Published in Women’s Wear Daily by David Moin and Vicki Young on January 14, 2015

At the annual Financo Forum, Diane von Furstenberg and Joel Horowitz, the co-chairmen of DVF Studio, stirred up the crowd with a candid parlay on concessions, a sensitive issue in U.S. retailing and the traditional retail-wholesale model that still permeates the department store industry in the U.S.

“If I can convert all of my wholesale business into concession today, I would do that,” Horowitz told the crowd of 300 at the Harmonie Club. “It gives us the ability to control what DVF looks like to the consumer. I don’t need another layer to reinterpret what we’ve created to tell the consumer what we want to represent. Nor do I want to rely on somebody else to sell it better than I believe we can sell it.”

Concessions, or leased shops-in-shop, are a growing trend at certain U.S. stores such as Saks Fifth Avenue and Bloomingdale’s, as well as Macy’s on the more moderate price level. Neiman Marcus, with the exception of Louis Vuitton and a few other designer labels, does not allow concessions on the selling floors — although the current management has indicated to WWD it’s rethinking that policy in some cases.

Horowitz said that via concessions, the DVF business could grow 35 to 50 percent per door and when Gould, who moderated the forum, pressed him as to why, Horowitz replied: “I could have a better product assortment in there. I could have proper inventory levels.” He also said he could have someone running the DVF shops-in-shop who delivers the brand message with “tender loving care.”

“We are talking to some of our partners about that,” Horowitz said. “Where we do have it in Galeries Lafayette in Paris, we increased our business by over 125 percent in the first year in the same square footage.”

DVF also has concessions in China and Japan. “Where we have concessions, we do much better.”

Gould asked when the model is coming to the U.S., and Horowitz replied, “It’s starting to come already.”

“But it’s the luxury guys,” Gould noted.

“It’s our guys, it’s the affordable luxury sector,” Horowitz said. “I don’t care what other brands are going to do. I care about DVF…We spend six months, eight months designing a collection, Diane does, and then she takes it to the showroom, and some buyer who may be employed for one year and just got out of school is going to decide what’s best from what she created. It’s not logical.”

“We need more curation, better merchants,” said von Furstenberg. “Everything is available in every price, in every color and nobody needs a f–king thing.”

She talked about how decades ago, her business trips took her to a potpourri of department stores with different nameplates and personalities. Then came the era of mergers and consolidation. “All of a sudden, the stores were no longer run by merchants but by accountants. The scenery changed. They all merged and all became Macy’s,” she said.

Aside from the concession issue, Gould got the designer and Horowitz to discuss the DVF DNA, the longevity of the brand and its business opportunities. “Beauty would be a perfect extension because we are so known for colors and prints,” Horowitz said.

“What is most amazing about my brand is that I was able to come up with one product that has lived 40 years — the wrap dress — and it’s managed to be relevant and a huge part of our business. Even though the wrap dress paid all my bills…I took it for granted, and sometimes I even resented it,” von Furstenberg said. She debated what to do for the 40th anniversary of the wrap dress, due to her mixed feelings. But Horowitz convinced her to celebrate it with a retrospective that included new designs and a book. “It’s never happened in the story of dresses that one dress survives that long,” said the designer.

Her celebrity status, her ability to stay relevant to all generations and maintain a consistent brand message globally were also cited as factors behind the collection’s success. “It’s effortless, sexy and you can roll it in a ball. We celebrate freedom, empower women and we sell confidence,” von Furstenberg said.

Earlier, Sarah Quinlan, senior vice president of market insights at MasterCard Advisors, warmed up the crowd with a provocative presentation on the holiday season with some surprising findings based on data from MasterCard transactions, which occur at a rate of about 160 million an hour.

Quinlan said apparel sales from Black Friday to Christmas Eve rose 3 percent. Women’s apparel was up 7.2 percent; men’s apparel up 4.1 percent and jewelry (not costume) was up 4.2 percent. Luxury, excluding jewelry, in December was off 2.3 percent, the third month in a row it was down.

Department store sales during the holiday stretch were down 3.7 percent, while e-commerce only represents 6.3 percent of total retail purchases.

Last holiday season, generally regarded as November and December combined, “Discounting wasn’t as prevalent. We would tell you to stop discounting. It’s about having the right amount of merchandise and really knowing the customer and reaching them,” Quinlan told the Financo crowd.

For stores, “the competition is the experience. Friends and family are coming together again and dining and traveling together. What people really want from the shopping experience is that retailers expedite and ease their lives and give them time back. That’s what people really want.”

Quinlan also said that e-commerce isn’t working, given that it’s only 6.3 percent of total sales.

Some in the crowd questioned certain of the MasterCard findings. Gould, for example, said he thought department store numbers were up, not negative. “There is no question that the four-wall business is a struggle. is still good,” he said.

Andrea Weiss, founder of The O Alliance, said MasterCard “is directionally right, with the exception of luxury,” which she felt performed stronger than MasterCard’s findings suggested.

Michael Appel, founder of consulting firm Appel Associates, said he was surprised at Quinlan’s comment that e-commerce is declining. According to Appel, “It’s possible that what’s happening is the rate of increase has slowed, but from everything I’ve heard or seen, e-commerce is still growing faster than bricks-and-mortar.”

“[Sarah] comes through extremely professional,” said Financo chairman Gilbert Harrison. “She knows what she is talking about.”

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