Forbes Contributor Richard Kestenbaum Interview: Luxury Fashion Redefined, Fashion M&A and Futuristic Shopping Experience
“Where Entertainment Happens, Shopping Follows…”
Forbes Contributor Richard Kestenbaum believes the next evolution in retail is when people come for entertainment not shopping, but they end up spending and buying: “Think about ‘The Las Vegas Model’. Retail should focus on experience first: create a unique facility where the majority of the space is for entertainment and there are many forms of entertainment, including theme park for children.”
Kestenbaum covers topics in retail, fashion, consumer insights and has been an investment banker for over 35 years focusing on M&A deals for the retail and consumer goods industry. He has sold popular online fashion shopping site Shopbop to Amazon. He also appears regularly in print and other media as well as industry panels and speaking programs. Kestenbaum received his MBA with a concentration in Finance from Harvard University.
When I heard Richard would like to ruminate together about what is happening in the industry since I seem thoughtful about where the industry is going, I found out Richard is doing some interesting things and there are a bit of common interest topics as well.
Therefore following a cordial interview by Richard this July on future of retail, digital fashion, disruptive trends post-pandemic, I am excited to invite Richard back for an interview to discuss further on interesting topics in fashion M&A, COVID impact, futuristic shopping experience and trends.
In July I have expressed the following views with Kestenbaum about the industry:
- The Isolated Industry: Fashion industry is lagging so behind and isolated in terms of mindset, digital and technology.
- “From Destructive to Disruptive”: COVID-19, while being destructive, is also the initiator of things disruptive that we’ll soon start seeing in the industry and the entire world. Brands and retailers are starting to realize the importance of ecommerce, digital marketing and virtual technologies. They are putting effort into enhancing their digital capabilities.
- The ‘Future’ is Delayed: Futuristic technologies and concepts, while fascinating, hasn’t really gone anywhere after all the years.
- International Fashion Markets Recovery: There are differences in terms of world economy recovery. It might make sense for companies to focus on markets that will recover sooner and quicker.
Below Kestenbaum shares his visions and insights in the future of fashion, retail, mergers and acquisitions –
Jaeger: As Coronavirus reshapes the retail M&A market, how will some of the acquisitions you anticipate to look like in the fashion/luxury industry, by category of the company (brands, retailers, online brands, department stores, major brand management groups, cross industries), if not names?
Kestenbaum: As the result of COVID-19 and the shutdowns, two trends are surging:
Legacy brands which fail to adapt to ever changing consumer needs, wants and demands will go bankruptcy. Acquisitions can help maximize the left over value of an older brand and create a new configuration.
Secondly, transactions that wouldn’t happen before is now making better sense as online grocery is exploding and consumers have changed the way they purchase the basics over the past few months thanks to the pandemic.
For example, Kroger should merge with Albertson’s to compete with Walmart and Amazon in online grocery. Walmart should buy Walgreen samely due to online grocery shopping growth plus increased consumers’ interest in health and wellness.nWalmart can use Walgreens facilities for staging of fast delivery and pickup of small grocery orders.
In terms of trending categories of acquisitions, the types of buyers haven’t changed; ultimately the motivation stays the same: growth, opportunity and profit.
Photo Credit: Triangle Capital LLC
Jaeger: Do traditional fashion houses such as Chanel or Prada that have remained separate from the luxury conglomerates such as LVMH and Kering have advantages from this separation or they would benefit from being acquired?
Kestenbaum: It is a trade off. There are pros and cons for each. Being on your own is easier and faster when it comes to allocate resources. Whereas being part of a big entity grants more resources and renders less risks.
The decision to acquire depends on the evaluation of risks and the company’s character. Join a large entity can crash the entrepreneurial culture of a company; but it can also enable it to grow.
Jaeger: Yes Chanel remained independent because they want to preserve their traditional values while also have much freedom when it comes to decision making.
Kestenbaum: Chanel’s tradition and value are worth preserving through maintaining its independence. Things however also change over time and the question of what is the right fit, goals and resources may turn in a different answer for the direction it should be heading toward.
