Luxury Industry News Roundup: 12/11/09

1.) Men's Fragrance & Skincare Take a Dive:
"From April to September (of 2009), sales of the men's fragrance category declined 13% ... compared with the same period last year. Dollar volume generated by new launches during the third quarter was down 30% compared with the third quarter of 2008 . . . sales of the overall men's skin care market were off by 8% in the second and third quarters."

Industry analysts blame the declines on the lack of new product launches from big names, but the big names aren't doing new product launches in the men's grooming category because of the weakness of the market -- it's a Catch-22. You can't have heat without someone throwing another log on the fire, but with fewer consumers huddled around the cash registers for warmth, there's less incentive on the part of the manufacturers.

Here's some breakdown of the men's market: face care - down 6%; face moisturizers - down 5%; shaving products - down 7%; body care - down 7%; hair care - down 30%; and mass market men's fragrances are expected to end 6.4% down for the year. But wow! Hair care -- what happened to you?! Men seem to be ditching the creams, conditioners, coloring treatments and gels in droves.

Will we see the resurgence of low-cost neighborhood barbershops as men seek ways to keep groomed without paying beauty spa prices? And with military recruitment on the rise in the U.S., will the no-fuss buzzcut become the style of choice?

And since I mentioned fragrance sales, the trendy new scent-note of the moment is officially the Middle Eastern oud (aka "aoud" and "oudh"): "Intense, exotic and earthy are among the characteristics of this byproduct of agarwood, the dark resinous heartwood that forms when Aquilaria trees become infected. Oud (pronounced ood) smells expensive and it is. What it perhaps has going for it most is its obscurity and ineffability. There really is nothing quite like it. Hence its appeal."

But chocolate will always give oud a run for its money:

Wait! What? Independent San Francisco perfumer Yosh Han created a line of chocolate perfumes? Yes! But they're only available from Temper Chocolates in Boston. The website is bare bones (to put it mildly) and there's no option for purchasing the fragrances online, so you'll have to call Temper Chocolates directly if you want a piece of the Yosh Han chocolate action (617-375-2255).

And just to add to our independent perfumer action, +Q Perfume blog has an interview with one of my favorite triple threats (artist, author, perfumer), Della Chuang: Della Chuang, Kyoto and fragrances - Interview

When one more link is never enough: Now Smell This, and See Its Maker -- "Some industry observers think showcasing the perfumer could help the broader fragrance market. Ms. Grant sees parallels with the cosmetics industry, where in-house technicians have successfully morphed into marketers. 'Makeup did it with the makeup artist,' she said. 'Skin care did it with doctors. What's happening is the fragrance industry is realizing the perfumer is the ultimate celebrity of fragrance.'"

There's a thread over at the Perfume of Life forum (POL) where members are debating the merits of focusing on the perfumer over the brand name. Some think it's a desperate, hail-mary pass from an industry that doesn't know how to stop the bleeding, yet I tend to look at it as a positive. We know that Karl Lagerfeld designs for the house of Coco Chanel, that Galliano designs for the house of Christian Dior -- and knowing this hasn't caused a drop in interest in both those brands, so why shouldn't we know that Maurice Roucel created a perfume for Gucci, or that Christophe Laudamiel worked on a perfume for Ralph Lauren? It could possibly jumpstart a much more involved consumer interest in perfumery, while also creating opportunities for individual perfumers to branch off and establish their own brands.

2.) David Lynch Is Set to Direct Next Dior Commercial:
"French fashion house Dior has confirmed ... that filmmaker David Lynch will follow in Oliver Dahan's footsteps, directing the label's next 'Lady Dior' ad . . . Lynch, the maker of US TV series Twin Peaks and movies such as Mulholland Drive, is no rookie to the fashion world: he previously collaborated with shoe designer Christian Louboutin on a photo exhibition and directed the ad for Gucci's signature fragrance."

The filmed commercial will be set in Shanghai (of course) -- where else but China would a luxury brand even think to film an advertisement these days? Earlier this week, even contemporary fashion's senior lion, Karl Lagerfeld, bowed to economic reality and produced a Shanghai collection for Chanel that debuted on a barge "moored on the edge of the Huangpu river, overlooking the extraordinary skyline of high-rises across the water in the booming financial district of Pudong."

Oh, and look -- they have a movie, too!

But no David Lynch to direct because Chanel doesn't need David Lynch, n'est-ce pas? And below is a video clip of the actual runway show from Shanghai:

But is all this attention on China too much? Tyler Brule, the editor for Monocle Magazine (responsible for one of my least favorite fragrances of all time, but let's ignore that, shall we?) thinks the "Shanghai this, Shanghai that, Shanghai all the time" is destroying the demand for luxury items in Western countries: European Luxury Goods Risk Cachet With China Focus: "European luxury brands are risking their cachet and alienating Western shoppers by changing designs to appeal to the Chinese market . . . Many brands 'added a little bit of jingle-jangle to their bags and a few shiny zippers and buckles to their shoes, which was not core to their aesthetic before,' during the past seven years, Brule said by phone from London. 'Some of these companies now are putting out products that Europeans wouldn't touch' . . . He said he's seen many 'upper to mid-market brands who've been really stung in China. How are they doing? This is always the interesting, uncomfortable question.'"

