The plan included layoffs, as well as a simplification of its product portfolio, with executives referencing its shift to a DTC model as a reason for the cuts. “Since fiscal ’19, our investments in accelerating Nike’s consumer direct vision have created new operating capabilities, added tens of millions of new members to our member base and delivered a return of more than $12 billion of incremental revenue,” Friend said on a call with analysts at the time. “However, we have also added complexity and inefficiency. In this competitive environment, we need to accelerate our pace of innovation, elevate our marketplace experiences, maximize the impact of our storytelling, and increase our speed and responsiveness.” Donahoe followed that up in March by acknowledging that the company needed to make some “important adjustments” to its Consumer Direct Acceleration strategy, as Nike was not “performing at our potential.” #Nike #DTC #Retail

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🚀 Big News Alert: Saks Buys Neiman Marcus with a Boost from Amazon! 🚀 Hey everyone! Just had to share this HUGE update in the luxury retail world. Saks Fifth Avenue’s parent company is dropping $2.65 billion to scoop up Neiman Marcus, and guess what? Amazon’s in on the action, bringing their tech and logistics game. 🛍️✨ Here’s the Tea: • Power Move: Merging two luxury legends to create a mega retail powerhouse. • Tech Boost: With Amazon on board, expect next-level tech integration for a seamless shopping experience, both online and offline. • Big Bucks: Financed by top-tier investors like Rhône Capital and the Abu Dhabi Investment Council, plus $1.15 billion in debt from Apollo Global Management. • Market Shakeup: The new combo will hit around $10 billion in annual sales, giving them major leverage with suppliers and streamlining costs. Why It’s a Big Deal: This merger shows how vital tech and partnerships are in today’s retail scene. It’s proof that luxury retail is evolving and adapting, even when times are tough. For investors, this move is a clear sign of confidence in the luxury sector’s future and the potential for new opportunities. Big things are coming, and I am excited to be part of this evolving industry. Stay tuned for more updates as we keep pushing the boundaries in luxury retail!

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In perhaps the least surprising #retail news of 2024, a federal judge has blocked the proposed merger between grocery chains Kroger and Albertsons, marking what could be a final "victory" for the FTC before a new, presumably more merger-friendly administration takes charge in January. "In her ruling, she said that supermarkets are 'distinct from other grocery retailers' and are not direct competitors to Walmart, Amazon and other companies that sell a wider range of goods." I'd hazard a guess that the 300M US consumers would be hard pressed to draw the distinction between a #supermarket and a "grocery retailer." Nor do most industry studies, which consistently list Walmart as the largest grocery chain in the US. Nor, in fact does the #USDA, which lumps together grocery and supermarkets in its #RetailTrends study. And TBH, this was such a foregone conclusion that I thought it had happened a few weeks ago. https://lnkd.in/exEs4E_X

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US department stores' business model is broken. Do you agree? In my conversation with Steve Dennis we talked about why transformations fail and what happens when businesses don't transform and we talked about the example of US department stores. With Macy's announcing the closure of 150 stores and Kohl's shares down almost 15% YTD and almost 50% within the last 5 years. Is there a way out? #retail #retailtransformation #leadersleap

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Things are hotting up in the east vs west battle for global dominance of the premium department store space. Hudson's Bay Company owned Saks Fifth Avenue merging with Neiman Marcus Group further cements Richard Baker’s ambitions to create the ultimate global luxury department store conglomerate. How stable mates Hudson's Bay and GALERIA Karstadt Kaufhof GmbH will be involved in this is not yet clear but the involvement of tech behemoths Amazon and Salesforce in this move is the ultimate enabler for global consolidation in both the physical and digital space. Given the collapse of FARFETCH, the questionable future of NET-A-PORTER, and the resurrection of the department store as brand aggregator, there is a void here to be exploited for sure. Currently the Thai giant Central Group leads the field in this, linking Selfridges group, THE KADEWE GROUP, DeBijenkorf BV, Brown Thomas Arnotts , Rinascente ILLUM GLOBUS CRG and Robinsons Retail Holdings Inc. On a market by market basis there has been little cross over, other than Germany, but the digital space could see a direct battleground. Perhaps a purchase of YOOX NET-A-PORTER might be a logical place for one of them to go next? https://lnkd.in/eaxV8AXX

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Retailer return policies are changing. Many retailers are now charging shipping fees for returns as both a way to recoup the high cost and impact to the bottom line as well as deter excessive returns. According to Good Morning America, this policy change will continue into 2025 and may become the new norm. In addition to charging return shipping fees, some retailers are using drop off locations (like Whole Foods for Amazon and Happy Returns locations) to help with the cost impact. I just had a $7 return shipping charge with LL Bean and will most likely not order from them online again (unless I am certain of the purchase) and there is no physical location near me. As we continue through “Returnuary” have you noticed this change? And does it deter you from shopping online with specific retailers? #RetailReturns #RetailTrends #Shipping #Ecommerce

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