The retail market, soon to disappear?

Just like Jarrod Chang mentioned in his blog [1], for many becoming an IPO for many is a sign of success or a fancy status a firm can acquire that makes them stand out. This makes it the dreams of some smaller companies to one day be on the podium of the NYSE or Nasdaq to announce your entry into the public market.

Becoming an IPO is a milestone but one that is costly and can be detrimental if done incorrectly. There are costs associated to the first entry into the public market as well as performance pressure from investors who expect more when there is a practical way of comparing two companies. Furthermore as we saw in class 6 of COMM 101, going into the public market means being fully exposed as every single move, decision and transaction must be traceable.

Not only is it a complicated and dangerous field for companies to first enter in but the difficulty doesn’t stop there, being able to stay on top of competition in the long run and maintaining a stable growth isn’t something everyone or every industry is able to do. Currently we live in a world dominated by the Internet of things and for the retail sector this means ecommerce is now the way to go. In consequence this means a retail industry which is tanking [2] and this just proves the point that even large companies who have been in the business for ages are still subject to failing in the long run on the stock market by being an IPO. Companies like Sears [3] and Toys R Us [4], as mentioned in our tutorial, have had trouble competing with online retailers, notably Amazon who has been dominating the industry in recent times.

It’s safe to say that becoming a player on the public market is a decision that has to be carefully planned out not only in the early days but, as we’ve seen countless times, in the long run as well. I believe mall’s and physical retail stores are no longer a good investment this day and age, and that is why so many investors are now more than ever looking into the future of retail which is now online. Who knows which industry the Internet of things will heavily disrupt but the stock market might be a good place to look for that answer. This isn’t to say every one in the retail industry, or any disrupted industry is destined to fail at a point on the market, as can be seen by Wal-Mart is still seeing steady growth on the NYSE.

Word Count: 430

Sources:

The Dangers of IPOs – Jarrod Chang’s Blog. (n.d.). Retrieved October 29, 2017, from https://blogs.ubc.ca/jarrodchang/2017/10/15/the-dangers-of-ipos/

Imbert, F. (2017, May 11). Stocks close lower as retail tanks; Macy’s plunges 17%. Retrieved October 29, 2017, from https://www.cnbc.com/2017/05/11/us-markets.html

Canada, S. (n.d.). Sears Canada files for bankruptcy. Retrieved October 29, 2017, from http://money.cnn.com/2017/06/22/news/companies/sears-canada-bankruptcy/index.html

Press, T. A. (2017, September 19). Toys ‘R’ Us files for bankruptcy protection in Canada, U.S. Retrieved October 29, 2017, from http://www.cbc.ca/news/business/toys-r-us-bankruptcy-protection-1.4296274

Tapestry, the first american luxury brand conglomerate

The luxury brand world is filled with time-honoured brands and houses such as Louis Vuitton, Saint Laurent Paris, Balenciaga, etc. What most consumers might not be aware of is that these names are all under two multinational conglomerate companies, LVMH and Kering both based in Paris.

Now Coach Inc. is joining the luxury fashion groups with its recent deals with Stuart Weitzman and Kate Spade being their first two acquisitions. But that now means the Coach brand known for making quality leather goods isn’t the same as the Coach company. For this reason the group has recently decided to change its parent name to Tapestry Inc., “It’s a wonderful metaphor for what we believe in, which is individual threads of different colours all working together to create a picture,” said Victor Luis, the chief executive. [1]

This unexpected change was met with some backlash by loyal fans of Coach, as well as some bigger names in the industry expressing their frustrations with the change made on social media platforms, “This is bizarre & a strategy departure. Dying to know the logic,” Andrea Wasserman, a former Nordstrom and Hudson’s Bay executive, wrote on Twitter [2]. A 3.2% drop in the company’s stock also marked this change on the NYSE, “the biggest intraday drop in two months”. [3]

But is the general public reacting in this manner? And is it justified? I think these reactions are mostly based off of a misunderstanding on what is actually happening with the name changes. Most people believe that the Coach brand making the bags is changing its name to ‘Tapestry’ but that is just a misconception, the brand will be keeping its famous name after all. A more interesting question would be to know if this is a good change by executives at former Coach Inc. in the long run when everything settles down. Starting with the bright yellow logo and more relaxed font of the brand makes it more inviting compared to the very exclusive and luxurious looking logos of Kering and LVMH, this could possible intrigue relatively smaller brands to join the new parent. Furthermore Tapestry is now the first luxury brand conglomerate based in the United States and with only 3 brands under its name it’s willing to partner with intercontinental brands. With some hard work and dedication the controversial change might allow the company to compete with French giants.

If Tapestry is truly willing to develop itself and create a sizeable conglomerate by following the French footsteps, this could be an excellent idea, by developing on their strengths. With time Tapestry is more than likely to become a respectable name.

Word Count: 440 words

Sources:

Friedman, V. (2017, October 11). Coach Inc. Is Dead. Long Live Tapestry. Retrieved October 13, 2017, from https://www.nytimes.com/2017/10/11/fashion/coach-inc-rebrands-tapestry-american-fashion-group.html?rref=collection%2Fsectioncollection%2Fbusiness&_r=0

Wong, S. H. (2017, October 11). Coach Is Changing Its Name to Tapestry. Retrieved October 13, 2017, from https://www.bloomberg.com/news/articles/2017-10-11/coach-changes-name-to-tapestry-in-bid-to-become-house-of-brands

Cavale, S. (2017, October 11). Loyalists unhappy as Coach becomes Tapestry Inc. Retrieved October 13, 2017, from https://www.reuters.com/article/us-coach-strategy/loyalists-unhappy-as-coach-becomes-tapestry-inc-idUSKBN1CG1RT

(n.d.). Retrieved October 13, 2017, from http://www.kering.com/en

(n.d.). Retrieved October 13, 2017, https://www.lvmh.com/

(n.d.). Retrieved October 13, 2017, http://www.tapestry.com/