Jaeger: Right just like the forever question of when high end luxury brands will go Ecommerce and sell expensive bags and clothing online. Can you tell us more about the Shopbop -> Amazon and Hudson Jeans -> Joe’s Jeans deals? How and in what ways has your company gotten involved? What is your opinion in regards to an all-encompassing online store Amazon acquiring a luxury fashion e-tailer?
Kestenbaum: I have more in depth involvement with the Shopbop deal than the Hudson Jeans deal. For the latter, all we did was to render fairness opinion; and advise Joe’s Jeans board whether it is a good buy or not.
For the former, Amazon approached Shopbop for a potential buy. Shopbop also wanted to sell as they are growing so fast that they are afraid to not be able to manage such kind of growth. Shopbop has brought us in to negotiate the deal with Amazon. It was a great sell and we have helped Shopbop increase its valuation by 45% for the deal. Shopbop has been doing an amazing job since the sale. Amazon has let Shopbop remain independent in how they operate and run their business. It is a smart move for Amazon.
Jaeger: Yes they did the same with Zappos. According to Zappos’ Tony Hsieh, he sold Zappos to Amazon because Jeff Bezos assured Hsieh that Zappos could operate independantly and retain its remarkable culture. What is your opinion in regards to an all-encompassing online store Amazon acquiring a luxury fashion e-tailer?
Kestenbaum: I personally don’t think Amazon is the right platform for luxury fashion. We have yet to see how it pans out.
There are multiple reports that Amazon is launching a luxury fashion site. Amazon may be the best system in the world for providing consumers with a way to shop when they know what they want and are looking for fast and convenient service. But the luxury fashion business is different. It requires exploration, discovery, personal service and creativity to be effective. Buying Fruit of the Loom underwear is not the same as buying an occasion dress from Oscar de la Renta. It is not as easy for Amazon to add luxury to its portfolio as it is to add another type of toothpaste.
Amazon is near impossible to beat on selection and convenience. But whether they can succeed in luxury fashion, and whether they are good for their possible luxury vendors, is an open question.
Jaeger: I have learned about the American Dream Mall in New Jersey from you. I think it is a great concept and believed in the model before COVID-19. However in a post COVID world with unprecedented acceptance of virtual technology and experience, do you think we still need such a gigantic space for full entertainment and retail shopping?
Kestenbaum: I think the future of retail is where people come out for fun and entertainment. They didn’t know or think they will buy yet being in that environment where entertainment and retail co-exist, they ended up buying and shopping. Just look at Las Vegas – it is a town created as a destination of entertainment, and then naturally shopping.
Retail should focus on experience first: create a unique facility where the majority of the space is for entertainment. There are many forms of entertainment, including theme park for children.
What drives consumers into stores isn’t buying things; it’s the fun and exploration they can have and what they can experience with friends. Malls can’t go back to what they were—consumers don’t want that anymore.
Such an entertainment and experience focused approach for retail is the future and even a small retail store on the Fifth Avenue can offer such experience its customers. Whether the space dedicated to this experience should be smaller or bigger is hard to say. But the need for such experience is certain.
American Dream Mall
Jaeger: Would luxury fashion revive after the pandemic or we are going to see a surge of more essential fashion wear business?
Kestenbaum: Luxury has been redefined in the last few years. We used to define luxury as fashion made out of the highest quality of material and sold to customers with the highest customer service.
Fashion is expressing who you are and your status. Yet nowadays people doesn’t care as much about status as it used to be. Luxury is defined based on each’s own perception and personal experience. For someone who has very little personal time, if he goes hiking and enjoys it, a great pair of hiking shorts is luxury for him.
Jaeger: I have seen some cool future technology of China videos about their power in robotics, artificial intelligence, supercomputing, bullet trains, aeronautics and other fields. Do you think China is ahead in terms of “futuristic technologies”?
Kestenbaum: No I think US is the lead. Innovation and creativity comes from US. China can’t do this.
Jaeger: While this is true, I see that China takes what US did and make it better. Look at Weibo and WeChat.
Kestenbaum: China is driven by a top down design economy. The central authority of government can accumulate power and create something of magnitude. On the other hand capitalism is about efficient allocation of capitals.
Futuristic Cinema
Jaeger: What are some of the key future trends you see for the fashion and retail industry?
