J.CrewAholics

From left: Gilbert Harrison, chairman of Financo; Gordon Segal, chairman and founder of Crate & Barrel; Mindy Grossman, CEO of HSN; Burt Tansky CEO of Neiman Marcus; Mickey Drexler, CEO of J. Crew Group; David Simon, CEO of Simon Property Group; Billy Susman, president and COO, Financo.

Last night, investment bank Financo hosted its annual CEO seminar.  Womens Wear Daily wrote about the dinner in an article yesterday called “Financo Dinner: Hot Ticket in Cold Climate.”

At the seminar, CEO of J. Crew, Mickey Drexler and CEO of Neiman Marcus, Burt Tansky, discussed the future of luxury.  The two seem to have two very different opinions on how this economic climate has affected their clientele and business.

J.Crew’s Drexler and Neiman Marcus’ Tanksy Discuss Future of Luxury
by Rachel Dodes

Amid an ongoing consumer recession that is altering the U.S. retail landscape, a group of top retail executives discussed the future of the economy at last night’s annual CEO seminar hosted by the boutique investment bank Financo. One exchange, between J. Crew Group chief executive Mickey Drexler and Neiman Marcus chief executive Burt Tansky was particularly spirited, and reflected the executives’ divergent beliefs and personalities, said Arnold Aronson, managing director at Kurt Salmon Associates, after the discussion was over.

Specifically, Mr. Drexler said that “prices are crazy in the designer market” and pointedly informed Mr. Tansky that, in his opinion, the days of $800 high-heels are over.

Mr. Tansky, known as “Mr. Luxury” because of his often-professed love for the rich, shot back, telling Mr. Drexler, “It’s premature to start denigrating what the affluent customer will want.” He said, much like Wal-Mart CEO Lee Scott did on Monday, he thinks the recession will continue through 2009 and into 2010. The current environment, he said, is too volatile to make any accurate predictions about shoppers’ preferences in the future. Still, Mr. Drexler stuck to his pronouncements, making the observation that “Wall Street is over” and that “more wealth has been created on non-productive [financial] transactions” than at any time in history. With that wealth suddenly gone, he argued, consumers will be more less likely to splurge on the high-priced items Neiman Marcus is known for carrying (and, the implication was, more likely to spend on more affordable items at J. Crew.)

“There’s a whole reset button that has been pushed,” said Mr. Drexler, who subsequently took another jab at his more upscale competitor when he said he was happy to be a vertically integrated retailer at this moment in time, as opposed to a wholesaler dependent on outside vendors. “I’d hate to bet my future on companies I have no control over,” he said.

Mr. Tansky said that Neiman Marcus tried to do private label products, but “our customers prefer branded goods.” Still, he reiterated his intention—stated in the company’s last conference call—that Neiman’s will likely be dropping some vendors, and pressing surviving vendors for “uniqueness” in the form of exclusive merchandise.

“We will focus on vendors that are the most important. We are not giving up uniqueness,” said Mr. Tansky.

For another article on last night’s seminar, please click, “Retail execs debate price, positioning at Financo event.”