1.) So, I think that, Uh, the Fashion Industry Wants Us All to Shop?:
September 10th just happens to be the grand opening of the Neiman Marcus in Bellevue, Washington, so I think I just might be shopping, after all (with Louise and Julie, of course).
Not everyone is impressed, however, with the fashion industry’s plea for peace, love and cash — Fashion’s Night Out Is Anna Wintour’s Charitable Ponzi Scheme: “Anna Wintour’s Make-People-Like-Me-Before-My-Contract-Is-Up Tour 2009 needed a charitable arm. She came up with Fashion’s Night Out, a plan to save the industry, the economy, and her job all at once . . . The plan seems to be to spend a lot of money getting people in the stores to spend a lot of money. The one thing we haven’t heard anything about is discounts. Just because Catherine Malandrino is converting her Meatpacking showplace into a French cafe for the evening doesn’t mean that suddenly more people will be able to afford one of her cocktail dresses.”
*ahem*
But if you happen to be in New York on September 10th (or just jolly well live there already), it sounds like Bergdorf Goodman is going to be the place to be, “with windows by Zac Posen, a celebrity designer cook-off judged by Padma Lakshmi, the Olsen twin’s bartending, and Andre Leon Talley hosting some sort of game show.”
2.) Avery Gilbert (a new breed of “smell scientist” and author of Royal Society Prize nominated What the Nose Knows) has a great article in Beauty Fashion magazine about the role of new media (blogs) in the future of fragrance marketing and advertising: Who Speaks for Perfume? (link goes to article download)
“The new voices of fragrance — the clamoring multitude of the internet — are a motley crew. Some speak insightfully and persuasively, others are self-absorbed and proudly subjective. Some take a longer, even historical view; others focus on the here and now. All are concerned with the practical issues of wearability, quality and value. All dare to criticize . . . They will be to perfume what movie reviewers are to Hollywood.”
The article is only about a page long, and I encourage you to download it at the link and read the whole thing. Mr. Gilbert describes, accurately and concisely, the reasons behind the rise of new fragrance related media, and the transition the industry is presently experiencing as a result. I hope the industry is listening.
Below is a video clip of an interview with Avery Gilbert on CBS’ Early Show. It’s short and exceptionally informative. That seems to be how Gilbert operates — get the information out there, unembellished with folderol and easy to grasp:
3.) Saks Fifth Avenue Reports Widening Losses:
“Luxury retailer Saks Inc. … reported a net loss for the second quarter that widened from last year, hurt by a 15% decline in sales in addition to lower margins amid increased markdowns . . . Luxury brands were expected to be less vulnerable to the economic downturn, but have seen sales slump alongside a broad slide in consumer spending as even shoppers with money scale back on spending amid job losses and lower home values.”
So much for the “recession proof” brands and stores.
I recall when the economy first started hitting the skids how stores like Neiman Marcus, Bergdorf and Saks were all touted for their ability to stay the course and prosper as lower priced chains withered, but it’s turning out to be just the opposite. Luxury brands understated their reliance on the “aspirational” consumer — i.e. the consumer who spent more than he/she could really afford in order to obtain and wear the symbols of prosperity — and as the recession has dragged on, their bottom lines are pretty much bottoming out as a result.
But hey, Discount Rules while Luxury flounders: “But what is compelling is that Saks saving grace may end up being its discount outlets. An AP story said that the less-expensive Off 5th stores are doing better than Saks’ full-price stores . . . Nordstrom … has announced that is expanding its discount chain, Nordstrom Rack. The question I have is with the boom of outlet stores and the success of discount stores like Marshalls and TJ Maxx, who will be left to buy the items at their original prices?”
A good question. Once consumers can no longer purchase a Chloe bag at half price, will they still be interested in Chloe bags? Or will they turn to mid-price brands (Kooba, Botkier, Tory Burch, Kate Spade) as the supply of discounted luxury dries up? We may even see the likes of Marc by Marc Jacobs and Michael by Michael Kors survive while the parent brands go belly up.
