This is a bold and risky move for Le Tote. While the fashion rental subscription business has had pockets of success, it represents a very small part of the apparel/fashion market. Taking on large department stores is not for the faint of heart, and adding advanced personalization to the department store model alone will likely not have a significant impact. I wish Le Tote management the best, but I’m skeptical this will be successful.

Poor Lord & Taylor! I keep envisioning a once wealthy dowager, down on her luck living in a studio apartment in a bad neighborhood in New York City.

Passed through so many hands, losing her home, and now renting her clothes to pay the rent.

The clothing rental and subscription business(es) appears to be another one of those retail concepts that is presumed to have an infinite market. And they don’t. This is not going to end well.

Rental subscription services are built on a foundation of knowing the customer and personalizing the offering to match their preferences. While this may infuse a culture of personalization into Lord & Taylor stores, it is only one element to saving a struggling chain. While the purchase price was very low at $100 million, the risks may outweigh the rewards on this deal. Best of luck to Le Tote.

This is an interesting sale which underlines two things. First, how much the value of Lord & Taylor has eroded over the past few years. Second, that there was very little credible interest in the firm from other traditional retailers or the private equity segment. Both of these facts suggest that the company’s business model is pretty broken. Can a rental company fix it? By virtue of being a rental company the answer is absolutely not. Rental is a fast growing part of the market but it is not a panacea or a fix for all ills. Lord & Taylor can no more survive by moving more into rental than can Macy’s or any other traditional player. However, some of the ideas from Le Tote are worthy. Localizing assortments is sensible, having a rental service as part of the offer will build some interest, and focusing on smaller, more personalized stores is viable if executed properly. However none of these things address the core issues: what does Lord & Taylor stand for, why is it… Read more »

This is another demonstration that the old legacy department store model is at best an anachronism. And as the details of this transaction emerge, it is still a bit of a head-scratcher. I thought HBC was becoming a rent collector … not a bad alternative. But to now read they are covering $58 million in annual rent? Man, they must have really wanted out of the game. So more power to Le Tote! Wish I knew more about them and their business model, but I’m happy to be a student of this new chapter.

What an ending for a storied brand. While a DNVB like Le Tote can bring some expertise around personalization and curation, where will the operational expertise come from? I see the only path for them as being to convert the chain to smaller format stores.

Yesterday I tweeted, “Meanwhile, while everyone is worrying whether or not established retailers should or should not add subscription services, a subscription service bought Lord & Taylor. The times they are a-changing.“

Lord & Taylor has long been one of my favorite stores, but lately the once fine store near me is tired: fitting rooms are trashed, the famous shoe department has been downsized, apparel assortments are weak, bright yellow and black signs are showing up all over the sales floor, and the cashier desks have been replaced by – shiver – a queue line. None of these things are representative of this once great retailer. I hope that Le Tote can breathe some new life into Lord & Taylor without destroying its legacy, but I have my doubts.

I don’t see this ending well at all. Le Tote ‘s business model will not scale to 120,000 square foot department stores, and they are acquiring only tarnished brand equity and overhead to help them survive while they attempt to learn how to run a chain of huge department stores.

I agree with most of my fellow panelists that this will be a challenge for Le Tote. The “rental fashion” business may have legs, but the space is starting to get overcrowded despite the growing value of data science. Plus, a department store with multiple locations presents totally different kinds of operating challenges in today’s struggling mall environment.

Add to these concerns the long-term decline of L&T’s brand equity, and it seems like a questionable match to me. HBC may have felt that this was the best it could do, like a baseball team trying to dump salary at the trade deadline.

Sorry, I don’t get it. Retailers already have trouble predicting trends and making shopping convenient. Having a collection of one-offs is at odds with convenient and frictionless – you don’t need a store for what the app can do. And with every department store offering rental, it’s just another race to the bottom of unprofitability.

What a bold move! There are so many interesting trends happening here. A rental service going into a high-end department store tells us they need the physical brick-and-mortar presence and that maybe consumers are not ready for 100 percent e-commerce businesses. The lackluster performance of L&T shows that the large store formats are on the decline and newer generations browse and shop very differently. A rental subscription business making such a bit bet indicates that they believe either majority of consumers still buy vs. rent or that the rental market is going to take off much faster than expected. In terms of thinking through the merger there are a lot of considerations. How much overlap, if any, does Le Tote expect in the consumer base? I’d imagine very little since L&T is typically more sophisticated vs. Le Tote which seems to be be aimed at a young professional audience. How will the technology for curation be used in-store and has Le Tote tested this? What will be the different business models used? Will it be… Read more »

What are Le Tote’s “advanced personalization techniques?” How will these techniques suddenly lift Lord & Taylor from the abyss? The reason for purchase according to Le Tote CEO Rakesh Tondon is, “Le Tote will be merging the iconic Lord & Taylor brand with technology.” Le Tote’s means to execute this sale? Low-interest rates on the back of debt financing. Sound familiar?

A review of Glassdoor and Yelp customer and employee reviews paints a challenging environment. The technology used to personalize a physical world customer experience must first have a great physical world to leverage. To transition 45 Lord & Taylor stores into hotbeds of “advanced personalization techniques” will take time. Requiring large-scale clearance of current goods, killer in-store (vs. online) merchandising strategies and product assortments, all requiring time, talent and resources.

In the end, based on Le Tote’s online apparel rental brands, the new Lord & Taylor will be filled with brands already found at other retailers, struggling to survive, including the now “sold” Lord & Taylor.

“Beginning in 2021, HBC can reassess the use of Lord & Taylor locations and recapture certain stores to determine their best use.” What? And after that, “The customers have spoken, and people are looking for smaller, more personalized locations — that’s something we do well at Le Tote.” What a deal.

It turns out, as we should know by now, that combining a mediocre brand with a lousy one rarely creates something remarkable. This feels like it could be Sears/Kmart 2.0. Or is it 3.0?

The personalization factor here is in the ecommerce side. These advanced personalization techniques are tied to the nature of Le Tote’s filled out customer profiles. Other than expanding assortment brands to use in its own model, there are only a few advantages for the in-store experience — returns and fitting showrooms for Le Tote. This is not a brand revitalization play, but an expansion play for Le Tote to thrive. Rental has met with mixed success and this will give a store presence with some advantages in managing their costs. For HBC, they still will influence the L&T brand with 2 board seats and some equity. L&T may take a shot at personalization in the store, but the merger is not designed to increase in-store sales. $100mm for a $1.1B sales company is basically a fire sale price, so this seems more of a white knight funding play including taking over $174mm (3 years of $58mm expenses) in rental obligations off the books rather than a real takeover. The real rental models will start at… Read more »