Tapestry’s $8.5 billion merger with Capri was just scrapped. Here’s what that means for the CIO
Yang Lu’s initial interest in technology began when she emigrated to the U.S. from China at the age of 12 and didn’t speak a single word of English. “Technology was a big equalizer for me,” she says. “When I walked into a computer science and programming course in high school, nobody knew the language.” It gave Lu an opportunity to learn something new along with her peers.
She joined luxury giant Tapestry eight years ago, partly to steer a technology transformation the company was undergoing as a result of a string of acquisitions, including the 2015 purchase of Stuart Weitzman, and that of Kate Spade two years later. Tapestry worked quickly to consolidate and harmonize all technology, across all brands, and for nearly all geographies, excluding China.
That means nearly all software, point-of-sale systems at retail stores, inventory management, supply chain, and all other technologies are synonymous across the entire business.
Lu, who ascended to the role of CIO in September, says the advantage of this structure is that Tapestry is able to test out technology solutions for one brand and if they like it, roll it out to the rest of the portfolio. And the company is okay with occasional failures. “My mantra is iteration is the new perfection,” says Lu.
In her new role as Tapestry CIO, Lu was ready to apply that same playbook to Capri — owner of the Versace and Michael Kors brands —which Tapestry was set to acquire for $8.5 billion. But Tapestry officially called off the deal this month due to the FTC’s efforts to block it on anti-competitive grounds.
“We’ve always had multiple paths and how we can enable our brands to grow,” says Lu, adding Tapestry is confident in its business and is “thrilled that the Street is just as confident.” Tapestry’s shares rose 9% on Thursday after the deal died.
With the task of integrating with Capri now off the table, Lu can dedicate more time to innovative technologies, like artificial intelligence, which she says can boost employee productivity and improve the customer shopping experience.
One recent example is a new AI-enabled tool that generates more emotionally evocative descriptions for handbags and other accessories that goes beyond simplistic product dimensions. “We were able to quickly roll out for one brand, Coach, and then see that really draw up higher conversion and higher revenue per visit,” says Lu, who later applied the technology to the other two brands.
Tapestry is piloting an internal version of ChatGPT, a chatbot called Stitch, which pulls data from the company’s industry research, policies, and procedures to answer employee questions. The company is also beginning to use AI to monitor and correct coding errors, exploring a relationship with an AI image generator to create creative assets, and uses AI and machine learning for price elasticity, which allows a retailer to command the highest price possible for its goods without seeing a dip in demand.
Another tool is called “Tell Rexy,” named after the dinosaur emblem that frequently is featured on Coach’s bags, wallets, and keychains. Store associates can audio record feedback from shoppers—including thoughts on products or even if the holiday music playlist just isn’t hitting the right note—and generative AI summarized insights that are shared with the corporate office.
Tapestry encourages the company’s workforce, including IT, to frequently visit stores and talk to associates and customers. “Every technologist needs to think business first,” says Lu.
As for AI, cloud, and other technologies, Tapestry explores relationships with multiple vendors depending on business needs, including Amazon and Google. For AI, there are three paths Tapestry intends to pursue, according to Lu: build their own solutions, partner with vendors for Tapestry-specific tech, and buy off the shelf.
“It’s our job to stitch it together in a seamless way,” Lu says.
John Kell
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Fortune‘s second annual AI 50 Innovators list is out today! You can see all the companies that made the list here, and read more about the trends in AI that shaped this year’s list in this story written by yours truly.
And if you’d like to join us for an upcoming conference, Fortune Brainstorm AI, in San Francisco, from Dec. 9-10, you can find information and request an invitation here. It will feature top executives from across business and tech, including Rohit Prasad, Amazon’s senior vice president and head scientist, artificial general intelligence; Liz Reid, Google’s vice president, search; Christopher Young, Microsoft’s executive vice president of business development, strategy, and ventures; and former NFL quarterback Colin Kaepernick, who has his own AI startup.
NEWS PACKETS
Equinix CIO, CISO have departed the company within weeks of each other. Equinix’s chief information officer, Milind Wagle, left the data-center operator in September after 14 years, while Chief Information Security Officer Michael Montoya departed his role earlier this month. “The two departures are not related, and neither departure is related to a cyber incident,” a company spokesman told Fortune in a statement. The representative added that Equinix’s VP of global IT infrastructure, Greg Ogle, is serving as an interim leader of the information security organization until a new leader is appointed. The IT department will be led by Nicole Collins, EVP of business operations, on an interim basis.
ChatGPT outperforms human doctors at diagnosing illness. The New York Times reports on a study that found OpenAI’s ChatGPT-4 performed better at diagnosing a medical condition than human doctors, besting physicians who had no assistance from AI technology as well as those that were able to use a chatbot. The study was tiny—the experiment only involved 50 doctors—but it raises interesting avenues to explore about the potential role for generative AI in medicine.
IT outage grounds British Airways flights. Flights out of Heathrow airport were delayed on Monday due to an IT issue that affected communications systems and delayed dozens of British Airways flights. Media outlets reported that the airline’s website and app also appeared to be down at one point during the outage, with most of the delays affecting domestic flights, as well as those bound for other parts of Europe and North America.
Big Tech’s big antitrust week. Bloomberg reports that Justice Department officials will ask a judge to force Google to sell off its Chrome browser and seek measures related to data licensing and AI, proposals Google says will harm consumers and developers. Separately, Elon Musk amended a lawsuit to make new antitrust claims against OpenAI, the ChatGPT creator he cofounded, and added Microsoft and venture capitalist Reid Hoffman as defendants. Musk, who runs his own AI company, accuses the companies of colluding to nix competition (OpenAI calls the allegations “baseless”). Meanwhile, the European Union slapped Meta Platforms with an $840 million fine for alleged breach of antitrust rules related to Facebook Marketplace. The social-media giant plans to appeal the decision.
ADOPTION CURVE
AI’s ROI focus varies by business size. A new survey of more than 500 CIOs and IT leaders found that smaller organizations are far more ROI-focused, with 40% of tech leaders at companies with 250 to 500 employees saying they are willing to halt AI projects that lack clear ROI. That’s more than double what larger companies say. Though smaller firms often have less budgeting flexibility for emerging technologies like AI, the approach may be short sighted, as the most bullish AI proponents say the true benefits will come from experimentation that goes beyond employee productivity gains.
Measurement is also an area that C-suite leaders should address more assertively. The survey, conducted on behalf of software provider Gong, found that six out of ten CIOs believe either a boost to revenue or workplace time savings would justify AI investments, yet only 32% actively measure both.
JOBS RADAR
Hiring:
– Carey International Group is seeking a chief systems officer, based in Orlando, Florida. Posted salary range: $175K-$225K/year.
– OTB is seeking an IT director, based in New York City. Posted salary range: $175K-$180K/year.
– The New York State Office of Information Technology Services is seeking a deputy commissioner for technology, based in Albany, New York. Posted salary range: $137.5K-$191.4K/year.
– Accordion is seeking a director of IT M&A, based in New York City. Posted salary range: $200K-$230K/year.
Hired:
