1) Kering is looking to acquire Moncler—a purchase that would strengthen its sportswear offering and enable it to better compete with LVMH.

WHAT HAPPENED: Bloomberg reported last week that Kering is eyeing Moncler, which is currently valued at €9.8 billion.

WHY IT MATTERS

  • LVMH’s recent Tiffany & Co. acquisition puts pressure on Kering to continue growing its portfolio. LVMH’s recent purchase is the biggest deal ever in the luxury sector. Since Kering is LVMH’s main competitor and Gucci’s momentum continues to slow, it needs to diversify. Rather than retaliate with brands from the jewelry and watch sector, Kering should focus on strengthening its sportswear business and look for new opportunities in the burgeoning streetwear category. LVMH ventured into this world with its recent investment in two-year-old streetwear label MadHappy, but Kering needs a brand like Moncler to continue succeeding.
  • While the Moncler purchase would strengthen Kering’s fashion offering, it does not solve the holding company’s lacking jewelry and watch offering. LVMH and Richemont’s control of the fine jewelry and watch space means Kering is at a disadvantage when it comes to expanding its existing holdings in this category. There have been murmurings of a possible merger between Kering and Swiss luxury giant Richemont, which would be advantageous for both parties. Richemont could bolster its fashion business and Kering its jewelry and watch offering.

2) Rent the Runway’s partnership with W Hotels promotes convenience but doesn’t offer the peace of mind that would enable travelers to pack less.

WHAT HAPPENED: Rent the Runway partnered with W Hotels to offer a unique rental experience at four of its locations: Aspen, Miami, Washington D.C. and West Hollywood. For $69, guests can choose four styles that they can use for the duration of their stay. The items will be delivered to the guest’s room and can be left there after checkout, eliminating the traditional returns process.

WHY IT MATTERS

  • Rent the Runway’s hotel partnership could lead to more anxiety than ease for travelers. The proposition sounds convenient but the service doesn’t enable users to effectively plan their vacation wardrobe because they can only choose items upon arriving at the hotel. This system means that options are significantly limited to the inventory that Rent the Runway sends to each hotel—which narrows the choices from an aesthetic and sizing standpoint. The existing offering is more in line with an impulse purchase rather than a utility service that enables travelers to rely on Rent the Runway to pack less.
  • This partnership might come too soon after Rent the Runway faced a backlash for logistical issues and poor customer service. Given these recent events, there is even more pressure on the company given the logistical and customer service requirements needed for this offering to succeed. It could be too soon for Rent the Runway to venture into more complex distribution channels before ensuring it has solved its existing problems. Logistics are key to Rent the Runway’s success and given the higher risk of encouraging people to pack less and rely on Rent The Runway more, future problems will only further tarnish the company’s reputation and consumer trust.

3) Glossier opened fragrance-focused pop-up shops in seven Nordstrom stores, but so few locations prevent the brand from expanding its reach.

WHAT HAPPENED: Glossier opened pop-up shops in seven Nordstrom stores in Chicago, Dallas, Houston, New York City, Washington D.C., Santa Anita, California and Seattle. The temporary installations will be open from December 3 to February 16, 2020 and will only feature the brand’s fragrance Glossier You.

WHY IT MATTERS

Glossier would be better off including more product categories beyond fragrance in its Nordstrom pop-ups. As a shop-in-shop, Glossier is in charge of everything from hiring the sales staff to managing the store design. While brand control is crucial as Glossier enters a mainstream wholesale channel for the first time, featuring additional products alongside the fragrance would enhance—not water down—its brand image by introducing more customers to its cult-classic favorites. Currently, Glossier’s Nordstrom partnership aims to encourage customers to smell its first fragrance before purchasing it, since selling perfume online remains challenging. But this leaves out shoppers who prefer to try all beauty products in-store before making a purchase.

To truly reach the masses, Glossier could have entered more than seven Nordstrom stores. While Glossier’s Nordstrom partnership expands its reach outside of New York and L.A., presence in more Nordstrom stores across the country, not just those in major cities like Chicago and Seattle (where the brand opened pop-up shops before), would increase brand awareness and diversify its customer base. Exclusivity and scarcity are vital to prevent brand dilution, but by controlling the shop-in-shops Glossier has more to gain than lose, especially since it has no plans to open dozens of retail stores.

4) Away CEO’s fear-based approach, combined with the pressure of hyper-scale, resulted in a customer service team unable to do its job.

WHAT HAPPENED: According to The Verge, Steph Korey, the CEO of the luggage start-up Away, publicly berated employees over Slack about her views on their performance. The Verge’s expose features Slack screenshots from Korey demanding her employees work long hours with little time off or paid overtime, all under the premise that they should be grateful for the opportunity to work for her.

WHY IT MATTERS

  • Away experienced explosive growth, but its communication practices didn’t evolve internally or externally—impacting the quality of its customer service. Away’s business grew by almost 200% each year since launching in 2015, with the number of orders increasing by over 150%. This puts an immense amount of pressure on the team but it doesn’t not need to be handled this way. Its growth didn’t give the startup a lot of time to At Zappos, a company known for its superior customer service, employees aren’t held accountable for call times and are encouraged to develop a personal emotional connection with customers (referred to as PEC). Zappos’ approach is reflective of its Holacratic structure—a system where employees define their own jobs, and is proven to result in a more productive workplace. Away’s internal communication process didn’t empower employees to solve problems, to collaborate with team members, or to deal with issues verbally or face-to-face. Fear of public shame via Slack and fatigue from long
  • Away is the most recent startup to be accused of a toxic workplace—representing an internal company culture far removed from its original mission. As more startup companies continue to emerge, negative accounts of toxic internal company cultures are surfacing. Uber, the ride-sharing platform that reinvented transportation as we know it, was reported to be a boy’s club that is “aggressive” and “unrestrained.” And ThirdLove, built as the bra company “by women, for women,” is said to actually promote a culture that rewards intimidation and lacks adequate employee benefits. The cultural disconnects could be the result of rampant growth in a short period, with a leadership team unequipped to handle the instant change from startup culture (a team of under 20 people) to unicorn status. On the other hand, many startup companies have figured out how to maintain positive company morale and grow at the same time, but the above examples show that a negative environment comes from the top.