Thanks for sharing! I’m a big fan of Net-A-Porter and particularly Mr. Porter (I’m a frequent shopper there) and I can certainly attest to the efficiency of their operating model and have been a very satisfied customer with their service. The fashion world has been so behind in adopting technology as part of their distribution strategy, although it’s been with reason. When you look at luxury brands like Chanel, Hermes, Louis Vuitton, and the like, they want to remain as unubiquitous as possible since they’re all about exclusivity. By establishing a presence online that feeling of exclusivity goes away. However, Net-A-Porter has done a superb job at curating the assortment of its brands so that both the brands and the sophisticated luxury customer are satisfied with the presentation. With the growing traction of competition like Moda Operandi (which allows customers to preorder looks after the runway show) I wonder if Net-A-Porter would shift to or extend to that sort of model and what the implications would be for its existing structure.
Thanks for reading, Patrick! Echoing my response to Akash above, I wouldn’t be surprised if companies like Gillette attempt to acquire Harry’s. However, I would think that given the image and unique brand Harry’s has built as a direct-to-consumer company, it would be difficult for management to give the company away and essentially sell out. When it comes to horizontal expansion, they definitely have to be careful not to deviate too much from their core competencies and DNA, especially if they decide to move into women’s products (simply because from my perspective the branding have been very male-focused). I guess we will have to see.
Point well taken, Akash. From my understanding, it seems the big boys like Gillette and Shick have patented the design of their razors, which puts a lot of limits to the design Harry’s can develop for their own razors. I would think that as they keep growing and receiving customer feedback (which their vertically integrated model allows for) they’ll be able to manufacture blades that are less uncomfortable. With respect to an acquisition by Gillette, it wouldn’t be surprising to me either although I would think that Harry’s has established such a strong, niche, and quirky brand that they would be hesitant to sell out.
Thanks for reading!
Thank you for reading!
Thanks for reading, Matt! Yeah, I’m with you there on the hassle. You should definitely check them out!
Thanks for reading, Bing!
Awesome read, Nina! I’ve been a big fan of Inditex and think it’s fascinating how their operating model has driven such tremendous success! The fact that they have no presence at the department stores (if I recall correctly) I think is great, considering that they (especially U.S. department stores) tend to really squeeze brands’ margins with markdowns. That was certainly an issue we had back at DKNY, where merchandise 100% of orders are placed six months ahead of season by wholesale accounts and retail stores and marked down based on sell-through performance. We actually also started implementing RFID over the past couple of years for the same purpose of tracking merchandise from start to finish.
What I wonder now is, would and could Inditex’s operating model be translated to other brands within the low- to high-end spectrum?
Really enjoyed the post, Betsy! I’ve actually had the opportunity to visit the Shinola store in NYC. It was definitely an experience – being located in an affluent neighborhood (TriBeCa), having its own coffee shop at the entrance, and the store space being high-ceilinged with exposed brick and bicycles hanging on the walls and their watches and leather goods showcased in glass boxes.
I think it’s fascinating not only that they’re re-invigorating the meaning of “Made in Detroit” (and potentially, as Andy suggests above, to “Made in America”/”Made in the USA”) but also that they’ve completely redesigned and rebranded a name that used to be associated with shoe polishing. The retail/luxury market (specifically the watch industry) is so saturated with European brands that it’s refreshing to see an American brand such as Shinola come to prominence because there is so much uncaptured value in the “Made in the USA” tagline that very few brands have been able to tap within this space.
In response to the criticisms of Shinola just being an assembler of foreign parts, would you think it would make sense for them to start building their own components rather than procuring them from Swiss vendors? It would be a significant endeavor but I wonder if the value-add brought on by doing so would outweigh the investment.
Thanks for reading, Nina! I hadn’t thought about the fact that outsourcing your manufacturing to third parties brings the disadvantage of competing with other brands for prioritization and space in their facilities, so you’re absolutely right that as a small brand with little leverage going for vertical integration makes sense. This of course being on top of the end-to-end (design to sale) control vertical integration provides. The business and operating models and brand strategy Harry’s has adopted certainly make it a fascinating place to work for!
Thanks for reading, Ryan! You are absolutely right – by having control of the manufacturing process they have the opportunity to innovate without restrictions. You can definitely see the move towards vertical integration across many industries nowadays, especially within the retail space (i.e. Warby Parker, Suitsupply, Bonobos), and it makes me wonder – why haven’t companies done this before?
In terms of your brick-and-mortar question, I think you’re spot on with your question. Given that Harry’s is a primarily a razor brand now, I believe having freestanding stores does not make sense at this time. A razor is not something you “try on” as you do a pair of glasses or a piece of clothing but something you need to experience, which is why I think the opening of their “Corner Shop” was genius. I think they should aim to open more of these locations in selected cities across the country and in other countries as they expand their global footprint. The purpose of this particular form of brick-and-mortar is certainly not only to attract new customers but also for the current online customer to have an offline experience in which they can get immersed into the brand. As Harry’s diversifies its product offering (particularly if they make a move into women’s beauty) in the medium- to long-term it might make sense to extend its point of sale to brick-and-mortar, although to be successful and continuously aligned with their brand I think they will need to be very selective on the number and location of the stores and the curation of their products.