1.) Celebrities + Fashion Shows = Dirty Little Secret:
“Backstage at Armani Prive that night, I chatted with Anne Hathaway about the exquisite collection of pink corseted dresses dusted with stardust we had just seen, every one of which will surely be fought over at the Oscars. I asked her which shows she had enjoyed so far, and was she looking forward to Chanel the next day? Anxiety flickered across those lovely eyes. ‘Oh no. I’m not going to see anything else. I’m only allowed to be at Armani. I’m wearing Armani, by the way. Isn’t it lovely?’ And there you have it. While the marriage of movie stars and fashion designers seems all lovey-dovey, sealed with an air kiss, it is, of course, all about money.”
Video clip below of the Armani Prive Spring 2010 show (at which Anne Hathaway was paid to sit):
“Though she looks as warm as gold, the moon’s a harsh mistress, she can be so cold”
*Note: Lady Gaga upped the popular exposure to Giorgio Armani’s haute couture line by magnitudes when she sported five (five!) different Armani Privé ensembles at various times during the 2010 Grammy Awards. The financial relationship between Gaga and Armani has not been disclosed, and members of the fashion press, if not just the press in general, never thought to ask, despite Gaga being arguably one of the most talked-about pop-music celebrities of the moment.
A post-Grammy interview below with Gaga in Armani Privé :
Another report at Zimbio (How Much Would You Pay to Seat Rihanna or Beyoncé in Your Front Row?) zeroes in on the same topic, revealing that hot, of the moment pop stars and Hollywood celebs aren’t sitting front row at numerous shows during the various global fashion weeks because they adore the clothes (though who wouldn’t, when you get the pick of the litter for free?), but because they’re getting paid beaucoup bucks to show up and flash their famous mugs for the paparazzi, which in turn, generates free fashion/gossip magazine coverage, breathless celebrity/fashion blog posts and an echo chamber of tweets.
Zimbio reveals that pop-star Rihanna allegedly pulls in $100,000.00 per appearance, and when you stop to consider that she sprints from show to show to show (in the latest 5″ heels, of course), she might easily bank half a million dollars from one fashion week alone.
Beyonce is said to be in second place with around an $80K haul per show, with other celebrities sliding down the scale according to that week’s (month’s? year’s?) popularity chart. Which is why you’ll recall that last year’s shows featured a significant pullback on the celebrity factor as cash-strapped fashion houses axed their budgets for famous face exposure (Marc Jacobs supposedly cut his usual unwieldy guest list from 1800 to 700).
Jean Paul Gaultier had this to say about the new financial relationship between fashion and celebrities: “‘When I first started out, Hollywood stars came and tried on the dresses and had many fittings. Now they expect the dresses for free. I hear some designers even pay them to wear their clothes. It is ‘opeless.’”
*Fun Factoid: The above Telegraph article states that “four bottles of (Jean Paul Gaultier) Classique (perfume) are sold every minute worldwide.” So while couture may be in decline, the house of Gaultier isn’t in danger of going out of business anytime soon.
Speaking of fragrance and the bottom line, celebrity and designer fragrance producer Parlux just witnessed a corporate shake-up, its CEO stepping down to be replaced by the man who founded the company in the first place.
Just last month, the now booted CEO was predicting an optimistic earnings report for Parlux, but the actual numbers came out much worse as “larger than expected product returns from U.S. department store customers have reduced the Company’s net sales for the third quarter.”
Parlux has also suffered from the loss of their profitable relationship with the Guess? brand due to a rumored breach of contract, and Kanye West, a celebrity that Parlux signed on to potentially license, poisoned his reputation so badly that no one wants his name on a fragrance bottle. Ever. A definite blow to Parlux.
2.) Versace Announces Job Cuts:
“Luxury Italian label Versace is closing in on an agreement to cut 350 of its 1,360 positions worldwide, equating to more than 25 percent of its workforce . . . Furthermore, Versace is introducing a new lower-priced womenswear collection as part of the arrangements. The new line, priced between 400 euros and 1,000 euros, will be the women’s ready-to-wear complement to Versace’s lower-priced men’s line.”
