Lands End's Amazon digital retail alliance owes more to Sears-xit than Brexit

For the past couple of months I’ve been keeping a wary eye out for examples of ‘Blame it on Brexit’ syndrome, the process of attributing long-standing issues and shortcomings on the UK’s 23 June vote to leave the European Union.

So far, there have been remarkably few instances, with tech vendors in particular sensibly observing that there hasn’t been time yet for any credible impact to have been observed.

But there are exceptions, such as ailing US clothing apparel firm Lands End, which just turned in a loss of $2 million down from from a year-ago profit of $7.5 million, on revenues down 6.5% to $292 million. CEO Federica Marchionni reached for ‘Blame it on Brexit’, stating:

We saw consumer concerns, both leading up to and following the Brexit vote in the UK.

To which I have to say - madame, your company’s problems reach back much further than the Brexit vote, particularly when Lands End’s own CFO attributes the fall in direct sales to:

decline in both the US region and to a lesser extent international business.

The reality is that Lands End is a retailer that’s struggled to make the move to the e-commerce era, but which also lacks the offline retail infrastructure to compensate for that or to provide a platform for an effective omni-channel strategy. Formerly part of the Sears group until its spin-off in 2014, Lands End is still reliant for its physical presence on 224 franchise outlets within Sears stores in the US, down from 229 this time last year.

Meanwhile its e-commerce efforts haven’t taken off to any startling degree with the firm’s core catalog-centric customer base. Lands’ End comes in at No. 44 in the Internet Retailer 2016 Top 500 Guide, which is good, but with estimated 2015 web sales of $1.14 billion down 5.0% from $1.20 billion in 2014, which isn't so good.

This isn’t to say that there haven’t been efforts to transform the firm, although whether those efforts are always directed in the right direction remains to be seen. For example, Marchionni, who came to her current role from Dolce & Gabbana, has been trying to rebrand Lands’ End as more of a fashion brand than a basic apparel and accessories retailer. This has meant focusing on slimmer fitting clothes, stiletto heels and a new line of athletic wear. The prime example of the new approach is the Canvas collection for women.

Marchionni came in as CEO in 2015, following Lands’ End split from parent company Sears Holdings Corp the year before, with a commitment to update Lands’ End’s clothing designs, upgrade its digital technology and expand its distribution channels.

The firm has also been shuffling its executive responsibilities to put in place a management team that can create an omni-channel future. Earlier this year, Becky Gebhardt, the firm’s Chief Creative Officer since 1991, was promoted to Chief Marketing Officer, with a brief to oversee brand advertising, e-commerce, digital brand marketing, social media and retail marketing.

While Gebhardt is an internal promotion, the firm has sourced Mike Zhang externally to become vice president for e-commerce, digital marketing and innovation. He doesn’t have a retail background, having previously been CMP at Kurbo Health and prior to that CMO at ticketing company Smart Destinations. He reports into Gerbhardt.

Whether the two appointments will create the necessary ‘dream team’ remains to be seen, but Gerbhardt gave an insight into her worldview to the National Retail Federation when she said:

Our catalog and online and digital strategies remain our key areas of focus, but we will also enhance our product offering to elevate our image while remaining true to our brand.

Asked about the changing nature of the retail landscape, she added:

The evolution of the consumer purchasing mindset and the ability for a retailer adapt to those new expectations. Consumers are using social influences digitally, devouring product reviews and looking for quick and easy ways to get the merchandise they want. Consumers are making informed, smart and fast decisions through a more diverse portfolio of channels and quickly adopting new purchasing habits to meet the needs of their busy lifestyles. We as a retailer are continuously challenged to not only keep up, but stay a step ahead.

Amazon's embrace

So, the firm's saying all the right words.  The question now is how does it keep that step ahead? Or even, keep up to step?

One way to do it is to adapt to the maxim of ‘if you can’t beat ‘em, join ‘em’, which is what Lands End now plans to do with Amazon, opting to sell some of its range via the online marketplace, including the all-important Canvas  collection.

There’s something of deja vu about this. Back in 2002, when omni-channel had yet to become a ‘hype’ word, let alone a strategic imperative. Lands End had a deal in place with Amazon to sell its goods, before deciding that it needed to go it alone on the internet.

Taking an established brand onto Amazon is increasingly an option for retailers under pressure. Earlier this year, GAP CEO Art Peck admitted it was an option being considered at his firm. For Marchionni, the return to the Amazon embrace is a pragmatic decision: 

This provides an additional channel for us to introduce consumers to our new brand and expanded category.

This isn’t to say that Lands End won’t be pursuing its own digital initiatives, she adds:

On the commerce front, we have continued to roll out our multi-branded website shopping experience.

In addition to an online segment dedicated to our Canvas by Lands’ End brand, we recently launched additional segments dedicated to our Lands’ End Sport, school uniform, business outfitters and Lighthouse brands. These efforts are designed to expand brand awareness for Lands’ End overall and broaden our customer base.

We can now leverage this differentiated site to target consumer with a more personalized experience with something that’s relevant to their needs. As we look to the holiday season, we’re excited to launch our new mobile application, as well as an improved online shopping experience on our e-commerce site.

There will also be a focus on raising social media presence though partnerships and collaborations with influencers, she adds:

We have also formed a digital media partnership to create a custom four-week social program to drive awareness and engagement with select publications, prioritizing historical best performance with social expansion capabilities. We will continue to foster direct relationship with social media influencer to develop unique content and generate new followers, as we look to expand brand awareness for Lands End.

But there’s one issue that Lands End needs to address if it’s to become a fashion band and that’s its time to market with new products. At the moment, that sits above the nine month mark - and even that, admits Marchionni, is a “huge effort” to achieve. In fact, she regards nine months as an objective:

We need to do a better job in making sure that all the pieces that all the departments that working towards developing and producing the product will be able to have enough time to create the best possible offer.

We are not a fast fashion, so I think nine months is a good target. The point is to give enough time to the different parts of the pieces, the supply chain to get into the nine months. Then if, and I don’t think that it’s our case, we will monitor if the part of the trend collection will be more substantial, then we need to reduce also that lead time.

We want to be on trend for parts of the collection, and sometimes those trends are just last minute. And so we need to be able to capture them and that’s why we’re creating a fast track, which is a little lower than nine-month, but of course, it’s for a tiny part of the business. But it’s very customary, let’s say, in the industry for companies that also have not just the timeless product, but also product that are on trend.

It's sensible then that the firm intends to continue to invest in its multi-year Oracle ERP roll-out, with the initial focus there being on finance functions, merchandising operations, and inventory planning systems. 

My take

There are a lot of factors at play in the current plight of Lands End - but it’s more Sears-xit than Brexit that’s at the heart of it.

Marchionni has laid out some ambitious objectives and recognizes the important of investment in digital and in back-office tech, but will that be enough to transform a brand recognized for its leadership in school uniforms and back-packs into a fashion house for women?  After 2016, that Oracle ERP investment should be around 75% complete and benefits should be accruing from that spend. One to keep an eye on.

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