by Lauren Indvik
If our play-by-play coverage is any testament, Kate Spade New York ranks among the strongest brands in the online marketing space. From Twitter and Tumblr to Instagram and online video, we’ve been consistently impressed with the quality and strength of voice the fashion and lifestyle label has brought to each new platform.
We’re not alone: Luxury research and advisory firm L2 ranked Kate Spade second in its third annual Digital IQ Index in the fashion category, just behind Burberry.
Four years ago, the label’s future was less certain. Founders Kate and Andy Spade left the company in mid-2007, less than a year after it was acquired by Liz Claiborne for $124 million. Deborah Lloyd, formerly of Banana Republic and Burberry, was brought on as president and chief creative officer shortly thereafter, and Craig Leavitt, now CEO of Kate Spade, joined the company as co-president and chief operating officer in 2008.
Since then, the label has expanded aggressively into new product categories and markets, introducing a ready-to-wear line in 2009 and establishing flagships in half-a-dozen new countries. But the big story — at least for those of us at Mashable — involves Kate Spade’s gains in digital media and ecommerce, the latter of which is approaching triple-digit growth this year, Leavitt tells us.
Q&A With Craig Leavitt, CEO, Kate Spade
What was Kate Spade like when you came on board in 2008?
What I found was really a niche brand with an amazing heritage and amazing DNA … [that] had fallen asleep a little. The good news was that there wasn’t really a tarnishing of brand or any bad feelings, it had just fallen off everyone’s radar. For us it was about taking that rich heritage and turning a niche brand into something with a broader consumer base and appeal, something that was relevant to the market today.
Can you tell me about the five-year plan you developed at the time?
The first thing we did was assemble a new management team with myself and Deborah [Lloyd], and for six months we looked at where we wanted the company to be five to 10 years down the road. What we planned to build was a global multichannel lifestyle brand embraced by consumers and markets in all the fashion capitals around the world, a brand that spanned multiple categories and reached [the consumer] in many different moments of her life. When I say multichannel, I mean that we believe in reaching out to [the consumer] in all channels of distribution, whether it’s brick-and-mortar or online; they’re all important points. Plus we wanted to modernize the product offering and build on the DNA and the heritage of the brand.
Has that planned been altered in any way due to unforeseen economic conditions, or advancements in digital media and ecommerce?
Just as we were really getting ready to launch that plan, the global recession hit. We had to decide whether to pull back and take a more safe approach, or aggressively approach the strategy [we had laid out]. We decided we needed to stick with our strategy. We didn’t have a big rollback of prices or change our distribution strategy, and believe me, we came out of it stronger, better and faster than our competitors because we stuck through.
How has Kate Spade expanded internationally in that period? You established stores in London and Sao Paulo recently, and you have 89 boutiques in Asia alone.
We have really diversified in becoming a truly global brand. Next year we’ll be in 16 or 17 markets around the world. The great news is that as we’ve entered new markets, we’ve found that consumers understand the voice of our brand and they’ve embraced us. Even in shrinking economies we’ve had strong comp[arable sales] increases, and we continue to open new stores and in new markets … many in southeast Asia. A few months ago we initiated a joint venture to enter China. Last year we also opened a direct subsidiary in South America and established a flagship in Sao Paolo that has been very successful. We opened a flagship in London, too. In the first and second quarters [of next year] we’ll open several stores in the Middle East.
You’re clearly expanding your retail foothold in many markets. Are you expanding your ecommerce business in those new markets as well?
We are. We have a relaunched site in Japan which has been very successful, and as we move into new markets and build brand equity with bricks and mortar, the ecommerce will follow. Right now we’re studying the right approach in China, so that we have a consistent global experience for the consumer that also addresses the nuances of the market.
At what rate is your ecommerce business expanding? What percentage of your sales now occur online?
We don’t release those details, but I can tell you that online is our fastest growing channel of distribution. We announced during our earnings call a few weeks ago that our overall comp[arable] sales growth has increased by 74% year-over-year. Ecommerce is growing even faster; it’s almost triple-digit growth.
You released a redesign of katespade.com in March. What were the goals of the makeover?
The shortest answer is that we really wanted to engage with our girl. Of course commerce is important, but it’s not only about commerce. Engagement drives commerce. The more engaged a girl is with the brand, the more valuable she is to us.
Have you seen a measurable improvement in sales on katespade.com since redesigning?
Absolutely. She’s spending more time on the site, and as I indicated earlier, our sales have really skyrocketed since then.
You’ve also sampled some new ecommerce models, including flash sales through sites like Gilt.com and Sneakpeeq. What drew you to those platforms in particular?
We want to find new ways to reach the consumer. Experimentation is important in general, but it’s particularly important in this space. Sites like Gilt are seen as arbiters of taste, and their customers are really, really engaged. We want to connect with them there. It’s all part of the multichannel approach.
What does your current investment in social media look like?
Social media is an integral part of how we look at our marketing and communications and consumer outreach, it’s part of our thinking every single day. In terms of investment, it’s in human resources. We have young people who live and breathe social media and are immersed in it every minute of every day. We allow them to lead and trust them in this space.
“It’s critical for brands to always be leaders, to always take risks and experiment.”
How have you developed the voice for Kate Spade on social channels?
We are really fortunate that we had already developed an authentic voice and persona for our brand. The Kate Spade girl aspires to lead an interesting life — to engage in the arts and literature and travel and adventure. We talk about those things on social media because that’s who she is, and she wants to hear about what her peers are doing. It feels very very natural for us.
With so many social networks to choose from, how do you decide where to invest your time?
I guess it’s really about the number of people we’re reaching in the end. We want to reach as many people as possible. We’re closing in on 400,000 Facebook fans and 150,000 Twitter followers — those are meaningful numbers for us as a brand, [and they determine] how we invest our time and our human resources across those different media. It’s also about enabling a real-time conversation, talking about where [the Kate Spade girl] is now and where she goes next.
What sort of return on your investment have you seen? And how do you measure it? Is it about sales or engagement?
It’s more of the latter. Primarily we’re looking to grow our consumer base and our followers, and ensuring that they remain engaged with us, which is the most important part. That said, we are looking at how to drive more direct revenue. We’ve offered special sales and previews on items to Facebook fans in the past, and we’ll look to do more of that in the future.
It sounds like you expect Facebook will become a significant sales channel for you.
We absolutely think that the Facebook platform is going to be important to us from a revenue perspective. We have a strong and very engaged fan base, and we expect [sales through Facebook] will be the fastest growing part of our business as we start to set some measurable goals for ourselves. We still believe that our direct email database is going to remain the most valuable, however. They are our most loyal fans if you will, because they have voted with their wallets as well.
What advice would you give other brands — fashion or otherwise — in this space going forward?
I guess it’s not so different from what I would say in general. It’s critical for brands to always be leaders, to always take risks and experiment. There’s this notion that a lot of brands have of not wanting to be first on a particular street or in a particular media space. That has to change, because the brands that are not being leaders in social media are being left behind very quickly. I also think that [social media] is a unique space, and you have got to make sure the people who are most connected, the ones who access it every day, are empowered to be leaders in this environment. Often they are the youngest members of a team.
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