The Wall Street Journal published an article last week about the troubles in Versace Land, and how head designer Donatella Versace’s drug addiction in the late 1990′s through the early 2000′s nearly brought the company down, its lasting effects still felt as the House of Versace struggles to keep afloat (it lost over $20 million last year) while its Italian peers have passed it by. The WSJ notes that Versace is “just a sixth the size of Giorgio Armani SpA, and one-twentieth the size of LVMH’s fashion division alone.”
In summary: the road to growth and profitability is not a boss that snorts the profits up her nose. Just so you know.
That said, the latest Versace menswear show in Milan was favor
ably received by the critics (who were fairly unanimous in declaring that Versace was returning to its aggressively sexy roots), and the Versace family appears determined to do what’s necessary to keep their business from collapsing into bankruptcy — tweaking collections, laying off workers, closing up operations in once-again frugal Japan, etc. Video clip below of the Milan Fall/Winter 2010/2011 menswear show:
Related news: number one luxury conglomerate LVMH reported a 13% drop in profit for 2009: “LVMH Moet Hennessy Louis Vuitton SA, the world’s largest maker of luxury goods, said full-year profit fell 13% as demand for watches and champagne declined in the recession.”
The bright spot? Perfume sales rose 2%, and sales of jewelry picked back up for the winter holiday season (though they were down for the year overall). LVMH stated that it’s experiencing strong growth in Asia (excluding Japan, where profits fell 18%), but that it expects all of 2010 to be flat as far as revenue and growth projections.
Luxury rival Hermes had a better fourth quarter than LVMH, reporting an 8.5% rise in total revenue, though its watch division performed the poorest with a 13% drop in sales. However, “sales of leather handbags and accessories, the main source of revenue, rose 14% during the fourth quarter, boosted by strong Asian demand. Revenue from silk ties and scarves jumped 16%, while apparel sales increased 7.9%, Hermes said.”
Video below of the Hermes menswear collection for Fall/Winter 2010/2011 — quite a contrast to the flash and splash of Versace, and perhaps an indication of why Hermes is continuing to grow while Versace flounders (LVMH CEO Bernard Arnault went so far as to say that “bling is out“):
Bling is no longer king
British luxury brand Burberry had a bang-up fourth quarter, reporting a 15% rise in sales; German line Hugo Boss continues to struggle due to disproportionately high exposure to financially strapped U.S. and European markets; and American stalwart Ralph Lauren reported end of the year profits (a 6% increase from the same quarter last year), but stated that it will be aggressively expanding into China throughout 2010, which will cut into profit reports ahead.
Meanwhile, Reuters reports that the Swiss watch industry as a whole is faring poorly, with sales falling even in the crucial November and December months, though exports to the increasingly important Chinese market are increasing. Exports to Asia are expected to account for about 30% of the Swiss watch business in 2010.
3.) Abercrombie & Fitch Gets It All Wrong in Japan:
“At the moment, Japan is in the midst of a low-price fashion boom. The only profitable brands are chain retailers like Uniqlo, H&M and Forever21, and the cheap domestic labels in the Shibuya109 shopping building. Yet remarkably, Abercrombie & Fitch made the decision to charge Japanese consumers nearly double its American prices . . . (and) their new Ginza store, in particular, clashes with Japanese fashion and shopping culture in almost every possible way.”
Last week, I linked to an article about how Mattel had botched its marketing for the Barbie Doll in China (Where Barbie Went Wrong in China) by not adapting the look and message to the Chinese consumer. It appears that Abercrombie & Fitch has done the same thing in Japan, crash-landing its entire Western consumer oriented look, feel and message smack into the middle of Tokyo — and it’s not working (surprise, surprise).
I don’t know about you, but it’s beyond comprehension that a brand would spend so much time and money expanding into a new international market, yet completely disregard that it might need to tailor its approach to the locals. One of A&F’s biggest faux pas (well, besides the shirtless male models and speaking only in English, I mean)? They spray their powerful Abercrombie & Fitch cologne all through the store every morning, dousing the mannequins and jeans, which runs counter to the cultural-wide dislike for pervasive perfumes.
Two word summation: Epic fail.
