What Really Happened At Phi?
Posted: December 22nd, 2009 | Author: Lauren Sherman | Filed under: Retail, fashion, luxury goods, marketing | Tags: Alexander Wang, Dree Hemingway, Michael Dell, Phi, Susan Dell, Vanessa Traina | 3 Comments »
Phi, a much-hyped fashion label based in New York and backed by Susan Dell (yes, wife of Dell computer founder Michael Dell), announced yesterday that it was closing its doors due to recessionary woes.
I’m sure the recession had something to do with Phi’s shuttering, but I can’t help but question the real motivation behind this closure. How could a brand with so much hype and positive press fail during what seemed like its pinnacle? (It was beloved by the folks at Vogue and also well-dressed socialites like Vanessa Traina and Dree Hemingway.)
In the end, Phi is pure proof that hype–and great press–doesn’t always result in sales. As a source familiar with the situation told me this morning, “It was just too niche. Great design, very hip and cool. But it appealed to a very limited audience.”
The source went on to say that Susan Dell was still pouring quite a bit of money into the company; she didn’t want to fund it any more.
What differentiates Phi from a similarly-styled–but infinitely more successful–brand like Alexander Wang? Momentum. Wang burst onto the scene in 2007 and quickly became a commercial hit. Phi, on the other hand, launched in 2003 and only began attracting substantial attention from the consumer press over the past two years. In fashion, like any other business, success has a lot to do with timing.
Many reasons why it failed. Top heavy with executive and executive salaries even though the line was in maybe 30 stores worldwide. People running the company who didn’t understand the business of luxury – the CEO, CFO, and others including a director of stores that was brought in had backgrounds at Levi’s and that was the extent of the experience in the “fashion” industry. Hundreds of thousands of dollars on ad campaigns and Stephen Meisel shoots but never more than $700,000 a year in business in it’s flagship store. Redundancy in the collections. Sloppily made clothes – unfinished seams, out of proportion patterns, shoes and accessories that fall apart. Is that enough for you?
You can see that there is no soul in the design, but that there was lots of money around. It’s nice to think that customers would rather invest their money in a brand with a designer at the helm rather than a trend forecasting team. These rich wannabes and celebs should back existing labels rather than trying to start their own.
and, perhaps, also the fact that Wang is thousands (on average) less than Phi. I dont think one is more innovative than the other, or one has better craftsmanship, but at the end of the day, it all comes down to who can purchase your goods, and Phi was certainly too niche.