By Kenneth Richard | The Impressionist
After five years of business, Reed Krakoff is suspending operations while the company refocuses on the accessible luxury segment of the accessories market and looks for strategic options.
According to a statement released by the brand last week, “the company will suspend all future design and production, while continuing to operate its Greene Street and Woodbury Commons stores, as well as the reedkrakoff.com e-commerce site. In addition, the company is reviewing all strategic options for the brand, which may include production and distribution partnerships or a sale of the business and the brand.”
The announcement came from the company currently owned by Reed and a series of investors from outside the traditional fashion circles: Washington, D.C.-based entrepreneur Mark Ein, founder of Venturehouse Group, who has an ownership stake along with Mitchell Rales and T. Rowe Price’s New Horizons Fund.
Challenges present opportunities and while there are plenty who view Reed Krakoff as a millionaire designer who launched a vanity label, The Impression sees a viable brand at the crossroads ripe with opportunities for savvy business minds. Think about it – this is, after all, the man who spent 16 years at Coach and who, along with CEO Lew Frankfort, took Coach from a $500 million company that sold boring classic handbags into a global accessory empire with sales of more than $5 billion.
That $5 billion happened because Coach was focused on accessible luxury accessories rather than ready-to-wear and now that Reed has sewed his RTW oats, who better than Reed to lead a charge into the accessory waters. Water that isn’t that crowded.
The Impression believes in second chances and that people learn from extremes and issuing an announcement as the firm did last week is an extreme. The brand is poised for change and still viable. Here are 5 opportunities we believe the situation presents.
Buy that Experience
Firms such as LVMH & Kering as well as Fossil Group should consider getting their hands on the man that helped carve out a niche in the accessible luxury space. Companies such as Kering are really in the leather goods business after all and there is little doubt that accessible luxury accessories have chipped away at the marketshare of luxury accessories. Why not own both? With a solid management team, marketing muscle and real estate know how, a team of savvy and experienced business executives could bring support and structure to turn the Reed Krakoff brand into a business of serious clout and profitability in five years or so, which is a nanosecond in luxury terms.
Line up the Licensees
Luxottica has been an eyewear license since 2010 and the current situation presents an opportunity to help assure this talent gets support at a time that they need it. Restructuring the terms to lend advertising support now to assure the name stays fresh while the brand realigns would be the stand-up thing to do and assure a long term and potentially profitable relationship. The downside is negligible in terms of cost and beats the alternative of no brand at all.
Beauty should come knocking. Reed has always been a fan of color and an authority on femininity and could devise collectable packaging, which would sit well on any beauty counter. Now would be an interesting time to get into a brand that is about to pivot to a growing market and Reed’s story makes for PR fodder to drive launch sales. With the right packaging, assortment, colors, and promotion, a branded beauty business could be a win-win for both the licensee and Reed. Plus Reed could offer his services to photograph the campaign, adding another layer to the marketing pitch.
A firm such as Net-a-Porter or Farfetch should consider having a retail exclusive conversation. Sure, no one likes to carry inventory, but if the program was to focus on just a category such as handbags, priced right and bought under projections, the product would supersede demand and those online retailers would have something new to talk about. Plus, as the firm gets their footing, the online exclusive program could grow to include other categories or be used to lure other name talent.
Tom Ford secured many partnerships before the first store was even built and approximately half of his retail square footage is via franchises. As the newly directed Reed Krakoff brand focuses to become an aspirational affordable luxury brand, there is little doubt the product will move. So imagine if you could have gotten in on Coach early. We believe now is the time to start having conversations.
Reed has a number of coffee table books: Fighter: The Fighters of the UFC and Women in Art: Figures of Influence by Reed Krakoff. We recommend a publisher getting behind what we think will be his best seller: Reed Krakoff. The fighters and artists can come along, but the focus of the book should be a look at the world of Reed Krakoff at Coach and beyond. There is a lot of great work to be claimed there and it would interesting to see Reed’s Coach work from Reed’s point of view.
Reed’s story parallels that of Tom Ford in that both became creative directors of established brands with heritage, proceeded to turn them on their heads and eventually turn them into the greatest fashion success stories of their time. Both are also photographers and both say something about the times we live in. So book it already.
Fashion is often fraught with a ‘Live and Let Die’ mentality and yet some of our greatest success stories from Marc Jacobs to Michael Kors have faced pivotal points where the industry speculated their demise. Truth is, business is hard, fast, and cynical. And every business hits crossroads. Rather than mudslinging or doing nothing, businesses that can lend a hand-up should. Because being good in business is, in fact, good business.