Brule mentions that the traditional focus on craftsmanship has declined while brands have upped the flash and bling -- essentially turning away from their former clients to woo the Asian market. He cites the example of French luxury leather house Goyard as a brand that has comfortably stepped into the void left by the likes of Chanel and Louis Vuitton when both those companies abandoned the Japanese market for China: "'Japanese customers are buying bags, they're just not buying them from the companies which report their figures publicly,' Brule said. 'The sheer amount of Goyard in Tokyo now is staggering . . . It's probably where Louis Vuitton was' 15 years ago, 'in that same kind of infancy when just everyone had to have it.'"

So which came first, the chicken or the egg? Did the recession cause Western clients to abandon the luxury brands, or did the luxury brands abandon the Western consumer first, hastening their own financial problems in the Western markets when the recession hit? Mr. Brule believes it's the latter.

As long as we're on the subject of luxury companies turning their faces toward Asia: Hermes to Open First Store in the Philippines -- "The boutique, which opens to the public Dec. 20, has a retail space of about 1,300 feet. It is located in the upscale Greenbelt 3 Mall, which also houses a recently opened Tory Burch store. The mall is located in Makati, the capital city's financial district. Hermès is planning to commemorate the store with an opening event January 14."

Et tu, Hermes?

Plus: perfumer and cosmetics wunderkind Serge Lutens opens a stand alone boutique -- in Marrakech. Granted, this is where Mr. Lutens lists his main residence, so there is a certain sense to the equation.

Bonus round: Best window display EVER:

Don't break up with Japan, oh great and mighty luxury brands, when Japan so clearly still loves you.

3.) Believe It Or Not: Botswana Has to Bail Out Diamond Giant De Beers:
"The Minister of Minerals, Energy and Water Resources, Pontashego Kedikilwe says Botswana is compelled to rescue De Beers from its debt because the failure of the world's biggest diamond producer will have devastating consequences on the economy of this country . . . Botswana, however, is itself cash-strapped after diamond exports plummeted to the point where the country had to seek a bailout from the African Development Bank, will finance $150 million for its part of the De Beers 'stimulus' package."

I did a double take when I first read that -- De Beers has to be bailed out . . . by Botswana! Talk about the cart pulling the horse.

But De Beers has been having a rough time of it lately: where they once controlled 85-90% of the world's diamond trade, they now only supply 40%, with mines in Russia having overtaken them as the world's largest diamond supplier; plus they were just recently socked with a big settlement payout related to their policy of stockpiling diamonds (in conjunction with Russia's Alrosa diamond company) in order to keep consumer prices high (much like what the American alligator farmers are now accusing Hermes of doing).

Yet Botswana's economy relies on the mining of diamonds, and when diamonds aren't selling, Botswana suffers. The Alrosa diamond company formed an agreement with the Angolan government where Angola would purchase 30% of the production from Angola's diamond mines to keep them off the market -- this creates an artificial scarcity of diamonds, which helps keep prices higher than they ordinarily would be if all these diamonds were released to consumers.

So consider these things when you're next shopping for diamonds: 1.) there are so many diamonds that companies are stockpiling them and/or deliberately removing them from the market to keep them from seeming too common; 2.) entire African economies are dependent on the mining of glittering, decorative stones; 3.) you're paying way too much for the privilege.

A video clip below on how synthetic diamonds are manufactured (and how vastly improved the technology is for doing such a thing) I'm a fan of synthetic diamonds, and believe that lab-created diamonds can be a preferred alternative to the political and social problems associated with the natural diamond trade:

Add on: a brief but good read on the subject of Botswana, diamonds and De Beers: Botswana Needs Drivers Beyond Diamonds -- the non-diamond related Botswana economy is growing (8-10% this year alone), but the country is still too reliant on diamond exportation for revenue -- 80% of foreign earnings presently come from diamonds, and that source of revenue is drying up.

4.) And Now You Know:
"Turquoise was selected as the color of 2010 by Pantone, a company that supplies and tracks color for fashion and home decor, among other industries. Fashion insiders agreed the color is on the rise . . . Leatrice Eiseman, executive director of the Pantone Color Institute, says there was no runner-up to turquoise in her mind because people crave escapism and freshness after a tough year. The shade is on the cusp of blue and green, which makes it both inviting and serene -- characteristics associated with blues -- and invigorating and luminous, which comes from green, she says."

And you know what I think the biggest appeal the color turquoise holds for the fashion and home furnishings industries? The fact that it's been out of vogue for so long that hardly anyone is likely to have a stitch of it, and now it's *THE* color of 2010. Ka Ching!

I hear screaming hordes of teenage girls heading to the mall as I type this.

