1) Le Tote plans to buy Lord & Taylor—a risky move to adopt the dwindling department store in exchange for a brick and mortar footprint.
WHAT HAPPENED: Le Tote, a seven year old subscription rental service, could take the department store chain off of Hudson’s Bay’s hands as Lord & Taylor’s parent company sheds assets. Lord & Taylor also sold its New York City flagship store to WeWork in June 2018 and has 45 remaining stores across the U.S. WHY IT MATTERS- At first glance, Le Tote’s plans to acquire Lord & Taylor are a smart move for the rental service to expand its audience. But Le Tote has never operated a single physical store before and reviving a struggling department store chain is a huge task that comes with an immense amount of operational complexity and risk. While Le Tote has just under 500 employees in the U.S., Lord & Taylor has over 3,000, according to LinkedIn, proof that it’s taking on an operation many times bigger than itself.
- Outside of the significant but yet-to-be-determined cost to purchase Lord & Taylor’s business—it generated $1 billion in 2018 sales compared to Le Tote’s estimated $200-300 million—Le Tote is adding more to its plate. This comes after the service’s failed China expansion in 2018 that caused it to lay off one-third of its employees.
- Competitors such as Rent the Runway have launched partnerships with Nordstrom and WeWork to expand its user base and offer more points of distribution. Le Tote is looking to reach women based in more suburban areas, making Lord & Taylor the ideal department store to acquire, while Rent the Runway focuses on a more urban and fashion-forward demographic. But now the subscription service needs to creatively transition its rental concept into the physical world while also stopping the bleeding at Lord & Taylor—two tasks that will fully determine Le Tote’s future.