Fashion Industry News Roundup: 11/28/09
1.) Black Friday Numbers Spark Cautious Hope for Retailers:
“Although malls around the country reported a rush of shoppers and filled parking lots throughout Black Friday, total sales for the day only saw a slight – and not a robust – improvement over last year . . . ‘Friday’s relatively strong performance isn’t always a bellwether for the entire season, but we believe the 1.6% increase we originally predicted for the holiday season remains intact,’ (said ShopperTrak co-founder Bill Martin) . . . It was a stronger picture for Internet retailing. The average online order on Black Friday rose 35% from last year.”
The Monday after the Thanksgiving weekend is called Cyber Monday as U.S. consumers use their work computers to shop for deals for Christmas gifts, so there’s still more reporting to come regarding the Thanksgiving season’s retail numbers — yet while sales figures are slightly up over the dismal figures from last year’s Black Friday, retailers are reporting that shoppers are more tame than last year when many chain stores offered drastic discounts on items across the board to move an over-abundance of stock off the shelves.
Fights did break out, however, over this season’s “hot” toy, the Zhu Zhu pet: “The Indianapolis Star reports fighting broke out about midnight as people lined up in the (Toys “R” Us) parking lot looking to buy the robotic hamsters known as Zhu Zhu Pets. Store manager B.J. Chavez says the hamsters are the hottest toys this season and the store generally sells out within 10 minutes.”
A video clip below of a store stampede from Black Friday 2007:
And remember the worker who was trampled and killed last year at a Black Friday Wal-Mart stampede?
There appear to be no reports this year of similar injuries and/or violence.
Note: Just from personal observation, I’m not certain if the retail figures from this weekend will indicate any long term trends. Yesterday (Black Friday), Pike Place Market was packed, all the parking lots around where we live were full up and there were crowds of pedestrians in the downtown shopping district. Today is a different story as the parking lots have been 3/4ths empty all day, the market is seeing only light foot traffic and the crowds of shoppers have evaporated from downtown.
2.) Just When You Thought It Might Be Safe to Start Spending Again:
“Real estate, which has traditionally brought the economy out of recession, seems increasingly likely this time to hold it back. The housing market’s epic boom early this decade has turned into an epic bust whose effects may take years to shake off . . . ‘There is no clear, easy way out for housing,’ said John Silvia, chief economist at Wells Fargo. ‘Contrary to my hopes, housing prices and the housing market in general will weaken again.’ He forecast a new decline in prices of as much as 10%, which he expected to shave a half-point off the nation’s economic output just as it emerges from the recession.”
And beyond the gathering storm clouds on the already shaky U.S. real estate scene, there are woes in Dubai, one of the primary areas of hope for the struggling luxury industry, where rumors of potential and massive debt default are rattling markets around the world and sending investors scrambling for the sell! sell! sell! button: “Dubai stunned investors with the news that it was asking banks to allow its main investment vehicle, Dubai World, to suspend its debt repayments for six months . . . the announcement … sowed fear of a contagion of instability . . . That possibility sent markets in London, Frankfurt and Paris spiraling downward, even as analysts struggled to explain which fears of contagion were legitimate and which were overwrought.”
I would think this might put the recently announced Lacroix residential tower design deal on hold: Abyaar and Lacroix to build Dubai residential tower.
But luxury companies refuse to be daunted, and are doubling their attention and efforts on both China and India, with Chanel even debuting a new and exclusive collection created specifically for the Chinese consumer: “Karl Lagerfeld’s latest Metier D’Arts collection for Chanel will be unveiled on Dec. 3 in Shanghai, where the French house has just opened a new boutique in the Peninsula Hotel”, while the retail model for India is getting an overhaul, with companies regrouping to focus on “affordable” luxury after several high-end global brands were forced to close: “Industry analysts contend that the global luxury brands that were early arrivers to India were too highly priced for Indian consumers. Now, in order to sustain in the market, most of them have started discount selling. The big brands Mega Carnival in Mumbai recently offered almost 80% off on international brands like Roberto Cavalli, Givenchy, Davidoff, Chopard and Calvin Klein, to name a few. ‘Market for luxury brands is yet to develop in a country like India …’ said Tarun Joshi, managing director of Brandhouse.”