Speaking of lower priced brands, some of them are already showing signs of benefiting from the trade-down as consumers opt for well-known but less expensive names and retail chains: Profit up 11 percent for Guess in second quarter — “Guess Inc. said Wednesday its fiscal 2010 second-quarter profit rose 11 percent as revenue climbed, especially in Europe, expenses fell and the clothing supplier posted strong product margins.”
And this: Chico’s 2Q profit more than doubles on sales — “Women’s specialty retailer Chico’s FAS Inc. said Tuesday that its profit more than doubled in the second quarter, helped by stronger sales and a leaner inventory . . . Same-store sales edged up 1.3 percent during the quarter, with Chico’s/Soma same-store sales gaining about 0.4 percent and White House Black Market same-store sales rising 3.7 percent.”
And this: Hard up fashionistas head to Marshalls — “Saks blamed its poor results on hard-up fashionistas who now prowl the racks at Marshalls instead, looking to pay $50 instead of the $300 they used to shell out to Saks for designer jeans.” Ouch!
And also this: J.Crew Profit Tops Analysts’ Estimates on New Stores — “J.Crew Group … reported second-quarter profit that exceeded analysts’ estimates after the company added stores and controlled costs . . . The company opened 21 stores in the first two quarters and closed 2, and had 319 locations as of Aug. 1. Sales at established locations fell 5 percent. Profit margins on merchandise were the same as a year earlier, a better outcome than the company had planned, Chairman and Chief Executive Officer Mickey Drexler said on a conference call with analysts.”
So higher end is down (Gucci, LVMH, Saks, Neiman Marcus) while the likes of Guess, Chico’s and J.Crew are reporting increasing sales and revenue. The bellwhethers are ringing.
Another major bellwhether: Thanks to the recession, drugstore cosmetics lines gain respect — “With traditional drugstore brands incorporating high-end innovations in low-cost product lines, the drugstore is becoming the H&M of the cosmetics world for everyday makeup . . . The drugstore cosmetics market has been strong, despite declining sales in the beauty industry as a whole. Total makeup sales dipped 2 percent nationwide in 2008 compared with 2007 … but the same study found that, while department-store sales of cosmetics dropped 4 percent, food, drug and mass-merchandiser outlets (excluding Wal-Mart) saw a 1 percent increase.”
Drugstores are turning to what they call “Masstige” items (mass-market versions of Prestige products) to bring customers to the counter. They’re adding mineral-based powders, vibrating-wand mascaras, foundations that adapt to the wearer’s skin color — innovations that were once the sole property of higher-end lines such as YSL, Chanel and Lancome — and they’re offering them at lower prices.
With less brand loyalty today than in the past, a lower price for the same type of product with a similar (though not exactly the same) quality is definitely appealing when a consumer is looking to cut back on overall spending.
4.) The Gap Wants You To Love Their Non-Premium Jeans:
“In the search for the perfect pair of jeans, shoppers have long bowed to the terms of premium-denim labels, which promise superior fit but demand supersize prices . . . Now Gap, Loft and other mall-based retailers are selling jeans that they say fit just as well for under $60 . . . The design team at Gap, a 40-year-old brand founded on denim, spent the past 18 months overhauling its lineup, according to Patrick Robinson, executive vice president of design for Gap adult and Gap body. It was all about “fit,” Mr. Robinson said. ‘Fit, fit, fit, fit, fit.’”
Below is a photo illustration the article used to show how the lower-end brands are attempting to catch up to the premium denim brands in regards to fit. The difference is still noticeable, but it’s not as wide a chasm as the fits used to be.
Gap on the L., Citizens for Humanity on the R. – CforH still wins, but Gap has improved
The article mentions that the biggest change for Gap in particular is that the different styles of jeans (Curvy, Real Straight, etc.) aren’t meant to fit everyone, so the one-size fits all approach is (thankfully) tossed out the window in exchange for more targeted fits. This makes sense — as consumers trade down from higher-priced options, they’re still going to want something that gives them an approximation of the premium fit they’ve grown accustomed to. It’s easier to justify the trade-down when the less expensive brand doesn’t come across like a saggy bag of middle-aged spread in the dressing room.*
*Note: I’m certain some of you have no idea what “saggy bag of middle-aged spread” means, and I want to go on record as saying that I hate you for that . . .
