Michelle Spiro, one of two principals at LYS Partners (you may remember our interview with Helene Ly from a couple of months ago), excels at helping people develop strategy for their products, create consistent vision, and convey that vision in a thoughtful and compelling way. She learned about the fashion industry by working from the ground up, starting with six weeks in the executive training program at Macy’s, and quickly rising in the ranks there before joining DKNY and Calvin Klein. “My forte has always been seeing patterns and building teams,” Michelle says. For more details from our epically delicious and interesting chat at Ralph’s Coffee in midtown, read on!
How would you characterize what it is that you do now, and how did you get there?
My business partner Helene and I have started a consulting company that focuses on helping people to bring their brand and their merchandise together, so there’s actually a strategy behind what they’re making and the story they’re telling, which is important when you’re expanding your business to other regions. Everything is becoming global now. The regions of the globe are different. They have different needs, and they shop differently. We bring all the experiences we’ve had, and our experience is very different. Helene is more the creative side, the design side, the production and product side. I’m really more the commercial side: What’s going to sell, how it needs to be organized, how it’s going to translate on the selling floor, whether it’s wholesale or your own retail, what does the customer needs to be told, how it has to be shown to the customer, what story you need to tell, and whether or not you have a point of view. Those are all things that are really important. They’re things that come so naturally to me that I didn’t realize that people didn’t know how to do them.
What do you mean?
So I just got off a call with another consulting firm about trade spend.
I don’t know what that is.
So, trade spend is when you do wholesale, and you’re working with wholesale customers like a Bloomingdale’s or a Macy’s. There’s a certain amount of money you have to pay them for advertising for in-store visuals, for fixtures, for their margin, and those people don’t understand that. And that’s very different in the U.S. from other regions in the world. One of the reasons why the US assortments are so much smaller is our markdowns are so much bigger. We promote more, and the vendors have to support those markdowns. In Europe they don’t. I think that’s going to change, but for now they don’t.
All right. Give us a little prediction. Why do you think it’s going to change?
I think it’s going to change because of the economy there. Over the last two years the amount of sales, in Paris especially, has increased dramatically. It used to be regulated by the government.
But it’s still like that. They have the sales twice a year.
No, they actually have it more now. There are many more private sales. Also, the department stores are having more promotions. I have gone to Paris for my birthday pretty much every year for the last ten to fifteen years. And it’s around Thanksgiving, so it’s the perfect time. In America, everything is on sale, but in Europe nothing is on sale yet. So I’m always doing my due diligence to see if I’m going to get it cheaper in Europe if it’s a European brand. My most recent visit was one of the first times I got a discount at the Bon Marché on my birthday. That never would have happened before.
Yeah. The mind reels.
I don’t think they’ve figured out how they’re going to pay for it. I don’t think they realize what this is going to do. The retailers have never had to pay for sales because it has been so constricted. But now it’s not constricted. I hope it never get like it is in the United States, because what I’ve watched happen in the past 25 years saddens me. I started in Macy’s executive training program, and my first position after the six weeks of training was to be a department manager, and I was put in Garden State Plaza, New Jersey, which was their biggest New Jersey store. It was the mall where the first Nordstrom’s opened on the East Coast, so it was kind of an exciting time. When they had one-day sales, they were really only one day, and there were maybe four of them a year. We would have to set up the night before, just to be ready. That is how the courtesy day came to be. There didn’t used to be a day. It’s just that because we set it up, and it was 8:30 at night and the store was open, and we would say, “Fine, buy it.” The numbers got to such a point we had to anniversary it.
One-day sales used to be just one day. Now they’re three days, but they still call it a one-day sale. The reason why is, when we used to set up, our numbers would be so big the day before we would have to anniversary those numbers. Then they started to make that the courtesy day, the day before the one-day sale. Now it’s gotten so bad that it’s like two days before the one-day sale. Now there are three one-day sales a month. There isn’t even a one-day sale anymore.
But explain something to me. Why is it that there are all these sales? Is it that the prices just aren’t affordable?
No. I think we’ve trained the customer. The customer will not buy at full price. Why would they? They don’t need to. There’s no reason to. It’s interesting, because Ron Johnson, who went to JC Penney, ended up not working out there. But conceptually he wasn’t wrong. And what he tried to do is change the strategy to a lowest price every day. That’s when Ellen DeGeneres started doing the ads. It backfired, because you can’t change a whole culture unless everyone’s involved in changing the culture. A lot of us in the industry know he was right, but you can’t change it by yourself. We’ve gotten to a point where something’s going to have to shift, or we’re going to have to pretend to price up so that we can discount. It’s interesting to see how the strategies are shifting due to the economy. The other thing that I learned when I was at Calvin [Klein] is that the American consumer does not like to think.
I think that Americans do not like to think in general.
