The Career of Steven Lagos Comes Full Circle

Steven Lagos

Steven Lagos founded his eponymous jewelry brand 1977 in Philadelphia. The company gradually grew to become one of the best-known jewelry brands in the US, with an extremely loyal following. LAGOS specializing in sterling silver jewelry. Its products are sold in more than 300 stores, including Neiman Marcus, Bloomingdale’s, Nordstrom, Saks Fifth Avenue and independent jewelry retailers. 

In February Lagos announced that he will step down from his CEO position to focus on his roles as chairman and creative director of the company. He described the change as both a natural progression for him and the company and as a dream come true as he can now put all of his focus on designing jewelry, which is why he entered the business in the first place. 

What follows is an interview I had with Lagos as he prepares for the next stage of his career. 

Anthony DeMarco: Why make this move now?
Steven Lagos: These management changes are the result of reaching our objectives within our long term strategic plan. While the wholesale customer base has consolidated, the retail marketplace is more fragmented than ever. When I first started you just focused on the stores, it was so easy. Today the customer is shopping everywhere. To stay competitive, the business must be scalable, and that requires significant resources. We define resources as "Money, Time and People." All three are critical and must work in unison.  Today, we are on track with our plan and know exactly what we want to do. This is the perfect time for me to step aside.

AD: How long have you been planning this?
SL: It’s been part of the master plan for a while.  In big companies they say it’s best to have a new CEO every seven years. I think 37 years is a pretty long run. 

Caviar, made of textured sterling silver, is the company’s iconic jewelry design 

AD: Is this a first step toward retirement?
SL: Retire from what? I love my work and my job. It provides me a fantastic lifestyle and is really interesting. I’m a creative type. I managed the business for all this time to get exactly where I am. Design Director is my dream title.  

AD: What are your responsibilities going to be?
SL: I started the business from the creative side. To relinquish my day to day business responsibilities is a dream come true for me. While I’m proud of the creative work I‘ve been doing, I think I’ve only scratched the surface of what’s possible. There is much more to explore. Creativity and design will be my main responsibility.

AD: You are showing a lot of faith in Chris Cullen, how has he earned it?
SL: Chris joined the company seven years ago as president and was charged with transforming LAGOS into a professionally operated, world‐class brand. For 31 years, I was creating products and selling in the best channels. We developed a cult following but were never able break through and scale our success. Chris is a team builder and professional manager. He created and has executed a vision of the company that leveraged our heritage and product portfolio, while developing new systems that focused on adapting to the changing marketplace. He has definitely earned it.

AD: Are you looking at creating new designs? New materials? New price points? Last year you seemed to introduce more expensive items? 
SL: I’m 100% interested in new designs and materials. Jewelry is so dynamic and versatile. Gold was logical as it build on our existing portfolio in both materials and price points.  With any product you have to innovate to stay relevant.   We won’t be adding new categories.  We are focused on being a women’s lifestyle jewelry brand.  We want to offer our customers jewelry for every time and occasion. 

AD: Is the company itself going to update its brand image?
SL: We are not updating the brand image, but rather re-affirming what the brand stands for and what makes it successful, which is our signature Caviar design, the bold femininity we want to convey, as well as our values; strength and integrity. The campaign we launched last fall “MY LAGOS MY WAY” (pictured below) is a result of this strategy.

AD: What is one or two of your best memories and/or accomplishments at Lagos?
SL: In 37 years there have been so many it would be hard to single out one or two. I think my best memories all involve people.  Jewelry is so intimate and personal. It’s an honor to be able to create and have people purchase and cherish your work for its beauty. The magic is the personal stories attached to each piece.  

AD: How do you see your future and the future of your company?
SL: We are building a brand. We have always prided ourselves in running a balanced, well run organization.  We believe that there is a lot of opportunity in the market and want to stay focused on building our brand.

AD: When you first started what were your goals and how have they changed over the years?
SL: When I started it was so much easier to focus. The distribution was simple–some retail stores and some mail order clients. Today the customer is shopping everywhere. It’s so different and fragmented. You need to focus on a lot of different distributions, often for the same business. 

AD: Did you ever think you would have a created a brand such as Lagos? 
SL: Growing up, I always wanted to be an artist and sign and sell my work. Creating LAGOS was my way of realizing this dream. I am super proud of what we have accomplished and humbled with what is left to do. 

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Survey: Ultra-Affluent Consumers are Spending Less at Luxe Department Stores

Barneys New York flagship store

Barneys New York, Nordstrom, and Bergdorf Goodman emerged as the top three luxury department store destinations among those with annual incomes of at least $250,000, according to a recent survey by Unity Marketing. However, a look back at the previous year shows ups and downs among ultra-affluent patronage of these retailers:

* Barneys New York, which currently attracts some 22 percent of ultra-affluent consumers, has weathered two quarters in the past year when patronage dipped as low as 16 percent. 

