Innovation is key to retaining customers: Lilly Pulitzer CEO

The most recent University of Michigan Consumer Sentiment Index reading showed a climb in consumer sentiment despite dealing with sticky inflation (prices have not adjusted as quickly to supply and demand changes), not reaching the Federal Reserve's target goal of 2% just yet.

Lilly Pulitzer CEO Michelle Kelly — the high-end women's apparel brand owned by Oxford Industries (OXM) — joins Yahoo Finance to discuss the state of consumer sentiment and how the retail sector is navigating economic headwinds.

Kelly gives insight into how the company approaches a changing consumer and attempts to retain those consumers: "We are really focused on innovation, and keeping things fresh. I think for the past almost four years now, it's been really hard to anticipate which product categories were going to serve the customer's needs best in her life because her lifestyle has been changing so much, and ups and downs..."

She continues on to affirm that innovation is the way to best adapt to a consumer as their needs change.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Nicholas Jacobino

Video Transcript

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- Americans are still struggling with sticky inflation, as prices remain well above the Fed's 2% target. Now, despite those higher costs, inflationary pressures have been easing just a bit, and it's enough for consumers to feel better about the economy. Consumer sentiment soaring to the highest level that we've seen in about 2 and 1/2 years in January.

The, the latest forecast from the National Retail Federation's chief economist saying that they expect consumer spending in 2024 is going to continue to grow. So how are retailers navigating this challenging environment? We want to bring in Michelle Kelly, CEO of Lilly Pulitzer, joining us now. Brands like Lilly Pulitzer, Tommy Bahama, and Southern Tide, are under a parent company, Oxford Industries. Michelle, it's great to have you. Thanks so much for joining us here this morning.

MICHELLE KELLY: Thank you for having me. Great to be with you.

- So let's talk about how challenging this setup is for names like Lilly Pulitzer for your company. How are you navigating this challenging environment right now, trying to obviously preserve your margins but also make your clothing, make your product affordable enough for consumers.

MICHELLE KELLY: It's a great question, and you phrased it to really get at the heart of some of our challenges right now. We are optimists at heart, the Lilly Pulitzer brand is really all about creating one sunshine, that's our brand positioning that we use internally as well as with our customers. And so we really believe in that notion of when life hands you lemons, you're finding a way to squeeze the juice and maybe come up with an entire brand as a side, a side circumstance, which is how the Lilly Pulitzer brand got started 65 years ago.

So we are really focused, we're just focused, I would say, is the way to answer that question. We're focused on finding, finding ways to create value for our customers, create great experiences for them, beautiful product, and consistent great service despite some of the cost pressures that we are seeing.

- Where have you needed to spend further into specific product categories underneath of the Lilly Pulitzer brand in order to not just retain, but attract new customers as well, and how are some of those efforts paying off from what you're seeing right now?

MICHELLE KELLY: Great question, thank you. We are really focused on innovation and keeping things fresh. I think for the past almost four years now, it's been really hard to anticipate which product categories were going to serve the customers' needs best in her life, because her lifestyle has been changing so much, and ups and downs, and inside outside things like that. So we have really been focused on innovation for the past, I mean always, but certainly for the past 12 months, we've been finding ways to innovate within all of our categories.

We've been focused on, which, trying to find that balance of how we can address her needs. And we really we have a higher degree of product newness coming in the next 12 months than we did in the past 12 months, we're very excited about that. And then we also have a few new categories that are really entirely new for our customer that should be exciting.

We've expanded into the home and gift area just knowing how important it is to our customers that they have the perfect gift when they are going to see their family, friends, and loved ones. And of course, the world of her athletic pursuits continues to evolve, and we've got some exciting things coming this year on the pickleball front.