July 28, 2014

Derek Lam’s Retail Ambitions

WWD – The first store for the Derek Lam 10 Crosby line will open in November, followed by e-commerce.

Derek Lam’s Retail Ambitions

Derek Lam doesn’t need a lesson on the pace of New York City commercial real estate. In the last 18 months, the designer has vacated his sprawling SoHo offices and splashy retail space — a combined 18,000 square feet at 10-12 Crosby Street — closing the ground-floor store in February 2013 and moving operations to the more affordable, if less fashionable, Murray Hill neighborhood in December. Uprooting the headquarters and shuttering shop was an obvious cost-saving measure. When Lam moved into the 10 Crosby address in 2009, it played as a land-grab and assertion of power that were clearly meant to have some level of permanence: The designer named his contemporary collection, which was launched in 2011, Derek Lam 10 Crosby. 

That’s in the past. In a case of the proverbial door closes/window opens, the company — after securing a minority investment from Sandbridge Capital LLC in January — is moving forward with a focus on domestic retail: The first store for the Derek Lam 10 Crosby line, to be located at 115 Mercer Street and designed by William Sofield, will open in November; e-commerce will launch the same month. Then, set for spring, Lam’s Madison Avenue flagship will be redesigned, also by Sofield, and the designer’s first shop-in-shop will open in Bergdorf Goodman. “It’s amazing how in a short period of time, so much can change in terms of the retail environment,” said Lam during an interview with his partner and chief executive officer Jan-Hendrik Schlottmann in their Madison Avenue office. “What was dire straits for everybody during the recession can get turned around and be much more optimistic. Specifically, we had to kind of get out of a relationship that didn’t work for all the parties involved.” He was referring to Labelux, the Vienna-based luxury goods holding company that bought a majority stake in Lam’s label in 2008 during a series of rapid-fire acquisitions, with grand plans to globalize. “It will not be the end of the strategy with the one retail store. We will also put Derek on the global map,” Berndt Hauptkorn, then ceo of Labelux, told WWD at the time. He added, “We are there to make this happen for the next 50 years.” 

Labelux sold its stake in Lam’s business back to Lam and Schlottmann in 2012. Last month, Joh. A. Benckiser Holdings, Labelux’s parent company, dissolved the division entirely. “The atmosphere when we signed up with Labelux was that you had to think about the whole world,” said Lam of the Labelux strategy. “Then when every little point of the world starts to collapse, you’re kind of like, ‘Wait a minute. Let’s concentrate on what’s closest to home.’ Buying back the company from Labelux forced us to work within the means that we had. We are owners of the company again. While we weren’t spendthrifts in any respect, it’s just the concentration and thinking more concisely.” 

Lam and Schlottmann consciously clarified their position, prioritizing the U.S. market, putting more resources behind 10 Crosby and honing the aesthetic of the designer collection. Lam has always professed to be a luxury American sportswear company, trading in classics with an air of California modernism, but the identity of the clothes crystallized relatively recently. “The big collection changed a lot, [particularly in] fall 2013, the first time we showed in the Sean Kelly Gallery,” said Schlottmann. 

Lam’s distinguishing factor has become an elitist artisanal vibe characterized by leather trims, fringe and a subtle, upscale earthiness. “I was there for the arc of his career and I saw him really exploring himself,” said Linda Fargo, Bergdorf Goodman’s senior vice president of women’s fashion, noting that the store has carried Lam’s collection for 10 years. “Within the last few years in particular, he really knows who he is; he’s solidified his DNA and simultaneously the business has proportionately responded to his clarity.” Physical evidence of Bergdorf’s belief in Lam will come in March when he gets his own hard shop-in-shop for the spring relaunch of the store’s sixth floor. It stands to note that Lam and Schlottmann’s renewed focus came in quick succession to Lam’s departure from Tod’s, the Italian luxury leather goods behemoth for which he served as creative director from 2006 to 2012. 