In light of the above, it’s no wonder that Abercrombie & Fitch is falling behind its competitors, such as American Eagle and Aeropostale, though A&F did manage to post a profit for January of 2010, finally putting a halt to the drastic declines of 2008 and 2009.
4.) Consumers Opt for Quality Over the Logo:
“Part of the appeal of custom culture is that it taps into the connoisseurship and one-upmanship that has long been central to guy culture. But whereas this was once the province of a certain tax bracket and its implicit fixations — Savile Row suits, golf clubs, cigars and single-malt Scotch — it now includes youthful fetishes with the coolest surfboards, sneakers and skateboards . . . Moreover, a custom-made item is often cheaper than a designer version. A big, beautiful long board, custom-made by a talented shaper in great 1960s colors, is $1,250 through Mollusk Surf Shop in Brooklyn. The SoHo boutique Kirna Zabête sells a limited-edition Proenza Schouler surfboard for $2,995. Which would you rather show up with at the pipeline?”
I experienced the same kind of shocked price reaction when I talked to a made-to-measure tailor here in Seattle. A fully custom dress shirt in a superfine, Italian cotton, made beautifully and exactly to my measu
rements, would run about $150.00, where a cotton-spandex blend Prada dress shirt, made to fit a model with a body and shape that’s nothing like mine, approaches $400.00. Does that make sense in any kind of reality?
To their credit, luxury brands are noticing that consumers are waking up to the fact that their prices don’t necessarily correspond with the quality of the work on offer, and that these customers can now find better for less.
Hence, the emergence of the “heritage” theme, and you’re going to start seeing this a lot — with established brands like Louis Vuitton, Hermes, Gucci and Prada emphasizing their history and reaching back into their design archives to produce items that look and feel like the products that made the brands famous in the first place.
Women’s Wear Daily reports that Gucci and Hermes are sponsoring equestrian events again to draw attention to their history as leather craftsmen for European royalty; Christian Dior is due to release a series of fragrances that are “refreshed” versions of several classics from the 1950′s (replete with vintage advertising illustrations); and Louis Vuitton is releasing a line of “heritage” wallets that look like the wallets they used to make almost one hundred years ago.
This theme was also explored by Suzy Menkes when she wrote about the Milan menswear shows in January: Going Back to Their Roots.
Says Sebastian Suhl, Prada SpA’s chief operating officer: “The shift back to heritage has been sped by the recession, but is moreover a ‘correction’ from a ‘media-centric, celebrity-oriented, glossy approach’ . . . The luxury category had been overselling the sizzle and forgetting about the steak.”
Yeah, well, maybe they shouldn’t have waited for the cattle to wander entirely off the ranch before they decided to do something about that.
5.) Bloomingdale’s Opens Its First International Location in Dubai:
“The company’s goal was to bring to Dubai what the 59th Street store in New York represented . . . But opening a Bloomingdale’s in the UAE wasn’t a simple matter of just opening New York-style cafés or stocking the store’s iconic Brown Bags. It also meant securing the rights to sell much of the same merchandise as the US stores . . . ‘Ralph Lauren is one of our largest resources in the store, but that took some doing because… Ralph Lauren in Dubai is actually distributed here by someone else,’ said Michael Gould, CEO. “And so it took a great deal of effort to get the Ralph Lauren people to work with that [distributor] and say, ‘Let them be in the store.’”
The Bloomingdale’s CEO spends a lot of time emphasizing the importance of DNA, and how it wasn’t merely a matter of plopping down a Bloomies in a Dubai mall, but about translating the NYC experience into a destination that would appeal to Dubai shoppers. Not an “If you build it, they will come” proposition (as we saw in Guangzhou, China with the huge but empty South China Mall), but more like “How can we build it so that it will appeal to the region’s consumers for the long term? Because we don’t want them to just come — we want them to come back!”
Yet piggybacking on the news that designer-filled Bloomingdale’s is opening in Dubai is the news that Dubai shoppers are downscaling their purchasing habits: “According to the Arabian Business Retail Trends Data, supplied by Dubai-based Datamonitor, the percentage of shoppers seeking out bargain brands rose by 12% to 49% of those polled. This represented the largest percentage of shoppers since Datamonitor began their monthly Recovery from Recession research in May.”
