1.) Shoplifter Returns Stolen Handbag, Says "I'm Sorry":
"A pregnant shoplifter who snatched a $1,500 purse from an upscale clothing boutique on Saturday returned the item to the store Thursday morning along with a note to the owner apologizing for the theft . . . The Marc Jacobs handbag was wrapped inside a brown paper bag along with the note from the thief. The note said,'I'm so sorry to hurt you. I regret what I did.'"
Mon dieu! You know the economy is bad when shoplifters have to return unsold hot merchandise for morality refunds. Or maybe it's just a comment on Marc Jacobs as a designer?
Here's how the note might have read: "Dear Mr. Jacobs -- I wanted a new bag, but the guilt I felt for stealing it far outweighed any satisfaction I derived from your designs. When I got home, I excitedly rang up all my friends to tell them of my new stolen Marc Jacobs quilted tote, but they were not impressed. I guess I should have snicked that adorable blue leather Tod's, instead. Love, your disappointed fan."
2.) Are the Japanese Falling Out of Love With Luxury?:
"The downturn is forcing customers in Japan to scale back purchases of luxury goods, accelerating a long-term shift in consumer attitudes . . . 'This is not a blip. This is a long-term shift in the market, said Brian Salsberg, the author of a McKinsey report on the Japanese luxury goods market . . . While luxury sales throughout the world are being hit by the recession, Mr Salsberg said that the implications of the latest slump for Japan were likely to be more serious and long-lasting."
Only as little ago as early 2008, luxury brands were ga-ga over the Japanese market. A blog post at Clast.com, while debunking the "94% of Japanese women in their 20's own a Louis Vuitton product" does go on to note the incredible market saturation that a brand like Louis Vuitton once enjoyed: "Our guess would be 30-40% of women in their 20s own some manner of Louis Vuitton item, with 15-20% owning a LV bag. This is still very, very impressive when viewed in the larger scheme of things."
I believe I've said this before, but I'll repeat myself -- when the BF and I visited Tokyo in 2007, I was stunned by the sheer number of Louis Vuitton logo bags I saw swinging from women's arms on any given day. It was strange to see what's often hyped as an "exclusive" luxury brand literally everywhere I turned.
In semi-related news, Safilo, considered one of the world's biggest eyewear makers (producing for brands like Dior and Gucci), is suffering from plummeting global sales and is looking for investors so it can keep operations in gear: "In addition to its financial problems, Safilo has seen its sales fall amid the global economic crisis. It has shut down a plant in Italy, laid off workers and transferred some of its production to China."
3.) Survey Shows the Brands Most Likely to Succeed in the Recession:
"Respondents were asked to name retail and fashion brands that were best-positioned to thrive and were given the option of selecting as many as three brands. Topshop ranked first, with 34.1% of those surveyed, naming it as a brand that will flourish. It was followed by Chanel at 28%; Louis Vuitton at 21.9% while Forever 21, H&M and Marc Jacobs all tied at 13.4%."
Video clip below of the recently opened TopShop store in New York City:
So cheap, trendy fashion and high-end luxury classics will be the survivors. I can't say that comes as much of a surprise. I do feel kind of sorry for all the other brands that positioned themselves in-between, though -- like the Koobas and the Anya Hindmarches. They're good brands with excellent products, but they're too expensive for the fast-fashion twenty-somethings and yet don't have the social cache or oomph necessary to attract the Chanel/Louis Vuitton crowd.
Speaking of surviving, the Wall Street Journal looks at stocks in the luxury industry and sees that while some major design houses are presently holding steady, bad news is coming: "Sales are falling across the sector as even big spenders have cut back, influenced as much by the idea it's no longer fashionable to flaunt wealth as by waning incomes . . . As the top-end department stores struggle, they are likely to cut back still further on orders which will hit the whole sector. In that context, the trading multiples (e.g. a valuation ratio that reflects the current stock-share price compared to the company's earnings) of the luxury-goods sector are starting to look as highly priced as the haute couture they represent."
Several brands are currently scrambling to avoid dire fates, such as Lacroix: "the house of Christian Lacroix, which filed last week for bankruptcy protection, has avoided immediate liquidation. A French commercial court on Wednesday gave it six months to try a restructuring and to find a buyer"; Roberto Cavalli (who finally caved in and sold an ownership stake in his brand to an investment company): "Clessidra SGR, an investment fund, bought 30% this week of the designer Roberto Cavalli's company, which bears his name. The company is also expected to get new leadership"; and Versace: "Giancarlo di Risio, chief executive of Gianni Versace since 2004, is expected to resign at a board meeting on Friday in Milan . . . The company said last month that first-quarter revenue had fallen 13% from a year earlier, though it still had managed 'a positive net result.'"