It’s true. But the math is not going to happen. And 25% off might as well be full price. If you put something on sale, the goal is to sell more. And what was happening was that stores and vendors were selling the same for less. So now the best strategy is to make people buy more to get the discount—so it would be buy three get one free. It’s still 25% off, but people don’t get it. It’s really incredible how it works, and it really worked for us. Macy’s wanted us to be part of every one-day sale when I was at Calvin, and I was like, “We can’t.”
So now Calvin has entered the picture. So you went from Macy’s to where?
I was at Macy’s. I went through their whole training program. I was a department manager, then I was an assistant buyer, then I was a group manager, which is someone who goes back to the stores and manages department managers. I was 24 when I did that. Then they created a new job, a regional merchandise manager. It still exists today, but I was the first class. That is someone who is given a region and a division. I was given men’s, so I worked for the head of men’s for Macy’s, and I worked for the head of the mid-Atlantic region. It was really fun. I did that for nine months, and then I was promoted to a buyer. I loved it, and then Federated bought Macy’s. By the time, I had decided that I wanted to go back to school anyway. Being a buyer, which was like my dream, wasn’t exactly what I thought it was going to be.
What was it instead?
It was about getting markdown money all the time, about getting money from the vendors to pay for the markdowns so that your gross margin would be higher.
So it wasn’t actually about buying clothes?
You did buy the clothes, but you only bought them from people who you knew would give you money. And it’s still that way.
That makes me sad. I always thought that buying was such a creative job. You go to the shows and buy new stuff, and it’s well-curated and this and that…
The only people who go to the shows are the really high-end stores. But right now, it’s more important for the vendors and the designers to have bloggers and magazine editors at their shows.
Why is that?
Because the end consumer is becoming a lot savvier about the information they can get, and they don’t just depend on what they see in stores anymore. They can do research online. There’s a lot more research than commerce being done online. So people will do research on Macys.com before going in to Macy’s. People are generating their own PR through bloggers, by listening to what they have to say. The influencers are becoming more reality, just like reality TV. The reality of the real people telling you what to buy is becoming really, really important.
So when did you end up at Calvin?
I took a severance package from Macy’s at 27 years old and marched up to Columbia and handed them the check. I did my master’s in organizational psychology. During that time, I still needed to make some money. Mary Wong was president of DKNY—she is now again, but there was space in between—and I had been a junior woven and denim buyer at Macy’s. They were looking to launch DKNY jeans, and she hired me to do the denim models. They kept giving me more projects, and then I started getting into account meetings. Then all of a sudden, I started to be brought into other projects. I was starting to do the six-month plans for retailers, and presenting them at market. And then I was doing all the gross margin analysis and negotiation and the end of the markets. This was all while I was in school. I thought I was going to be a consultant—I thought I was going to go work at Deloitte and Touche. Mary Wong said, “You are not going anywhere. I am making a position for you.” And she made me the business analyst for DKNY Women’s, and DKNY Accessories. I did all of their business analysis. And then John Idol became the CEO of Donna Karan and saw that the only two divisions that had any analysis going on were the ones that I was running. So he made me a corporate analyst. After doing that, John said, “I’m ready for you to be reporting to a general manager.” So I took that job. And I’m so happy I did. It was a really great experience. We grew the business, and I had my relationships with Polo, and it was great.
Then what happened?
Things changed. The put all of sales in one division. That wasn’t for me. They ended up making layoffs, and unfortunately I was one of them. They gave me a very nice package, and didn’t give me a non-compete. So I went to work for Calvin underwear. I met Helene at Calvin. I spent almost seven years at Calvin. I left in April 2013. I had always been a Francophile. I went for the first time in 2000, and the minute I stepped out of the airport, I knew I was home. I started to go back every year for my birthday. In 2011, I started thinking, you got to figure this out. But I only had the courage to retire there, but I figured that if I was going to retire there, I might as well start meeting people. And I met the most incredible people. Then things began to change at Warnaco. A lot of the changes didn’t suit me, and I knew I wasn’t happy there. I realized in August 2012 that it was time for me to start looking. I got a call from a headhunter who said, “Why don’t I know you?” I realized that nobody knew me. I thought, wow, I really need to change what I’m doing here. And then, at the end of October, Hurricane Sandy hit. I live in Hoboken, and I was trapped in my building for three days. It was awful.
You were not prepared.
I was not prepared at all. The Hudson River swallowed Hoboken. I watched it happen. It was like the river came in. We were living on the roof. We couldn’t get out. I got a text that Warnaco had been sold. I thought, “Mother Nature had to work really hard to get me to make a move.” I wanted my life to be extraordinary, and I knew it wasn’t. I had been working really hard with an executive coach and another person to figure out what extraordinary means to me.
What does it mean to you?
My world opened. I wasn’t going to be held back anymore. After Hurricane Sandy, I believed I could do anything.
What three things would you suggest to someone to help them live an extraordinary life?
The first is to make sure you have respect for yourself. The second is to accept your fear. The third is to know that you have a choice, every day, between faith and fear. If you can pick faith more than you can pick fear, then you can do anything you want.