PVH Corporation, the company that owns Calvin Klein and Tommy Hilfiger, is adding an extra $20 million to its marketing budget for the holiday season, and the majority of that money will be spent on fostering its close relationship with Amazon.
In November, Calvin Klein announced that it would be selling its underwear exclusively with the retailer, cutting out other wholesale partners including Urban Outfitters and Macy’s, which is Calvin Klein’s largest retail distributor, according to CEO Emanuel Chirico. On top of the new partnership, Calvin Klein has teamed up with Amazon Fashion for two physical pop-up retail stores in New York and Los Angeles, themed around the brand’s “My Calvins” tag. The stores have Amazon Echo technology throughout, including inside fitting rooms, as well as customized product. Online, the brand has built a My Calvins storefront, where it’s selling denim alongside its underwear, with exclusive products and branded imagery with models like Karlie Kloss.
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As the holiday shopping season is underway, PVH is increasing its marketing budget to drive sales, particularly through the Amazon partnership, as well as through updated store and online advertising imagery, focusing on its latest My Calvin campaign featuring Solange Knowles. The goal is to maintain momentum from the company’s third quarter of its financial 2017, which saw revenue increase 5 percent year over year. The latest results pushed the company’s predictions for year-end revenue to a 7 percent increase, up from a previous 6 percent prediction.
Calvin Klein revenue for the quarter increased 6 percent, to $943 million. The brand, under guidance by creative director Raf Simons, has seen a turnaround at the runway collection level, with the brand shifting away from its department store-brand status and back towards being an aspirational brand. But during the all-important holiday season, runway collections aren’t going to be the ones driving the most sales.
“In the first half of the year, initiatives around the Calvin Klein business were focused on creating a brand halo and brand positioning, driving the collection business and fashion relevancy,” said Chirico, on an earnings call Thursday with investors. “This is about driving traffic and sales, and we think it will pay big dividends.”
The majority of the $20 million, Chirico said, will be put towards the Amazon partnership, making sure the Calvin Klein and the My Calvins branding comes through stronger than the Amazon brand. That’s a smart investment for a brand that’s going all-in on the platform. As Jessica Ramirez, a retail analyst at the firm Jane Hali and Associates, put it, Calvin Klein is the first fashion brand to sell apparel through a Dash Button.
“Calvin Klein is the fashion brand that is probably the most on point when it comes to working with Amazon,” said Ramirez. “They’re finding a way to partner with them that makes the investment worth it. The way they teamed up with Amazon still has that level of brand recognition. When shopping there, it feels like you’re on a Calvin Klein page. The investment that you put towards that only makes the brand better. On Amazon, maintaining your brand image is very important.”
PVH continues to invest in its relationship with Amazon, sometimes at the expense of its other retail partners, but Chirico said those other retailers haven’t been discouraged. In fact, the partnership with Amazon has created enough momentum around the brand that it’s seeing overall lift.
“The experience [on Amazon], for us, has been great for the brand; we’ve seen strong performance from pop-up shops and a strong sales performance on Amazon online,” he said. “The interesting thing we saw is that it’s created a lot of momentum around the brand, in that all categories of business really accelerated through the month of November on all channels, in particular the Black Friday through Cyber Monday weekend, which was one of our strongest weeks on record. So we haven’t seen any kind of pushback from other accounts.”
To turn quick sales over the holidays, an exclusive product strategy with a major retailer like Amazon is one way to do it, but there’s a lot in it for Amazon, too.
“Retail brands, like Calvin Klein, that partner with Amazon with exclusive products only available in Amazon pop-up stores or online are doing so to boost their revenues – very quickly,” said Ken Morris, principal at Boston Retail Partners. “While it is quite tempting from a sales impact, retailers need to be careful. If Amazon gains access to your customers and builds profiles for them, they are one step away from converting them to loyal Amazon fashion customers – disintermediating your brand.”
Calvin Klein is being particular about the products it sells through Amazon, focusing on core pieces and basics, like underwear — not the Raf Simons collections.
“Those elevated, brand-halo products are the things loyal customers will still go to the brand to seek out and buy,” said Ramirez. “Calvin Klein is kind of taking a gamble right now, by suggesting it can split up its product across different channels and still keep that direct-to-consumer moment.”