Kestenbaum: One of the key things I think is important is content. Brands want two things:
- Increase their margin
- Reduce customer acquisition cost
Everyone rushes to Direct-to-Consumer, yet you need an unique voice to reach to consumers directly in a more efficient way. Facebook and Instagram are smart as they have built the content platforms for everyone to use.
Look at Glossier, they started as a blog, built an audience and then start creating a brand with products. It is the paradigm,
where the fashion and retail industry is going, whereas it used to be about advertising.
It is also about values in life. Understand the values of people who created the company and convey the value with content. When consumers resonate with the value and identify the content, they are less interested in buying by discount. Pricing is no longer the key bargain.
Haus of Jaeger Gen Z Shopping Behaviors Insight Report Featuring H&M
Gen Z has finally arrived to the main stage of the society. How is their shopping behaviors different from Millennials and what kind of business do they buy from? How is this going to impact fashion retail brands and retail store selling?
Fashion Consultant & Strategist Elle Von Jaeger is here to share some of her research findings and insights –
Gen Z is defined as those people born between 1995 – 2012. With the oldest of them reaching age 24, Millennials are starting to shy away and giving the limelight to the next generation – Gen Z. Gen Z differs from Millennials in many ways. According to Bloomberg, Gen Z will comprise 32 percent of the global population of 7.7 billion and outnumber Millennials in 2019. It is time for businesses to take actions – study infographics; learn more about their mindsets, behaviors and preferences; prepare your brand now to grab this market share before your competitors do.
Millennials vs Gen Z


Gen Z is true digital natives growing up with mobile devices and social media (Youtube is their #1 social media channel). They have shorter attention span and prefer individuality and unique styles they can show off on social media, rather than the brand names. Gen Z prefers being sold a cool PRODUCT (60%) over a cool EXPERIENCE (40%); Millennials prefer the opposite. Experienced the great recessions started in 2008, they are also more frugal and cautious in spending. Their in store purchase behaviors are heavily influenced by technologies: They use mobile apps and its features in retail stores. When it comes to communications while in store, texting is mostly used followed by Snapchat. They are also more socially conscious and would go out of their ways to buy products from businesses which will make “doing good (world peace, sustainability, climate change, energy etc.) and making the world a better place” a center part of their business, not just by giving to charities.

Good news is Gen Z still shop in stores for the convenience and shopping experience it offers. H&M has already been the top apparel choice in their teen ages. H&M has also taken some initiatives such as testing new concept stores and launching new brands that are more luxurious and sophisticated to enhance consumers’ store experience and adapt to their evolving needs. H&M’s Karlaplan new concept store in Stockholm has a contemporary visual appeal without the usual clutter you see at a H&M store.

Arket is H&M’s luxury brand with a vegetarian café inside. The sore sells beautiful homeware that you could also see at the café area. The café itself will attract new and return customers, keep them longer in the store with the increased likelihood they will shop in the store for clothing, as well as the homeware they saw earlier at the café.


Now is time for the retailer to grow with Gen Z as they start entering the work force as young adults. What does these psychographics of Gen Z listed mean for a retailer?:
Short attention span (8s): Gen Z want things quick and fresh. So let’s make fast fashion even faster! And give them the convenience of fast shipping, plus pick up and return in stores. The digital augmented shopping experience allows them to quickly find help and solutions with the absence of a busy sales associate.
Individuality and uniqueness: Gen Z prefer quality and styles that speaks of their uniqueness and personalities. Their frugal spending habits along with such styling preference means they will prefer quality over quantity, buy less but spend on higher quality items and rent or own second hand stylish pieces.
Digital savvy in store shoppers: mobile apps with near field communication features, AI virtual try-on apps and intelligent in store digital signage.
Social awareness and socialism: Gen Z will only spend on brands that reflect their values. They will ravenously research a company’s history to ensure it is socially and environmentally conscious, also animal cruelty free.




Elle Von Jaeger’s Branding Concept for Visit Sweden – “Sustainable Fashion Capital of the World”
FOR IMMEDIATE RELEASE
Stockhom Sweden, Manhattan NY – March 15 2020 – In Oct 2019, Haus of Jaeger’s Managing Director Elle Von Jaeger presented a bold branding concept “Sustainable Fashion Capital of the World” first in Stockholm and then New York for the promotion of the Swedish fashion industry. This branding concept and slogan have now been used in Visit Sweden‘s press materials.