Speaking of being out of vogue:

5.) Is Lady Gaga More Influential than Anna Wintour?:
"Forbes Magazine recently declared that 'Lady Gaga isn't the music industry's new Madonna. She's its new business model.' However, what the Forbes article failed to note is that Lady Gaga may very well be revolutionising the fashion business as well . . . Lady Gaga's stylist Nicola Formichetti ... has dressed Ms. Gaga in clothes by young designers from around the world, including London-based milliner Nasir Mazhar and American designer Benjamin Cho, providing these new talents with a powerful PR platform that brings fashion into the digital age. In this way, Ms. Gaga may now be the single most powerful editorial machine for fashion designers looking for mass exposure."

Lady Gaga shown below in 'Bad Romance':

The article notes that Lady Gaga's latest video, in which she flounces about the screen in Alexander McQueen couture (among others, and I'm sure Smirnoff is delighted with the product placement, as well), has been viewed 30 million times in just over a month (it was released November 10th), whereas Vogue magazine sells maybe 1.2 million magazines a month. You do the math.

Still, though, it's not like Gaga discovers and nurtures the careers of up and coming designers -- you know, the way Wintour does. So I wouldn't say that Gaga is more influential or powerful than Wintour, she's presently just a more effective marketing platform than Vogue magazine. Back when the likes of Madonna and Michael Jackson were burning up the video charts, we didn't have the internet to give us such easy access to the designers they were wearing and the products featured in their videos. Now, however . . .

6.) INDUSTRY QUICK HITS:

A.) Christian Louboutin Barbie Doll Sells Out In One Day: "Now shoe fiends coveting the limited edition 'Cat Burglar' doll will have to add it to their Net-A-Porter 'wish list' in order to be notified when they're back in stock. Or buy the doll over at BarbieCollector.com, where it's on back order until December 11."

It's always better to sell out in one day than go on sale after two months.

B.) Paris Haute Couture Needs Jewels to Survive:
"What to do when €35,000 (£31,670) dresses just aren't getting your industry enough attention? Adding some mind-blowingly expensive jewels into the mix could be one solution . . . The 140-year-old Chambre Syndicale, French fashion's governing body, has invited seven major jewellers - including Boucheron, Cartier, Chanel Joaillerie, Dior Joaillerie and Van Cleef & Arpels - to present their creations during haute couture week in Paris next month. It said the marriage of haute couture and high jewellery would provide 'a unique window of exclusivity' and was 'the absolute unification of technical know-how'."

Those are going to be some high-flying haute couture shows, and god knows they need a bit of a jumpstart, too -- they lost Christian Lacroix, and it's not like there were that many haute couture designers left to begin with. So bring on the sparklies! And, uhm, maybe some extra security . . . ?

C.) Photoshopped Ads Turn Ralph Lauren Corp. Into a Hot Boycott Mess: "Roberts, creator of the documentary 'America the Beautiful,' said in an open letter that he started the (boycott) campaign in response to several recent Ralph Lauren ads with extremely distorted images of women. After a media flurry of criticism, the designer publicly apologized for one of the ads, but then published two similar ads featuring equally, if not more severely, distorted images."

The boycott has generated the support of over 60 organizations so far, including the National Association of Anorexia Nervousa and Associated Eating Disorders, and the YWCA. Of course, it's not bad PR for the guy's documentary, either. I mean, every single article about the boycott mentions the name of the documentary and the film's website address: "Booooo! to Ralph Lauren's distorted images of women -- oh, and go see my documentary. Kthnx!"

Video clip of the trailer for 'America the Beautiful' below:

You see? Even I did it!

D.) It's Not the Bag That's Fake, It's the Person Carrying It:
"People are more likely to identify a designer handbag as authentic if the individual carrying it wears expensive clothes or has a certain aura that says rich person, the research found. The study, by Renee Richardson Gosline, an assistant professor of marketing at MIT's Sloan School of Management, showed that shoppers can more accurately distinguish between real designer bags and fakes if given social cues."

So the study pretty much came to the conclusion that the only people who can get away with carrying a fake designer handbag are the people who have the money to buy the real thing in the first place.

Moral of the story: if you're buying your shoes and jewelry from discounters, there's no point in wasting hard-earned money on a fake Chanel bag. Instead, buy the best bag you can get at Macy's for the same price -- it'll probably last longer, the materials will likely be better/more durable, and you'll be supporting a legitimate business and legitimate, tax-paying business owners in the process.

In related news, New York gets tough on counterfeiters: " Just as vendors are surely hitting a busy time of year with fake designer handbags being purchased as holiday gifts. 1010Wins reports that "police raided a block of Canal Street off Broadway including 10 buildings and 30 stalls. During the raid, police said they also found secret rooms inside the buildings where dealers allegedly conducted business." Everything from knock-off Chanel bags to Tiffany-esque jewelry was confiscated."

The end quote is the kicker: "But what about the broke brand-whores? One woman declared, 'I can't afford an $1800 Louis Vuitton bag. When I get it for $60 it's good.'"

There are so many things wrong with that statement, I don't even know where to begin.

Video clip below of a private investigator who talks about Canal Street and his work investigating the counterfeit brand trade: