Monday, December 23, 2019

What is a Discount?

What is a discount?

Retailers are also consumers and should understand how they think, so here goes my reality check:

Retailer: The obsession with discounting in the apparel business is a retailer’s excuse for not working hard enough to find what the customer will buy at the original price.

Oh sure, there’s Amazon, Walmart, TJ Maxx, etc. etc. They made you do it, right? No. If what you are selling is comparable enough to theirs by any stretch of the imagination, then, is that the sandbox you want to be playing in?

Where is it written that there is only one sandbox in the world? I believe there are a lot of blue oceans in the apparel universe.

Consumer: If someone has to offer you a discount to buy, it is for something you did not want in the first place


you outsmarted them by waiting.

BUT, what if you really wanted to buy something and you didn’t know when or IF it would be discounted? What would you do?

Retailer: Unfortunately, the distortion of reality in today’s retail world is this: the discount is the real price. The original price is BS and has no real value for consumers. The retail gurus, led by Macy’s and Walmart, have molded the customer’s expectations, and trained them NOT to buy until they get what they believe is maximum discount.

There is no doubt that customers buy when they perceive the item is at its REAL value.

Consumer: SO, buying something you really like and want at the regular price tells us two things: a. The item has real value to you which is what? The price PLUS the internal satisfactions that the purchase would bring; and b. you have the self confidence to buy what you want, when you want, and at the price, because you want IT, not the price.

DOES that mean you should ignore discounts offered? Of course not. But the next time you hear the discount bells tolling, think about if they are tolling for thee. And, if you would not have bought the item at regular price, did you really want the item or just the momentary satisfaction of saving money?

BUT- are you really saving if you spent money on something you really wouldn’t buy in the first place, rather than putting that money toward what you really do want? AND, if we believe the saying, “you get what you pay for,” could you be making a mistake?

SO, in the rare case that you go to buy something at regular price and are surprised to find that it is on sale, by all means snap it up (after you think about why the retailer has decided to give it away).

Retailer: IS there a solution to the discount mania that drives away profits and drives people nuts? IF there is one, the only hope is that people put their maximum effort into the PRODUCT and pack it with value, so the price asked IS the real VALUE. The hot item is out there- IF you look and have the merchandising touch to find it. 

Thursday, December 19, 2019

Sustainability Report in Fashion Retail 2019 by NOSTO-we tick the boxes

Sustainability. What does this mean, really?

The common definition of sustainability is to maintain something at a certain level. 

As defined by the fashion industry, maybe the definition is just now coming to light, even though the C-Suite has been using it as a buzzword for years.

The report attached here, "Sustainability Report in Fashion Retail 2019 by NOSTO" surveyed 2000 consumers to find out what they think Sustainability is and how it would affect their retail purchases.  In doing so, it clearly defines some main themes that are important to consumers. But-

How important is sustainability to consumers nowadays? From the report:

"50% of consumers who desire sustainable
fashion would be more likely to buy clothes from companies they know
are committed to sustainability, while 28% of them would stop buying
clothes from a company if they find out it is not committed to the cause."

This article is important for BOTH consumers and brands.

  • Consumers should read and recognize what coincides with their attitudes toward purchasing and, most important, will they follow this direction? 
  • Brands should use the report as a self-check (assuming that sustainability is a key part of their business mission) to make sure that they are doing what they can to fulfill customers' expectations (and their own).
Some key takeaways from this report and how we stack up:

1. 57% try to keep clothes longer because it’s better for the environment. We make our shirts, ties and pocket squares out of natural materials of high quality that won't need to be trashed anytime soon.
2. 46% say they prefer to buy clothes that are made sustainability rather than buying them just because they’re from a well-known brand. Good for us and our future, because this is US.
3. Consumer Expectations re: Sustainability:

   Reduce the amount of packaging (75%)
• Provide fair pay and good working conditions (74%)
• Use renewable and recyclable materials (73%)
• Make clothes that are designed to last longer (71%)
• Use fewer resources — e.g power, water, materials (64%)
• Focus on innovation to come up with new environmentallyfriendly
materials and methods for making clothes (61%)
• Create initiatives to help people resell or recycle their
old clothes (59%)
• Make clothes in classic styles that will stay in fashion longer
(to encourage people to keep them longer (49%)

We have described all of the above on our website. And we tick all the above boxes except the second to last, which we haven't started yet because we're new. But we will.

Our business was built with this goal in mind and is mission-critical to us. 

How about your favorite brand? What are they doing NOW about sustainability (not what are they saying). Please do check and let us know!

Sunday, December 15, 2019


After years of seeing and being part of the good, the bad, and the ugly of the fashion industry, I decided (with my wife Lotus) to do something about it. Hence Lotus & Michael- the Art of Shirts.

1. Because we can. With so many years experience in the fashion business, sourcing, production, merchandising and marketing, we knew exactly how to get it done and done right.
2. Because there are huge white spaces and opportunities in the fashion business (shirts is one of the biggest):
a. Customers in general are buying less clothes; we believe it is in large part because there is less and less to hold their interest and everything looks the same. When someone comes along (like Lululemon) to offer something new and different, the customer will buy;
b. Mens shirts all look the same; the cheap ones and the designer ones look the same, so why spend the money on the high level?
c. Zara, H&M and others have created a syndrome of disposable clothes; buy it cheap, throw it away a short time later, and feel ok about it because it was cheap-despite the effect on the environment;
d. We are committed to sustainability in our packaging and materials;
e. The social wave is quickly erasing the boundaries between men and women; fashion inevitably follows social trends.
f. Women love to wear menswear looks, but there is little for them to choose from that are REAL shirts, with REAL shirt construction.

3. Because Lotus is a very talented painter and designer, and Chinese, so we have our own original and endless source of design.

So what is the result? Take a look first:

love our pink shirts and red wine!
great day green
sweet Magnolia pink
Uncloudy Sky blue solid dobby w/silk tie
Embroidered Dragon
Chrystanthemum yellow solid w ginger tie
Mandarin Driven Snow white

Necessary objects print

Ginger silk tie (1 of 4 coordinating colors available)
Our pocket squares

1. 100% cotton high quality wrinkle free shirts-
          Solid yarn dye dobby
          Original prints
          Unique yarn dye patterns
          Dragon and Phoenix embroidered solids
2. 100% silk ties
3. Coordinating pocket squares
4. Engineered fit tailored for men and women
5. Mother of Pearl buttons (easy to open and close, hard to break in the laundry)

Why buy?
1. Because our shirts will make you happy when you wear them and you will never look like the person next to you (unless they are also wearing our shirt).
2. Because our shirts will express your individuality and power.
3. Because our shirts are INVESTMENT DRESSING, and won't look like crap a couple of weeks later.

And, as an introductory, LIMITED TIME offer, we will give you a FREE silk tie or pocket square with qualified purchase

Finally, we guarantee your satisfaction- free shipping and returns in continental US. Elsewhere, per destination rates.

You have nothing to lose and everything to gain. See the above and more, share our inspiration-visit our website to see our shirts AND ORIGINAL ART, as well as featured promotions:

Lotus & Michael

and follow us on Instagram: lotusandmichael

We welcome your comments and questions- we live a simple life, and love to create a proud and satisfied community.

Saturday, December 7, 2019

Why you are not buying clothes (but should be)

Why you are not buying clothes (and should be)

 Here are the top reasons you (and everyone else in US) are not buying clothes anymore:

  1. Clothes are boring- regardless of price, what can you buy that you don’t already have in your closet?
  2. “Low prices are not fun anymore”- As CNBC reported in October of this year, “Consumers have reached peak happiness with clothing purchases” “In other words, consumers already own so many clothes that each new item they purchase doesn’t spark happiness.”
  3. Consumers have given up on department stores as a location for fashion inspiration- As you can see from the below chart, by age group, between 34% to 51% of Macy’s consumers have given up shopping there in favor of TJ Maxx, Target, Amazon, etc.
  4. There is too much to look at online; what should I buy?- The Paradox of Choice has betrayed us by giving us so many choices we don’t know what to believe anymore.
  5. Clothes are disposable- So I buy this heavily discounted clothing, and a few months later, I find that either I don’t like it anymore or it looks like crap.

Does this mean consumers are just not spending money? NO. In fact, for example, Millenials have increased their total annual expenditure by 233% since 2013. Yet, total apparel industry revenue has declined since then. So what are they spending their money on? NOT clothing.

CNBC again: ““Put simply, consumers would rather spend their marginal dollar on, say, going out for a meal, than on buying a 60th item of clothing in a year,” 

But we all love clothes- IF they make us feel happy, appreciated, powerful, individual. Can anyone deny this? Social movements have all expressed themselves with clothing and style; in the 60’s and 70’s, the social revolution expressed itself dramatically in a change of style. Today, we have the LGBTQ and women/minority social revolution, which will have much more of a lasting impact on society and the male/female persona than any other in the last 50 years at least.

AND, if we can feel that each purchase of clothes is an investment, not a fast-food purchase, we might actually buy more

Finally, at the same time, the sales and penetration of luxury brands has increased significantly.

So, what does this tell you about what you should do to rid yourself of disposable clothing and to begin to build a stable wardrobe of stuff that makes you happy when you wear it and will continue to support you as a wardrobe foundation?

But First- Wait, let’s be clear-tell me if you don’t agree- great clothing makes you happy every day.

  1. Throw out your disposables- First, throw out all those items in your wardrobe that you were seduced to buy because of 50% + another 20%, sale ends today, etc. 
  2. Buy VALUE, not PRICE- Focus your expenditure on items that will satisfy your expectations, not just your wallet.
  3. Don’t buy anything that doesn’t make you happy every time you wear it- The self-esteem generated by a bargain will never match the self-esteem which you get from a really great garment.
  4. Understand that, in today’s global marketplace, luxury is AFFORDABLE for most of us- Don’t be afraid- you don’t need any tax returns or certification to buy excellent clothing.
  5. Interact with your chosen providers; they are anxious to hear from you (or should be)- Today, the customer is the CEO- make your wishes known.

There is no better way to express yourself than through the clothes you wear. Period. 
So let’s find a way to build our own custom presentation through clothing. You can!

We have made affordable luxury and sustainability a priority in our shirt business:

source info:

Saturday, October 12, 2019

“Social” vs “Traditional” CRM: The “new thing” or symptom of backasswards?

“Social” vs “Traditional” CRM: The “new thing” or symptom of backasswards?

A lot is being written recently about the emergence of “Social CRM.” How is this different from the CRM that went before?

One article defines it as follows:

Traditional CRM is a business strategy that materialised in a set of applications. The software enhances data management, automates sales and marketing processes, and helps to oversee customers’ behavior and communication histories. The core of this CRM model is expressed in the standardised performance that uses input data as a basis.
Social CRM is an innovative approach to fulfilling the strategy of business processes facilitation and cultivation of trustworthy relationships with existing and future customers. The uniqueness of this CRM consists in the modifying the content into a full-scale and meaningful conversation with a prospect that is handed out via social networks and digital channels.
So, the dynamic engagement with the leads and prospects, instead of uninvolved messages, is the striking difference of social CRM. (Article)

I was going to let the suspense build a little before giving my two cents, but I can’t. The above is too way off in its perspective to resist.

First- Traditional CRM materialized before most applications existed. In the  late ’90’s, Gerhard Raab wrote, “Customer Relationship Management: A Global Perspective,” in which he defined 6 stages of CRM which I would call “Traditional:”
1. Customer Orientation
2. Product Quality
3. Customer Satisfaction
4. Customer Retention
5. Customer Value
6. Company success

which, as I teach, formed the core foundation of today’s CRM. 

Raab included technology in his Three Pillars, but it is one of 3:
1. Personnel
2 .Technology
3. Organization

Jeff Bezos, who founded Amazon in 1994, when interviewed by CNBC in 1999, used the words “internet schminternet” and insisted that the foundation of his company was not its technology, but its prioritizing the customer. 

An article written in 2017 by Michael Haenlein and published by the Kelley School of Business was entitled, “How to date your clients in the 21st century: Challenges in managing customer relationships in today’s world” In the article, the author argues that firms that are not taking the social nature of CRM into account are managing like 30 years ago (’80s and ’90s) and are relying on “outdated rules.” He disparages the “linear process consisting of acquisition, development and retention” and suggests that CRM be moved toward concepts like social influence, opinion leadership and word-of-mouth. And here’s the worst part: He calls the mantra, “the customer is always right “nonsenical”. If the customer isn’t always right, who is?

So here’s my point and the WTF moment that inspired this writing: What these author’s call “Social CRM”- word of mouth, social influence, companies paying attention to the words and actions of customers- predates even the origins of the modern CRM practice as written by Raab and others; it goes back as far as there were marketplaces, to the Agora of Greece, or for one still in existence and more familiar the Grand Bazaar of Istanbul. As I remember the retail business in the 60’s and 70’s, we had no technology to rely on, so what did we do? We talked to the customers! 

Once TV could influence customers, that was the medium of choice. But the intelligence gained from the advertising itself was nil, so what did companies do? Talked to customers!

Fast forward to the 80’s and 90’s where the new new thing were infomercials. Broadcasters talked to customers directly, and the customers called in to talk back. Social CRM? Of course!

It is true that the social media technology has altered the landscape of customer relationships. With it, the ability to measure Customer Social Value, Customer Lifetime Social Value, and Customer Equity presents an opportunity for greater insight into the customer’s mind and helps us to understand and predict their actions.

But, to me, that capability does not present a new aspect of CRM. It clearly tells us that we went astray for the last (?) years where companies sat in their offices and relied on IT to tell them what the customer was thinking instead of getting the answer for themselves.

Most authors that I have read in pursuing the subject of CRM as a professor, as well as competitive strategy, warn that, if a company allows IT to dominate the CRM process and be strictly or chiefly responsible for the results, it is wrongfooted and making a (costly) mistake.

So, if this Social CRM “revolution” can accomplish anything useful, it will be to get IT off the head of the table and put it in its rightful place, as data support to confirm, on a statistical basis, what we learned from the customer in the FIRST place.

Do you want to know why I think the customer is always right? Because the customer is the CEO, and the BOSS is always right..

Monday, September 2, 2019

Will Costco Survive in China?

Will Costco survive in China? 

Recently (August 27), Costco made headline news because it opened its first physical store in China (Minhang district of  Shanghai- as a rough idea, 23km from Shanghai downtown Center to Minhang Center, not accessible by mass transit). Despite the location, the opening days turned into a frenzy, with people queueing up at 2a.m., and people literally fighting over goods. So much so that the store had to close early due to a situation which became potentially dangerous.

The headline welcoming offers were Hermes bag for $14000 and MaoTai liquor for $150. Membership fees were offered at $28. 

Sounds good, right? The store surely opened with a bang. But those of us who understand the China retail scene will seriously question Costco's viability in the China Market. Why?

Foreign hypermart  and warehouse retailers have, almost universally, not been successful in China:

·     French hypermart Carrefour, after more than 20 years in China, sold 80% of their ownership stake to, a local retailer, in June 2019;
·     Metro, the German warehouse store, is anxiously looking for a buyer for its stores in China;
·     Korean Lotte Mart has sold 93 of its retail locations to local retailer Wumei Holdings in 2018;
·     British retailer Tesco failed miserably in China and had to abandon itself to a joint venture that all but erased its identity (whatever it was).

Walmart, who owns Sam's Club warehouse stores, is growing in China, but is dependent on its partnership with for its execution (Costco has some kind of partnership with Alibaba).

What is the root of the problem that has chased respectable retail chains from China? And how can Costco overcome these challenges and survive? Everyone (including me) has an opinion on the answer to these questions, but the truth is that the real answer is, nobody knows- up to now there is no formula for success for foreign mass merchants- only a history of failure.

Having lived in Shanghai for ten years, I have personally seen and shopped at all of the above retailers. But my point of view, as a foreigner, even one with on-the-ground experience, must be understood in context; to understand why these retailers have failed, we have to understand the nature of the China retail scene and, most important, the mind of the Chinese consumer.

I used to believe that Carrefour was successful because they morphed their China identity to be, in many ways, a mirror alternative to local markets and online retailers; stores contained a very small import products section and 95%, including fresh food, was focused on duplicating local products. Now I realize that the ultimate failure of this chain was due to the fact that Carrefour did not establish a separate identity from the shopping alternatives; in most cases price, quality etc. was no different from the local markets and ecommerce sites such as Taobao and Tmall.

From the above, I believe that we can learn the first relevant lesson for Costco: These retailers focused on price, which in the China market is the equivalent of the destructive head-to-head battles of WWI- nobody really wins, but lots of people die in the process. That, and duplication of the local product that was available every elsewhere.

All over the world, for sure in China, people intuitively understand the difference between price and value. Price is tangible- it is a number and 100% factual- 2 is less than 3. Value is perceptual- it is the buyer's interpretation of the significance of the number to them and their lives.

If you try to compete on price in China, you are born to lose. Establish a unique and robust value proposition, and people will pay more for your product at regular price, and go nuts when it is on sale. In China recent retail history, this is the formula for success of Inditex (Zara, Massimo Dutti, etc.); everyday prices on goods that are current fashionable and are good value; when they go on sale, the enthusiasm of the customer rises to a fever pitch (kind words for shark-like behavior).

Additionally, as we have seen in mass market stores like Walmart in the US, leading with fresh food is the key to success. Fresher, Better and sometimes Cheaper should be the formula. Core value proposition: These grapes at 15RMB/jing (aka lb. in China) are better (I perceive) than what I can get on the street for 10 RMB. Costco needs to establish a niche in China that creates a perceptual divide of VALUE between them and the local competition.

Finally, a long list of foreign firms has failed in China because they either failed to understand the Chinese mentality or were too arrogant to believe they should. You cannot superimpose an American or European strategy on China without change. To succeed, management need a humble and complete understanding of what they are up against. They must follow Sun Tzu's principles and win based on superior intelligence and understanding of the marketplace. Should this intelligence be Chinese, foreign, Asia Asians, Western expat, etc? Frankly, my opinion is that it doesn't matter the nationality of the leadership, as long as they have lived/worked/taught in China and thoroughly understand the local social and commercial environment. In my experience, the best formula for a successful team is a collaboration of foreigners and locals working together as equals.

Even with the above said, Costco's success or failure in China will depend on the decisions and the decision makers- from the macro to the mundane. Based on history, Western companies will send their best and their brightest- who in most cases will lack maturity AND any track record of success (or even visits) to China, but will be fully full of themselves. Based on their inexperience and lack of understanding, (added to those of the executives in the parent company), history will repeat itself.

For Costco, it is more than selling great products at great prices; it is about learning from those who have come before and failed; then, move forward without arrogance and with full armor of market information: create an unique and robust strategy. if not, welcome to the scrap heap.

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