But Beirut wants in on the action, too, now that Dubai is suffering its own massive financial shakeup: “Dethroned by Dubai as a top destination for shoppers, downtown Beirut today has embarked on a charm offensive as it seeks to attract visitors with ambitious projects like the “Beirut Souks,” where 400 stores, 49 of them jewellers, are set to open in coming month.”
The problem is, luxury brands can’t continue to establish flagship stores only to pull out and head in a shinier, happier direction when the prospects dim, yet the global financial merry go round isn’t particularly showing signs of slowing down.
For example: Japan’s Department Store Sales Fall 10.5 Percent, Yves St. Laurent boutique closes up shop in San Francisco and Manhattan Retail Rents Decline Overall.
But for all this, Hermes refuses to blink:
3.) Hermes CEO Stands Firm Against Market Pressures:
“‘Hermès has no desire to become ‘masstige’ – a mass producer of prestige goods,’ says CEO, Patrick Thomas. ‘If we put a big H on a bag, we will sell millions. But what if to grow faster you compromise on quality and the finishing of the product? Then people will begin to say, ‘Ah, you know Hermès is no longer the same.’ That’s why we should never do that. It would be a capital sin when you have an asset, a jewel like Hermès.’”
Forbes published an editorial regarding exactly this concept, how the present economic cycle will force luxury to return to its roots, the “Have it but didn’t flant it” attitude that defined high-end retail before the Mad Scramble For Profits era of logo bags, celebrity shills and bling — “the ethos of Jil Sander, not Donatella Versace,” writes Forbes editor Gary Walther.
But consumers now want something better than a brand name on the tag or a logo on the side of a handbag — Mr. Walther writes that they want something original, something handmade and lasting, and the present version of mass-market luxury doesn’t offer any of the above. Which is not good news . . . if you’re one of the aforementioned mass-market luxury brands. See below:
Now, I like Botkier as a brand — better than average design, materials and workmanship, but it’s a mass-market brand positioning itself “upscale” as a means of targeting the low-market consumer who might wish to trade up in both image and price-point. That strategy worked great for several years, and brands like Botkier found themselves flush with cash and giddy press on fashion/gossip blogs as celebrities were photographed carrying their products, but the recession has been unkind to the masstige segment, with their target consumer putting the brakes on spending.
Confession: I recently purchased a Botkier bag for a friend, but I waited until it was on sale for 60% off. It’s a great bag in a terrific color with lots of room, interior pockets and well-placed hardware, but I felt it was definitely overpriced at its original MSRP. 60% off made it just right, but shedding unsold merchandise for 60% off the suggested retail price won’t keep Botkier in business for long.
4.) Ungaro CEO defends Lindsay Lohan Against Critics:
“As rumours surfaced that Lohan could be on her way out of the fashion house following her S/S10 debut, CEO Moufarrige said: ‘As we speak, she is in New York in shoots with Ungaro,’ he said, adding that he completely denies reports suggesting Ungaro chairman Asim Abdullah wanted rid of the actress.”
The fashion press was less than kind to the collection that celebrity co-designer Lohan sent down the runway, with ex-designer Emmanuelle Ungaro himself calling the collection “a disaster“.
CEO Moufarrige, however, has been upfront from the start about why they hired Lohan in the first place (it’s her celebrity status, of course), states that the Ungaro brand has received more press attention since Lohan’s debut than they have in years, the maligned Spring collection she co-designed has been selling better than expected, and that while he respects Mr. Ungaro, the former designer is welcome to keep his opinions to himself.
A video clip of the panned (yet apparently commercially successful) collection below:
Critics hate it, retailers love it
5) Are fashion bloggers the new big thing in the industry?:
“Requiring nothing more than a digital camera, blogger account, budding (or seasoned if you want to have an upper hand) wardrobe, and a knack for posing shamelessly for a timer or make-shift photographer, easy accessibility has turned what was once perhaps an innocent way of passing the time, into job credentials.”