So it looks like Bloomies is expanding internationally at just about the worst time they could have possibly imagined. All the wheeling and dealing took place years ago while the global economy, and especially Dubai, was skyrocketing, but now that times are different, it’s really anybody’s guess as to whether Bloomingdale’s will connect with Dubai consumers and survive in the Dubai market.
6.) INDUSTRY QUICK HITS:
A.) In our “Watch the Scramble to Embrace the Low-End Dollar” department: Jimmy Choo bites the bullet and launches a sneaker/trainer line; sophisticated urban New York designer Narciso Rodriguez launches an eBay shop with items that top out at around $350.00; Mary-Kate and Ashley Olsen design a mainstream (and wallet friendly) clothing range for JC Penney — and JC Penney is pleased with the results; Everyman brand Levi’s moves into the once super-trendy NYC Meatpacking District; and Zac Posen, former “it” designer for the young celebrity jet-set, swallows his pride, downscales his shows, produces a less-expensive diffusion line for Saks and creates a collection for Target.
B.) Chanel cosmetics fumbles the ball in Korea: “Chanel cosmetics will lose its dedicated space in the Lotte Department Store, Korea’s largest department store chain. A spokesman for the retailer on Monday said the French cosmetics brand would shut its business in seven branches of Lotte on Jan. 29 . . . ‘Chanel has the best spot in the store and its booth amounts to 1.5 times of the space of other brands,’ the spokesman said. ‘The problems is that it is too arrogant as the world’s best and has failed to catch up with the changing trend among Korean consumers.’”
The article notes that Chanel was a top-seller in the department store chain until 2002, when consumer focus shifted away from color cosmetics to wrinkle creams and other anti-aging products. By 2007, Chanel was ranked in the bottom top ten sellers among beauty brands in the Korean chain — yet one more example of a Western brand that doesn’t pay enough attention to its local clientele.
In related news, here’s a recent article that addresses the desire of the Asian consumer for skin care, especially skin whiteners and brighteners, over color products (which, really, should have been a no-brainer for Western brands if they were paying any attention at all to their international demographic) — The Yearning for Whiter Skin: “Dark skin is associated with hard physical work, and the media are full of tips on how to look younger and whiter . . . the craving for white skin becomes stronger as Asian countries have more contact with foreign cultures and are economically better off. LeeJiHam Cosmetics CEO Kim Young-sun said, ‘The yearning for white and flawless skin like Korean TV stars is very strong in Southeast Asian countries like the Philippines and Vietnam, where Korean TV dramas are popular. It’s probably even stronger than in Korea.’”
A Bloomberg article from November 12th of 2009 talks about the boom of
skin whitening products in India, as well: Fair-Skin Fashion Boosts Sales of Whitening Creams in India. And with India and China becoming the top emerging markets (China threatens to become the top market, period), beauty brands ignore definite consumer trends in these markets to their own detriment.
After all, the Korean story shows that even Chanel cannot succeed based on its name and logo alone. Again, it’s not an “If you build it, they will come” story. Brands have to provide the items and service that the local consumer demands, and with cosmetics presently tallying 70% of retail sales in department stores in Korea, this is too big an issue to dismiss.
C.) New York Fashion Week to hold its last Bryant Park event: “This season is New York Fashion Week’s last in the iconic white tents at midtown’s Bryant Park . . . Nostalgic reflections from Anna Wintour, Patricia Field and many more will plaster the Bryant Park Tents for the grand farewell before next season’s move to the Lincoln Center performing arts complex.”
Video clip below of TimeOutNY going behind the scenes in Bryant Park for Fashion Week in 2008:
D.) Wedding gowns are the future of haute couture: “Lebanese designer Zuhair Murad seems confident that wedding dresses could save haute couture in the long run. ‘Ready to Wear covers everything else,’ Murad told Relaxnews in his Paris showroom during haute couture fashion week. ‘You have outfits for your dinner, your cocktail, daytime. [...] But a haute couture dress that you’ll hopefully only use once in a lifetime, that’s our niche in the market.’”