Visit Sweden is Sweden’s National Tourism Organization, promoting Sweden as a destination and as a brand to attract more foreign visitors. Visit Sweden forms partnerships with Swedish regions and other players in the Swedish tourism industry. Equally owned by the Swedish Government through the Ministry of Enterprise and Innovation, and the Swedish Tourism Industry through Svensk Turism AB, Visit Sweden is present in ten countries worldwide.
Visitsweden.com is part of Sweden.se – the official portal for general information about Sweden. Visit Sweden is one of five Swedish organizations with overall responsibility for providing information about Sweden to other countries. The other organisations are Invest in Sweden Agency, the Swedish Government Offices including the Foreign Ministry, the Swedish Institute and the Swedish Trade Council.
Familiar with the Swedish culture and that humble Swedes would never give themselves such an entitled label, Jaeger has decided to be the first person eating the crab: she made the bold move to present this whole branding concept along with the slogan to the Swedish fashion industry.
Unlike many other parts of the world where sustainability is more of a fab word associated with people who demonstrate forward thinking in social consciousness, Swedes truly and genuinely lives with it in their every day life.
Sweden also has an impressive fashion profile with well known brands such as H&M, Acne Studio, J.Lindberg. H&M is the second biggest fashion company in the world and now leading in the industry for its sustainability effort. On the other hand, despite these three brands are household names in the US, no one associate them as Swedish brands or recognize Swedish fashion. In comparison, they have more awareness of sustainability in Sweden.
Stockholm, capital and Sweden’s biggest city, has unusually high concentration of well dressed people on the street, much more than even the big four fashion capitals of the world: Paris, Milan, London, New York. #SwedishStreetStyle should be next on the hot search list.
It is on the basis of these observations that Elle Von Jaeger formed this “Sustainable Fashion Capital of the World” branding concept, as part of a bigger branding package to gain world recognition for the Swedish fashion industry and bring Swedish brands to international markets. There are more that certainly can be done for Swedish fashion.
Jaeger also raised the bar overall for a “Sustainable Fashion Forum” event she helped organizing in New York on Nov 21, 2019. Through her outreach, she has received a personal message from Diane Von Furstenberg herself within minutes and obtained attendance from Business of Fashion, Stella McCartney brand ambassador and sustainable influencers. She supported Swedish brands such as Dedicated Brand, re:newcell and House of Dagmar. Other partners of the event include H&M, FIT (Fashion Institute of Technology), Invest Stockholm, Visit Stockholm, the Consulate General of Sweden in New York.

Dedicated Brand, re:newcell and House of Dagmar
Copyright @ Haus of Jaeger
“Sustainable Fashion Capital of the World”, when applicable to Swedish fashion and its industry, is the original branding concept and slogan of Elle Von Jaeger or Haus of Jaeger. We reserve the exclusive usage right of the slogan. Any third party shall not use the slogan without prior consent or accreditation.
About Haus of Jaeger
Haus of Jaeger is a premier, multi-division strategy consulting firm. We set our bars high in building a premier management consulting firm in luxury & fashion with top clienteles – leading luxury & fashion companies, established and emerging luxury brands, major media and online brands. Company leadership has experience with celebrity designers, luxury fashion brands and retail stores, leading fortune 500 media companies and is advised by McKinsey partner, Goldman Sachs strategy executive and serial entrepreneurs.
“Most brands haven’t yet achieved digital marketing excellence” – Boston Consulting Group report “Dressed for Digital: The Next Evolution in Fashion Marketing”
Unlike most consultancies or agencies in the industry, Haus of Jaeger is backed by Fortune 500, leading media industry companies experience and a strong digital marketing strategy background in marketing mix, cross channel, Ecommerce, targeting and analytics.
This is the biggest differentiator in marking us as a strategy consulting firm, in addition to our over 10 years of fashion/nonprofit industry experience, luxury brands, PR, celebrity and media relations, fashion media, global marketing communications, retail and creative directions services.
Following its launch this Spring 2020 in New York, Haus of Jaeger will also launch a second base in Stockholm this Summer/Fall 2020.
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