Pint-size Style Rookie, one of the most talked about of the new fashion bloggers, at the Spring 2010 shows below:
But while up and coming designers are busily embracing their internet overlords, the old guard is still resisting, and there’s speculation that this is only going to hurt them in the long term — “the consumption of luxury goods will not only be found in stores and in person – they’ll be found online and through mobile devices. Luxury brands need to develop long-term digital strategies that focus on e-commerce and m-commerce. And those strategies need to coincide with the brand’s long-term strategy for expansion and growth of retail locations in the cities’ brick and mortar stores; otherwise, luxury brands risk losing valuable market share, revenue or face a situation similar to Versace’s in Japan.
The article notes that over 57% of Chinese consumers purchase clothing and accessories via online portals, and that this number is only continuing to grow — so any brand that wishes to establish a market presence in China (not to mention retain its presence throughout the rest of the world) will need to get their a***s in gear and allow consumers to purchase their goods online. Unless, of course, it’s a company like Hermes that *wants* to stay small and exclusive.
That said, even Hermes presently hosts an e-commerce site where consumers can purchase fragrances, scarves and limited jewelry items. You just can’t order a Birkin or Kelly online. Cue wailing and gnashing of teeth.
6.) Ugandan Vanilla Growers Celebrate Vanilla Day:
“There is hope and economic value in growing vanilla in Uganda. This was the main message on Vanilla Day, which was celebrated in Ngongwe, Mukono district earlier this month. The chairman of Uganda Vanilla Growers Association (UVAN), Agha Sekalala, said: ‘Many people who had stopped growing vanilla have now started growing it again. This is encouraging to the sector.’ He said the most encouraging thing is that prices are stabilising again.”
Vanilla is one of the most important cash crops for Uganda’s agriculture dependent economy (coffee and bananas are larger cash crops), with Swiss flavor and fragrance giant Firmenich said to purchase the majority of Uganda’s vanilla harvest. Vanilla production peaked in 2005, yet dropped drastically thereafter, declining from an export of 13,546 tons in 2003 to only 6.3 tons in 2007 due to other available sources.
The crash in demand nearly destroyed Uganda’s vanilla production entirely as farmers abandoned the crop for others that were less economically volatile, but a rising desire for organic vanilla has given Ugandan vanilla farmers a new lease on life as they adopt organic standards. Uganda has recently begun expanding its spice production to include cardamom, cinnamon, cloves and black pepper.
Hmmm, vanilla, cardamom, cinnamon, cloves and pepper. It sounds like the formula to a very nice perfume.
In other fragrance related news:
*Narciso Rodriguez is launching a 1000ml (33.3 oz) version of the Ross Lovegrove designed bottle for the Narciso Rodriguez Essence fragrance. Available exclusively at Harrods over the holiday season. This one will make a bold statement on your washroom counter top while also leaving a big dent in your bank account — it’s £975.00GBP (or about $1615.00 in US dollars). Still, what a sculpture that would make!
*Banana Republic has tweaked and repackaged its classic fragrance — “Back in the safari-jacketed days of 1995, (general manager for personal care Laure De Metz) said, Banana Republic Classic was an eau de toilette. De Metz was very excited to be able to announce that today’s Classic was a more concentrated eau de parfum . . . ‘We really amped up the base notes,’ (she added).”
*Flavor and Fragrance company Frutarom reports that sales for the first nine months of 2009 declined over 15% compared to the same period in 2008. Frutarom is ranked as one of the top ten F&F companies in the world.
*The Royal Botanical Gardens in Kew (London, England) have launched a “luxury” fragrance designed by uber-talented perfumer Christophe Laudamiel. Proceeds from the sale of the fragrance are used to support the Kew Gardens. The fragrance, called Orchidelirium, is available for sale on the Kew Gardens website.
*Fragrance industry heads into the 2009 holiday season down 10% in sales, a troubling sign for the industry overall. Says Karen Grant, senior beauty industry analyst at the NPD Group: “Fine fragrance sales between October and December represent about 50% of sales for the year. More than 20% of the business is done in just two weeks.” The U.S. market is down 10-12%, with U.S. retailers looking at a holiday downturn alone of 2-12%.