Loehmann’s gets new life as e-tailer
When the fashion discount chain Loehmann’s filed for its third and final bankruptcy late last year, the company partly blamed its failure on being "late in introducing the e-commerce channel relative to its peers in the ‘off-price’ retail sector." The chain went on to close all its stores, but in a strange-but-true twist of fate is being reborn as an e-tail operation.
The Loehmann’s name and assets were acquired by the Esopus Creek Series Fund, which hired CAK Entertainment to rebuild the equity of the retail brand.
Charles Koppelman, founder of CAK, told Women’s Wear Daily, that the new site will launch next month and continue in the Loehmann’s tradition of offering name brand fashions at discount prices.
The new Loehmann’s will make use of social media and focus more intently on younger consumers. "They want to have a dialogue with brands about what they want to see and what brands they want," Mr. Kopppelman told WWD. "We are going to talk to them, helping with the product and brand selection. They will tell us what they want and help us with our buying."
Discussion Questions
What do you think in general about failed retail store operations being brought back as e-tail operations? What will Loehmann’s need to do to succeed in this new iteration?
Critical success factors for being successful as an online retailer are radically different than for operating stores. The systems, technology and processes are all different. And online e-tail operates “real time,” serving today’s omni-channel consumers who are expecting high levels of service set by Amazon.
Is it conceivable that a failed store operator could be successful online? Perhaps, but it would have to be an extreme long shot. Case in point, Circuit City.
The problem here is that there’s a presumption that people remember what Loehmann’s stood for. They don’t. That was the issue in the first place. It just fell off the relevancy radar.
I did a very small sample poll among friends I had that used to go there regularly when we were kids. They all had opinions, and also had not been in the store in decades.
I think Tiger Direct tried the same thing with CompUSA and declared failure.
It’s hard enough to reinvent before the curve and almost impossible to do so after the curve. Maybe it’s the Canadian in me or I need to get out more, but I’ve never heard of Loehmanns. What did I miss?
Time will tell, but if they couldn’t survive in the traditional retail world, what makes them think they can survive in a much faster paced, tougher environment like eCommerce? As someone who grew up in the Northeast, Loehman’s was never a destination for my family, so not sure of its brand power as the company has filed for bankruptcy 3 times.
It’ll be interesting to watch how this plays out, but I’m glad I don’t have a financial stake in this.
This is an exciting move and it is clear to me that the “new Loehmann’s” is employing a strategy directed towards millennials and their affinity for value and co-creation in their shopping experience.
Building a customer base through social media is a smart move and positions Loehmann’s well for future short-term retail experiences, such as pop-up stores, exclusive brick and mortar events, or mobile retail engagements that are promoted through social channels.
Isn’t the Loehmann’s brand synonymous with communal dressing rooms? How are they going to do that online? Actually, I don’t want to know….
I’m not feeling this one. Loehmann’s left the physical retail world because its brand no longer resonated as a destination for low-cost fashion. To assume that shoppers will crawl the darker spaces of the Internet to seek the brand out seems like quite a stretch. With Amazon attacking fashion at the same time, the timing couldn’t be worse.
If the brand is loved and can deliver a profit it makes sense to keep it alive as an e-tailer. The caveat is that it needs to have brand recognition by online shoppers.
Loehmann’s e-tail success will depend largely on the brand’s ability to promote itself to the intended audience — a large and difficult task if the intended audience skews young, as mentioned in the article.
A young audience might have latent brand awareness of Loehmann’s, but a retail brand needs more than awareness, it needs recognition, positive experiences and a positioning that differentiates it from other similar brands. Let’s remember that lack of differentiation led to the demise of Loehmann as a brick and mortar retailer.
Loehmann’s will need a brilliant strategy and will have to spend the appropriate, and considerable, amount of marketing moneys to succeed. It needs to behave as if it’s launching a new brand to the e-consumer.
I think Loehmann’s troubles had more to do with it being acquired by a private equity company (and the large amount of debt financing that goes along with it).
If the online Loehmann’s can offer the right assortment, and prices along with search engine optimization and other technology, then perhaps there is a chance they can make it.
Occasionally Lazarus-like revivals – the Biblical person, not the former Federated founding member – make sense, such as when it’s the original founder or the original building, or the original recipe or…the original SOMETHING. But in a case like this, where the only heritage is a handful of intangible assets passed on to some unrelated third party, the effort is pointless. Actually it’s probably worse than pointless, since they’ve spent money for a name that people remember little of other than “didn’t they go out of business?”