Thursday, April 25, 2019

Stefan Larsson iTalks to Be the Next CEO of J.Crew

How chief executive Neal J. Fox took a 165-year-old leather goods brand and turned it into a 21st century street style favourite by not being afraid to pivot or take a gamble.

How chief executive Neal J. Fox took a 165-year-old leather goods brand and turned it into a 21st century street style favourite by not being afraid to pivot or take a gamble.

NEW YORK, United States The latest chapter in Mark Crosss long history didnt start in Boston, where the leather brand was founded as a saddlery in 1845, or in the French Riviera, where later owners Gerald and Sara Murphy inspired F. Scott Fitzgeralds Tender Is the Night in the 1920s, or even in Hollywood, where Grace Kelly carried Mark Cross on screen in the 1954 film Rear Window. It started in Boca Raton, Florida, in the summer of 2003, when New York retailer Neal J. Fox decided to pay a visit to a former luggage executive named J.P. Wilkin Jr.

Wilkin Jr had acquired the trademark to the once illustrious leather goods brand Mark Cross quite opportunistically: four years after the Sara Lee Corporation, which bought Mark Cross for $7.5 million in 1993, shut the struggling company down in 1997 to focus on its other American leather brand,Coach, Wilkin Jr started using the Mark Cross name on stationery, on email, when introducing himself as its president prompting Sara Lee to sue him. Citing abandonment, Wilkin Jr won the name.

It was an unlikely outcome for a historic brand that once boasted stores around the country and a flagship on Fifth Avenue, back when Herms still only had a shop-in-shop inside the landmark New York City department store Bonwit Teller. Fox saw the story in the press and went to go see Wilkin Jr in Florida to try to buy the trademark himself. According to Foxs retelling of his involvement with the brand, the former luggage executive didnt want to sell.

Nevertheless, Fox and Wilkin Jr developed a friendly relationship over the next five years, during which there wasnt much activity around the brand. It finally debuted on QVC in 2008 with bags in the $200 to $300 range, but the effort was short-lived. I told him from the time that I met him that he was wrong, but it took a while to get the message, Fox told BoF.

Fox had ambitious dreams for Mark Cross, as well as memories and the kind of deep retail experience that enabled him to make a go of it. He started his career at Brooks Brothers in 1956 and later took senior leadership or chief executive roles at Neiman Marcus, Bergdorf Goodman, I. Magnin and several other upscale department stores. The Washington Post once described him as brash.

[Mark Cross] was, in effect, Americas Herms, Americas Vuitton and AmericasGucciall rolled into one, said Fox. And it was unsullied, unlike other American classics such as Halston. I dont know that I would have felt the same emotionally about the brand if it had been beaten to death, he said. When Fox said Wilkin Jr finally agreed to let him license the name to produce a line of bags, he decided to take a gamble.

I looked at the market at that juncture and said, Well, we dont have the wherewithal and the capacity to really take it where I thought it belonged, at the apex of the pyramid, said Fox. With financing from fashion executive Richard Bienen, who took a 50 percent stake in the company, Fox developed a line of bags priced between $500 and $900, andRon Frasch, then president of Saks Fifth Avenue, agreed to carry the line of boxy leather bags at 18 store locations. Fox manufactured it at Chinese factories with Italian leather. We started with a sensible, affordable luxury, he said.

Mark Cross relaunched for the first time in the spring of 2010, as the US economy was still grappling with the recession, and it didnt resonate the way Fox hoped. As a retailer, I was unhappy, he said. Saks was okay. The problem, as he saw it, was that Mark Cross was not expensive enough to be on the ground floor at the Fifth Avenue flagship, which accounted for almost a third of Saks Fifth Avenues business at the time.

Unsatisfied with the brands performance, Fox decided the following year to send his design team to the very same factories that produced Mark Cross bags 35 years ago in Italy. He was thrilled with the samples they brought back at the kind of luxury level he had always thought the brand should be positioned and decided to aggressively pursue the new strategy. I wanted to compete with all the big guys out there, he explained. At the end of the day, I got lucky. I had a strong feeling that there was longevity inherent in this concept, as more and more consumers focused on their accessories at the expense of what they put on their backs. In its new iteration, each Mark Cross bag cost around $2500.

The consumer is up to here with LVs and Cs and Gs. They are very secure with themselves and they love our brand because its not identifiable.

While most of the department stores, Saks Fifth Avenue included, were cool on the idea, Fox saidMark LeeandDaniella Vitaleof Barneys jumped at the chance to carry the new higher price line exclusively at all nine of their stores.

I personally had always loved the Mark Cross brand I think its one of the only true American luxury brands, said Lee, who stepped down from his role as chief executive of Barneys in February. It was a great fit.

Barneys also provided Mark Cross with a high enough volume of orders for Fox to meet the necessary production minimums. I couldnt have gotten the thing off the ground at that stage the game [otherwise], said Fox. He terminated the relationship with Saks Fifth Avenue, held the 2011 holiday shipments and delivered the new and upscale Mark Cross to Barneys the following spring.

That same year, Wilkin Jr passed away after an illness and Fox gained full control of the Mark Cross trademark. Meanwhile Foxs wife Martha Kramer, who had previously led Emanuel Ungaros North American business, joined the brand to focus on marketing. (She is now its senior vice president.)

On the floor alongside luxury handbags, the new Mark Cross struck a chord with post-recession consumers looking for cleaner and more understated accessories. In the contemporary market,Mansur Gavrieltapped into the same desire with its signature bucket bags when it launched in 2013.

And to Foxs surprise, his consumer was much younger than he had anticipated: no actual nostalgia was required for millennial shoppers looking for a timeless, vintage-feeling luxury handbag. The brands boxy Grace style quickly became ubiquitous outside international fashion weeks, and popped up on the shoulders ofRihanna, Jessica Biel and Lady Gaga,杭州419 among other celebrities, despite the companys no-gifting policy. (The brand has since leaned into its street style affinity, later collaborating with it-girls Harley Viera Newton and Chelsea Leyland.)

Initially it was about the product, said Fox. [The consumer is] up to here with LVs and Cs and Gs They are very secure with themselves and they love our brand because its not identifiable.

With domestic sales locked down at Barneys, where the brand was exclusive through 2015, Fox pushed for international accounts like Harrods and MatchesFashion. Now only 30 percent of the Mark Crosss sales are in the US, whereForty Five Tenand Kirna Zabete are among its retailers.

Fox declined to share sales revenue figures but said the business doubled in 2015 and grew 75 percent in 2016, and he expects it to remain up by double digits in 2017. When you dont market, at some moment, were going to hit a wall, said Fox about the deceleration. I predicted this two years ago were about ready to hit a wall if we dont do something to really force the issue.

To fuel future growth, Mark Cross will spend money on marketing for the first time this autumn. Fox also wants to offer more bags at a slightly lower price. I dont have what I categorise as a locomotive likeSaint Laurentdoes at $995 with the tote, I wish I did. Perhaps something along the lines of a Goyard canvas tote or a Valextra Super Bag, but in the meantime a $1195 tote plays that role.

Fox is also expanding categories, not just travel, introduced in 2015, and a relaunched mens line debuting this month. (Fox retired an earlier mens iteration in 2013 and 2014 because he wasnt happy with it.) He wants to explore the categories that keep Herms alive scarves and jewelry under $1000.

But before that expansion, Mark Cross needs its own retail channels, said Fox, who knows the brand cant rely on wholesale in todays retail market. Everyone talks about the growth of the digital but growth of digital on a luxury level is a lot more limited than the growth collectively, and with a brand like ours thats still relatively quiet in terms of its global equity I think that vertical retail is going to play a dominant role in the growth of our business, he said. The short-term strategy is to build a foundation of flagship stores in major cities across the country in tandem with a very focused attack on the digital world. Right now, Mark Crosss web business is marginal. Im at the starting gate with all the other luxury brands, said Fox about e-commerce. So I dont feel as if Im that far behind.

To implement this plan vertical retail is very capital intensive Fox recently took on outside investment at the end of 2015 that saw Bienens shares bought out. (Fox declined to name the investor or the new ownership structure.)

And not coincidentally, Fox also recently took a fresh look at a hit list of dormant American brands, ripe for a comeback, that he compiled years ago. Some of them are gone but theres still a few around that are worth looking at, he said. Can the Mark Cross recipe work for another American heritage brand?

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