Fashion People Podcast: Episode Summary
Episode Title: Tariffs & The Art of Retail Maintenance
Release Date: April 15, 2025
Host: Lauren Sherman
Guest: Jonathan Schley, Senior Vice President at CBRE, Retail Advisory and Transaction Services
Introduction
In this episode of Fashion People, host Lauren Sherman engages in an insightful conversation with retail real estate expert Jonathan Schley. The discussion delves into significant industry developments, including Prada's acquisition of Versace, the impact of recent tariffs on the fashion sector, and the fluctuating fortunes of direct-to-consumer (DTC) brands like Glossier.
Prada's Acquisition of Versace
Timestamp: [09:00]
Lauren Sherman kicks off the episode by discussing the notable acquisition of Versace by the Prada Group for approximately $1.4 billion—a price less than half of what Capri paid for it in 2018, adjusted for inflation. She contextualizes the deal within Versace's struggling performance and Capri’s failed merger attempts with Tapestry.
Key Points:
- Versace's Decline: Despite a post-COVID fashion boom, Versace experienced stagnation and decline.
- Prada's Strategic Move: Schley perceives this acquisition as an opportunistic move by Prada to leverage Versace’s valuable real estate in key markets.
- Brand Synergy: With Prada, Miu Miu, and Versace under one umbrella, Prada can diversify its consumer base and strengthen its market presence.
Notable Quote:
Jonathan Schley [10:49]: "Versace actually has quite good real estate despite their lack of performance in a lot of primary markets that are otherwise competitive. So from that perspective, it feels like a good opportunity for Prada to plug in some Miu Miu stores in some prime Versace real estate."
Impact of Tariffs on the Fashion Industry
Timestamp: [22:48]
The conversation shifts to the implementation of tariffs, initially slated for April 2, and their repercussions on the fashion and retail sectors. Lauren and Jonathan analyze the unpredictability and potential long-term effects of these economic measures.
Key Points:
- Uncertainty and Delays: The anticipated blanket tariffs faced delays, with many tariffs likely to be negotiated or modified.
- Real Estate Transactions: Schley shares personal experiences of paused and resumed retail deals amid tariff uncertainties, highlighting the resilience of long-term luxury brands.
- Economic Strategies: Discussion on how private sector strategies often outpace public sector policies, with Schley expressing confidence that tariffs won't cause lasting disruption.
Notable Quotes:
Jonathan Schley [23:44]: "I think there's probably good opportunities, you know, but that's. So Versace actually has quite good real estate despite their lack of performance in a lot of primary markets that are otherwise competitive."
Lauren Sherman [27:58]: "I think for me, the conclusion I came to, which was pre tariffs going to be this way anyway, is the next two quarters are going to be kind of shitty because the economy wasn't going to be good no matter what."
The Trajectory of Glossier and DTC Brands
Timestamp: [37:53]
Lauren Sherman brings attention to Glossier's recent struggles, referencing Rachel Shugatz's reporting on the company's decreased valuation and funding challenges. The discussion explores the sustainability of Glossier's DTC model and its potential to rival established giants like Estée Lauder.
Key Points:
- Initial Success: Glossier's innovative drops model and strong community engagement positioned it as a modern beauty brand leader.
- Challenges Faced: Market shifts, the end of the COVID era, and leadership changes have led to a decline in Glossier's market presence and brand momentum.
- Media Relations: Schley notes the disconnect between customer loyalty and critical media coverage, suggesting that negative press can overshadow core strengths.
Notable Quotes:
Jonathan Schley [42:00]: "Glossier is definitely, at least from my perception, lost the zeitgeist element."
Lauren Sherman [43:23]: "They had offers to buy it and she should have sold it in 2018 when it was valued at like a billion dollars."
Founder Influence and Brand Sustainability
Timestamp: [46:23]
The discussion broadens to the impact of founder-centric branding on long-term brand viability. Schley emphasizes the risks associated with brands heavily reliant on their founder's personal brand and public persona.
Key Points:
- Founder Syndrome: Brands where founders are the face often struggle to maintain momentum once the founder steps back or departs.
- Brand Evolution: Successful brands require strategic repositioning and leadership that can transcend the founder's influence.
- Case Study - Skims: Contrary to Glossier, Skims is highlighted as a brand successfully navigating founder influence, maintaining strength beyond Kim Kardashian's direct involvement.
Notable Quote:
Jonathan Schley [48:31]: "I think they've done a very good job at not actually leaning too heavily on, on her impact."
Conclusion
The episode wraps up with Lauren Sherman and Jonathan Schley reflecting on the interconnectedness of real estate, brand strategy, and economic policies in shaping the fashion industry's landscape. They underscore the importance of adaptability and strategic foresight for brands navigating both internal challenges and external economic pressures.
Final Remarks:
Lauren Sherman [51:02]: "Jonathan, thanks for joining me. This was so fun."
Jonathan Schley [51:05]: "My pleasure. Thanks for having me."
Takeaways
- Strategic Acquisitions: Prada’s acquisition of Versace underscores the importance of strategic real estate assets in luxury branding.
- Tariff Implications: Tariffs introduce uncertainty but also opportunities for brands with robust, long-term strategies.
- DTC Challenges: Direct-to-consumer brands like Glossier must continuously innovate and manage founder influence to sustain growth.
- Brand Resilience: Successful brands balance founder influence with strong, adaptable leadership to maintain market relevance.
This comprehensive discussion provides valuable insights into the intricate dynamics of the fashion industry's business strategies, economic influences, and brand management challenges.