Asked how his time at the house influences the way he’s working now, Lam said, “It gave me a lot of exposure around the world, because obviously Tod’s is known everywhere. At the same time, the regular consumer didn’t know [Lam was the designer], which was fine with me because I was also learning how to reach a worldwide audience. Then again, once that wound down, it was kind of like, ‘OK, maybe you have to stop thinking so globally because you can’t answer everybody at this scale.’” In the interim between Labelux and Sandbridge, Lam and Schlottmann were independent but not orphaned. 

Acting as their good shepherd all along was Domenico De Sole, the former ceo of Gucci Group, who began mentoring the pair when Lam was a finalist in the CFDA/Vogue Fashion Fund in 2005, two years after he launched his own label. The relationship has lasted. De Sole arranged the financing with Sandbridge (he also brokered the initial deal with Labelux), a private equity firm that focuses on the retail and consumer sectors and has stakes in Tamara Mellon, Karl Lagerfeld and Topshop. He sits on its board, as does Tommy Hilfiger. 

With a legacy of burnishing luxury brand image to lasting gleam, De Sole knows that retail, how it’s presented and maintained, is critical. “At the end of the day, a store is really a representation of the brand,” said De Sole. “Forget about the people that have been in the business forever — if you ask anybody on the street their image of Chanel, in their mind, it’s the store. The store is the heart of the brand, the icon of the brand.” Lam enlisted William Sofield of Studio Sofield Inc., who has worked extensively with De Sole on Gucci and Tom Ford, to create an overarching retail concept for 10 Crosby and Derek Lam. “Upon meeting Derek Lam and seeing his collection, I was challenged to create an architecture that was as strong, straightforward and deceptively simple as his most complex constructions,” said Sofield. “Technical ingenuity, rich craft and bold geometry characterize my approach to both 10 Crosby and Derek Lam Collection.” First up is the opening of the 10 Crosby Store on Mercer Street, a space adjacent to the 3.1 Phillip Lim store on a stretch flush with hot contemporary brands such as Rag & Bone and Carven. Lam said the store design will reflect “an earthiness, a little more approachability” of the retail vision. Getting the store right is critical for 10 Crosby. The label has serious momentum. 

A handbag line is launching for fall, with styles priced between $395 and $850. The overall collection is growing 100 percent year-over-year and now accounts for the majority of the company’s sales volume — 65 percent compared with 35 percent for the designer collection. Schlottmann said the contemporary and designer categories are growing, though not at the same rate. “The advanced contemporary business pie is so much bigger and grows so much faster,” he said. “The issue with [the designer] collection is that maybe the market pie is not really growing as fast as advanced contemporary, but we are still growing, so it means we gained some market share.” The Sofield redesign will roll out in March at the designer store at 764 Madison Avenue, which, for now, bears the highly directional design by Japanese architects SANAA that originated at the flagship on Crosby Street. That one featured giant, curving acrylic walls to partition the various collections, which was pretty, but probably better left behind: Wander into the store to browse, leave with a broken nose. The design will be a more subtle statement on luxury — “leather, glass, crystal,” said Schlottmann. “But without it being cliché,” added Lam. Then there’s the third store: e-commerce, coming in November at the same time as the 10 Crosby store. In 2014 it’s almost shocking to think that a label such as Derek Lam, that’s been around for 10 years, still doesn’t have e-commerce. “We actually tried to do it ourselves once, and that’s kind of what we learned: You need to be an expert,” said Schlottmann. 

They’re working with Onestop, which handles e-commerce operations for labels including J Brand, Rag & Bone and Lululemon. Derek Lam and 10 Crosby will both be shoppable from the same homepage, ideally with the full range of merchandise available. “It has to be a destination unto its own, it can’t just be a sales mechanism to get someone to buy the clothes because they can’t find it elsewhere,” said Lam, who is thinking total experience, from search to shipping. “I’m always the most disappointed person when I get something online and I find that it’s just thrown in a box and sent to me with, like, no finesse.” 

Designing his packaging, along with two stores and an e-commerce site, not to mention the collections, is on Lam’s summer to-do list.