* Nordstrom ranks as the second most popular destination, however, its share of purchase among ultra-affluents dropped by more than 5 percentage points from the fourth quarter 2010 to first quarter 2011. 

In fact, among the seven leading luxury department stores included in Unity Marketing's luxury tracking survey, only one—Saks Fifth Avenue—captured a larger share of ultra-affluent shoppers this quarter as compared with last quarter, according to the survey titled, “The Luxury Report 2011: Ultimate Guide to the Luxury Consumer Market.”

Luxe department store patronage among ultra-affluents is down after peaking in third quarter 2010. The survey from the Stevens, Pa.-based luxury market research firm defines ultra affluents as those with annual household incomes of $250,000 and above, the wealthiest 2 percent of U.S. households who spend the most in the consumer economy.

Even more striking is the decline in the percentage of ultra-affluents shopping in these luxe department stores overall, said Pam Danziger, Unity Marketing president. While the percentage of ultra-affluents shopping in luxury department stores peaked at nearly 75 percent in the third quarter 2010, it has declined since, leveling off at about 70 percent. She says that relatively small declines in patronage on a percentage basis translate into big drops across the market. Regardless of ultra-affluents' favorite luxe department stores, it is clear that nearly a third of these wealthiest Americans are not passing through any of their doors each quarter.

“These top retailers—who are known for being destinations for the wealthiest customers—can serve as both a model and a cautionary tale for others who would like to operate in this space,” Danziger said. “While the popularity of each store waxes and wanes quarter-to-quarter, the overall trend is that ultra-affluents are slowing their pace of shopping in the luxury department store sector. If the downward trend among ultra-affluents continues, each of these stores may have to rethink their approach if they are to remain a compelling and attractive destination for the wealthy.”

Luxury Brands Report Strong Sales in March

Luxury retail sales continue to be the bright spot in an otherwise fragile U.S. retail sector that is balancing on a number of internal and external factors.

In March, luxury department stores reported sales increases for stores open more than a year. Among them are Saks Fifth Avenue (up 11.1 percent) Neiman Marcus (up 8.8 percent) and Nordstrom (up 5.1 percent). Victoria’s Secret, the high-end lingerie store owned by Limited Brands reported a 19 percent increase in same store sales.

Meanwhile, Limited-owned GAP, a mid-market brand, reported a same store sales drop of 9 percent. Other mid-market and low-end stores were disappointing, as well, including Target (down 5.5 percent), Dilliards (down 1 percent) and Kohl’s (down 6.5 percent).

The International Council of Shopping Centers said comparable sales at chain stores increased 2 percent in March, year-over-year. The retail organization said a late Easter impacted year-over-year sales data.

“Sales for the month of March were on the high side of our expectations despite the negative impact of the Easter-date shift and less than favorable weather conditions in parts of the country,” said Michael P. Niemira, chief economist and director of research for ICSC. “This gain, in the face of somewhat adverse factors, was encouraging and reflected a solid underlying trend in consumer demand.”

Bergdorf Goodman Earns Top Ranking Among Luxury Consumers

For the second consecutive year, Neiman Marcus' Bergdorf Goodman subsidiary earns the top ranking among eight luxury retailers in the 2011 Luxury Consumer Experience Index survey of wealthy shoppers conducted by the Luxury Institute. Respondents rated retailers on store personnel, the shopping environment and whether the overall experience resulted in complete satisfaction.

Brooks Brothers earns the second highest overall LCEI score but ranks first for completely meeting wealthy customers' needs. Nordstrom receives the third highest LCEI score, and remains the most popular luxury shopping destination, visited by 38 percent of wealthy shoppers in the past 12 months. It is also earns the highest loyalty, with 98 percent of shoppers planning to come back.

“The top-tier brands of luxury with resources are now focused on becoming customer-centric global enterprises,” says Milton Pedraza, CEO of the Luxury Institute, a New York-based market research firm specializing on high net-worth consumers, which does the LCEI survey. “The only way to achieve this is to create establish a self-reinforcing culture of service to your associates and your customers. The work is extremely hard but the financial returns can be dramatic.”

Survey participants had minimum household income of $150,000, with average income of $271,000 and average net worth of $2.4 million.

Strong Showing for Retail Stores in September

A number of department stores posted strong gains for the month of September, outperforming other retails segments.

For example, Neiman Marcus reported that its same store sales rose 4.7 percent during the month against the same period last year. Jewelry, women’s shoes, handbags and men’s clothing saw big sales gains. Stores in California, Texas, the south-east and New York were the top performing for the period.

Saks reported a 6.5 per cent increase in same store sales, highlighting strength in a similarly broad range of categories. Nordstrom said its same store sales rose 7.5 percent and that transactions at its main stores had increased for the 13th month in a row.

Mid-market retailers also did well for the month. Macy’s same store sale rose 4.8 percent, JC Penney was up 5.1 percent and Kohl’s increased 3 percent in September.

Teen and youth retailers also delivered a generally strong month, with same store sales at Abercrombie & Fitch up 13 percent.