5.) Cambodian Garment Exports Fall as Recession Drags On:
“Figures released Tuesday by the Kingdom’s import-export inspection body showed July exports plummeted an annualised 26.4 percent, a larger decrease than in June, suggesting the worst of the economic crisis is not yet over for Cambodia . . . Though Cambodia’s export figures continue to decline, a number of other export-dependent economies in the region have seen recent improvements, including China, Singapore and Taiwan. Hong Kong, however, saw its exports worsen in July, down 19.9 percent year on year compared to with 5.4 percent in June, government figures said Tuesday.”
Camodia reported an already drastic 17% drop in garment exports in June, and the July 26% drop just compounds the problem for the workers of Cambodia, as the garment industry alone is responsible for about 90% of Cambodia’s total exports. In other words, without Western consumers spending and purchasing, Cambodia’s economy is headed for a free-fall, with nothing in place to substitute for all the lost jobs that will inevitably result from the decreasing exports.
An interesting point that was noted in the article: “Business Development Manager Kaing Monika warned that although some markets, including Asia and Europe, had picked up in recent months, the United States – Cambodia’s biggest export market by trade value – was showing relatively few signs of recovery.”
6.) Stella McCartney Gets to Go Nude After All:
“Nude Brands Ltd., a cosmetics company founded by the wife of U2′s Bono, Ali Hewson, lost a London court bid to block fashion designer Stella McCartney from introducing a new perfume (STELLANUDE) . . . Hewson’s Nude Brands has a European Union trademark on “nude” in capital letters and asked the London court for an order delaying sales of the perfume pending a full trial on trademark issues . . . While Nude Brands might “ultimately prevail at trial,” the “massive disruption” that would be done to L’Oreal’s business if the order was wrongly granted would outweigh the damage to Nude Brands by refusing to grant it, Justice Christopher Floyd said today.”
Another article mentions that the British High Court refused requests for a “fast trial”, and it’s unclear as to whether Nude Brands will take the case all the way to and through trial now that the Stella McCartney company has been granted permission to continue with its launch.
It’s likely that Nude Brands was betting an injunction denying McCartney permission to launch STELLANUDE so closely to release date would force the company to settle with Nude Brands in an effort to avoid massive monetary loss. Now that the injunction has been denied, Nude Brands has very little leverage, and lawyers for McCartney Ltd. get ample time to prepare a defense.
The court ruling did, however, state that the judge found “the term ‘Stellanude’ was similar enough to the term ‘nude’ to justify scrutiny under trade mark law,” which means that he would allow the case to go to trial should both parties pursue the matter.
A video clip below of Stella McCartney’s Fall 2009 runway collection:
7.) Remember what I said last time about luxury design houses turning their focus to the Middle East? Well, that might not turn out to be such a hot strategy, after all — Prices a downer in Dubai:
“In a report on Dubai, Colliers International said second-quarter residential prices fell 9 per cent, a marked slowing on the 40 per cent fall in the first quarter. Prices are thus down 50 per cent on their peak in the third quarter of last year . . . The market’s collapse followed a construction boom that created thousands of homes just as demand began to evaporate amid the global recession.”
It appears that Dubai, where many Western brands go to seek out the Middle Eastern consumer, is suffering from its own real estate bubble collapse, and this could spread throughout the region’s economy in much the same way the effects of the real estate crash rippled throughout the U.S., resulting in reduced spending, falling profits and increased unemployment. All of these factors, plus the reduced demand for oil due to global economic slowdown, is like a perfect storm rushing right toward all those luxury boutique shopkeepers in Dubai.
A video clip below of a new report examining the collapse of the Dubai real estate market:
“You can’t put a percentage figure on the market drop — in fact, there isn’t a market at all!”
I think Dubai might just need its own Fashion’s Night Out . . . although that Gucci seatbelt idea could help: “A total of 72.4 percent of people who took part in an online poll criticised the idea of distributing Gucci seatbelts to young UAE motorists in a bid to get them to buckle up. The poll by Arabian Business found the vast majority of people thought the idea was ridiculous and would not work.”
I can hear it now — “Put on your seatbelt, dear. I don’t care if it saves your life or not, it’s Gucci!”