Crisp hi-def clip of Versace's Spring/Summer 2009 collection below:
Update: And di Risio just resigned -- "Gianni Versace SpA's Giancarlo Di Risio has resigned as chief executive of the Italian fashion house, according to a statement on Friday, confirming newspaper reports he was set to depart. The company did not give a reason for Di Risio's resignation, nor did it name a successor."
4.) Gucci Copes by Cutting Back on Production:
"Gucci's new chief executive officer, Patrizio di Marco, said he's fighting the recession by cutting production, making fewer styles to reduce costs, and bulking up the luxury label's mid-priced range . . . In this market, buyers 'want products with substance and good prices. We don't need 75 variations on the same handbag. Two or three are enough' (he said) . . . The company is scheduled to open a flagship shop in Shanghai next week, the 28th Gucci store in the country since entering China in 1997."
And just as I ran across the above article about Gucci cutting back, I stumble across this next one about small manufacturers who are going under as big luxury firms cut back on orders: "the risks are far higher for the small and midsize European companies that supply the luxury houses with everything from hand-tooled leather to perfume bottles . . . A wave of bankruptcies has begun hitting these businesses, many of which were already struggling to hold their own against lower-cost competitors in China and elsewhere."
The article goes on to note that the only ones making a profit in the luxury business these days are the "Internet-based merchants that sell luxury manufacturers' excess inventory at discount prices. One such company, Paris-based EspaceMax, says its business is up 50% this year."
5.) Lagerfeld Goes to Moscow for the First Time, Sees No Cute Men:
"The designer was in the city -- amazingly, his first time ever -- for a presentation of the Paris-Moscow collection, which made its debut in Paris in December and pays tribute to Chanel's Russian links . . . 'I think the women are better than the men. I think if I were a woman here, I would be a lesbian,' he said."
Below is a short film Lagerfeld produced to promote the Chanel Paris-Moscow collection that he just sent down the runways in Moscow. The collection was first shown in Paris in December of last year:
6.) It's the Prices, Stupid:
"While top industry players aren't sure how the issue will play out long-term, every corner of the luxury market has taken a hit, and many execs said that pricing is the root of the problem . . . 'Prices have been driven through the roof, and consumers are pushing back,' said Pam Danziger, president of Unity Marketing, a luxury research firm . . . Jeffrey Kalinsky, owner of the Jeffrey boutiques in New York and Atlanta, added that he hasn't changed his buying strategy for spring '10, but has noticed that footwear has been the hardest hit category in his shops over the last year -- even before the economy took a severe turn. He blames swelling prices for the slump. 'Women want to come in and shop and have fun,' he said. 'It's not fun when every shoe they pick up is around the $1,000 price point.'"
Luxury brands were happy, even eager, to raise prices on all their goods while the consumer was in the mood to spend, but now the same brands appear baffled as to how to respond to a buying public that's dug in its heels and said, No More!
As I mentioned back in December, many of the luxury brands are acting like they're engaged in a game of chicken with the consumer -- don't lower prices and see who caves in first! Well, the consumer will always win that game. Merchandise is produced that needs to be sold, and if no one buys it at the original listed price, then it will just go on sale later. Wouldn't it be easier on everyone involved if the prices were just 30%-40% lower in the first place?
Total case in point: the Marc Jacobs boutique in SoHo is holding a 70% off sale of its Spring/Summer merchandise, and we're just barely into summer -- "All spring ready-to-wear, shoes and jewelry are discounted by two-thirds. Bags are not discounted at all so if you're looking for a good MJ bag discount you might want to head over to Barneys or Saks." Snark!
Here's another article about designers finally seeing the need to bring the price point down: Designers Tout Luxury for Less With $300 Coach Bags -- "Between 2005 and 2007, the average wholesale price of luxury goods increased 10 percent to 15 percent each year . . . A shrinking global economy is reversing that trend. While some shoppers still will buy at the highest end of the luxury range, more consumers will balk at cocktail dresses that cost more than $2,000 and shoes above $1,000."
7.) Fools Rush In:
"Paris's Chambre Syndicale released a temporary version of the schedule for the upcoming men's fashion week, which runs June 25-29 - and it features more newcomers than dropouts . . . New faces on the men's runway include Alexis Mabille, who is to show men's wear separately from women's couture for the first time, New York-based designer Tim Hamilton, who is to make his Paris debut, Vienna's House of the Island and France's Bill Tornade."
Because I've always found the best time to launch a new menswear brand is right when half the population has snapped their wallets shut. Honestly, is there no one in these people's lives who could have pulled them aside and said, "You know, maybe it's not the best timing . . . "
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