I got my start in eCommerce at Donald J Pliner. And when I posted about it on TikTok, I discovered that there is still a lot of demand for the brand...on eBay and Poshmark.
That was a little surprising because, when I worked there, we were always struggling to build awareness with a younger audience. The stereotypical Pliner woman was retired, 55+ and lived in a sunbelt state.
As I looked back at my time working there, I realized that DJP was the perfect case study for the hourglass framework.
The brand produced amazing products and had a solid set of differentiators...so why did it fade into irrelevancy?
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Why Price To Value Is A Trap
But there is a reason that the internet covets vintage DJP's while ignoring the brand's current offering: when the brand launched, the price to value proposition was amazing.
The brand's slogan was literally "Made In The Mountains Of Italy". The craftsmanship and quality was comparable with designer brands, but at a price point that was 25-35% lower.
Another differentiator was comfort. Donald J Pliner invented the "crepe elastic" upper, and each new last (shoe body, basically the shoe's silhouette) was designed and rigorously tested for comfort before going into production.
Unfortunately, the brand never evolved from differentiators to brand platform. And price to value is one of the trickiest differentiators to maintain long term.
It's a recurring theme: brand launches with amazing value for price, a certain segment of consumers raves, the brand can't maintain that proposition as it scales, and the original fans turn on it, hard.
When I posted about Everlane, I got so many comments saying some version of "the quality used to be amazing!".
And it's become a trend to blame private equity or some other grand conspiracy when brands deliver less quality for the same (or higher) prices as time passes.
But that simply is not the case. Two major factors drive up prices:
- The price of raw materials is almost always increasing over time, especially high quality natural materials. You can see the price of cotton since 1969 here. It's volatile, but there is a steady upward trend line since 2000.
- Sales expansion requires SKU expansion. This increases inventory risk, requiring brands to discount more. Those discount eat into margins, requiring brands to either raise prices or reduce quality to make money and stay in business.
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There are some macro factors introduced in this century that made the problem worse:
- Fast fashion increased consumer appetites for newness. This increased inventory risk even more.
- Amazon set an industry standard for fast, free shipping and free returns. Most brands can't ignore these entirely, even if they don't deliver Amazon-tier service. This is expensive.
These factors make it almost impossible to maintain price to value over time, unless you commit to keeping the brand small and the product line limited.
Delivering on perceived value is important, but making it your sole differentiator is a trap.
The Private Equity Transition
Donald J Pliner was nearly taken out by the 2008 recession. Department stores drove most of the brand's revenues, and that sector was severely disrupted during the financial crisis.
The brand's operations were subpar–cash was not being invested efficiently, and every aspect of the brand's opex was "luxe"–the original corporate office was on 57th Street in Manhattan.
So, in 2011, Mr. Pliner sold the brand to a private equity firm to save it from bankruptcy. And what was one of the first decisions the firm made?
They moved most of production out of Italy, and over to China and Brazil in order to lower costs.
If the brand had developed a platform that allowed it to move beyond "made in Italy" in an authentic way, that would have been a calculated risk.
But without a brand platform, the decision simply killed off the brand's strongest differentiator. It was a price:quality brand that started underdelivering on its promise.
From a purely logical standpoint, the decision made sense. The shift in production allowed the brand to maintain its $250-350 price point. For the shoes that were still made in Italy, prices increased to $495-550.
But, at the time, pricing in the designer category also increased to $895-1,000. The pricing of the Italian shoes was still relatively a good bargain. But increasing price point does tend to churn out existing customers.
No matter which decision the PE firm made, it was going to hurt sales in the short term.
PE Can Turn Around Ops, Not Brand
The "private equity turnaround" was a really sexy business narrative for a long time. PE firm buys distressed company, implements operational efficiencies, creates massive value. Dunkin Donuts and Chewy.com were both turned around by PE firms.
But when a brand's operations and positioning and consumer perception all need help, PE is not the right tool for the job.
PE investors and operating partners tend to think of decisions purely in financial terms. Shifting DJP's manufacturing is the perfect example: they did not realize that, by abandoning Italy, they were essentially hard restarting the brand.
PE folks are often fast to dismiss things that can't be quantified and tested. At DJP, we invested a lot in digital advertising and direct mail, because it was easy to "prove" ROAS.
But instead of hiring a brand strategy firm or even a real art director, there were countless circular debates about how "luxury" or how "young" we should be. There was no cohesive message.
And while that stuff can be fluffy, it is important. Because without differentiators, a fashion brand becomes a commodity.
That's exactly what happened to Donald J Pliner. The brand slipped into an escalating cycle of discounting. Revenues grew, then plateaued, then started to regress to the pre-acquisition level.
The PE firm sold the brand to a holding company who, by the look of things, manages a roster of brands in decline.