Luxury Industry News Roundup: 02/012/10

1.) Fashion Industry Mourns the Death of Designer Alexander McQueen:
"Top British fashion designer Alexander McQueen, who dressed stars from Sarah Jessica Parker to Rihanna to Nicole Kidman in bold shapes and colors, was found dead in his home Thursday, a spokesman for his company said. Though his reputation for controversy earned him the titles 'enfant terrible' and 'the hooligan of English fashion,' British Vogue Editor Alexandra Shulman said his work 'influenced a whole generation of designers'."

News of the death of Alexander McQueen quickly tore through the fashion world, with the New York Fashion Week shows (that kicked off Thursday morning just as word of the designer's suicide ricocheted through the tents at Bryant Park) overshadowed by the shock of the design world at losing one of their best and brightest too soon.

And using the term "best and brightest" in relation to McQueen is not a cliche.

The talk among designers, journalists and editors is no longer just "How do we cope with the still sluggish global economy?", but also "How do we cope with the loss of Alexander McQueen?" -- arguably one of the most notable movers and shakers in 21st century fashion design so far.

Of course, the show goes on (though McQueen's diffusion line runway show, McQ, due to present on Thursday evening in New York, was cancelled), but now the brand (controlled by parent company Gucci Group/PPR) is in damage control mode, scrambling to retrieve preview and sample items before unscrupulous industry insiders start hawking them on eBay, blocking access to the Alexander McQueen website, shrouding the New York boutique's front window and refusing comments to the press.

And no wonder -- PPR is already struggling to conceive of how they might possibly keep the Alexander McQueen label functioning after the loss of its most valuable asset, designer McQueen himself: "The future of the label may hinge on PPR's ability to find a designer with the same creative leadership as McQueen and whether the retail-to-luxury behemoth is prepared to write off nearly 10 years of investment."

The Associated Press writes that "McQueen's work is considered so unique that some are voicing serious doubts" that the brand can survive without him.

The Gucci Group acquired a 51% controlling interest in the Alexander McQueen brand in 2000, bringing the label to break-even financials in 2007, just at the start of the global squeeze. It's likely that the house of McQueen, with its daring silhouettes and hi-tech influences, had dipped back into the red in the intervening years, which means that PPR has a choice on its hands -- close down a unique yet unprofitable brand that's just lost its boldly creative head designer, or decide to carry on with the McQueen name but bring in designers who will be instructed to mainstream the look (which would incur accusations of disrespecting McQueen's legacy).

It's possible that brand McQueen could carry on strictly as an accessories unit, reaching back throughout the designer's career for prints and detailing that can be translated into future collections of scarves, jewelry, hosiery and handbags, but other than that, it's pretty much a no-win situation for everyone involved.

*Note: Hmmmm, unless someone were to, maybe, ask Kate and Laura Mulleavy, the sisters behind Rodarte, to take up the challenge of the McQueen label . . . ? That's an idea I could get behind.

But as weirdly vulture-ish as it may seem, the death of a recognized artist (musician, painter, designer, etc.), always results in an immediate increase in demand for his/her work: Devotees in a dash to buy a piece of Alexander McQueen's legacy -- "'The response was immediate,' Kate Brindley, head of press at the London department store Liberty, said. 'At about 4pm, just after the news broke, all of our Alexander McQueen stock started flying off the shelves.'"

You know, I have to admit that I immediately ordered an Alexander McQueen skull print scarf for Louise when I heard that McQueen had died. It seemed the right thing to do, to mark the sadness of the occasion by 1.) recognizing the value of the man's work, and 2.) making sure I shared his singular vision of beauty with someone else.

Other designer related news: Diane Von Furstenberg's creative director, Nathan Jenden, resigns to focus solely on his own namesake brand -- Furstenberg hates to see him leave, but is delighted that he's experiencing success with his label, as she was a supporter from the start; and Celine head designer Phoebe Philo, who was at the helm of Chloe when the whole "it" bag craze exploded due to the introduction of Chloe's popular Paddington model, declares that the trend of the "it" bag has run its course, and that, "rather than producing bags that are covetable merely for their name and distinctive hardware, Philo aims to make Celine bags desirable for their quality and even functionality."

2.) Marc Jacobs President Robert Duffy Discovers Twitter:
"Q: You've just started tweeting. What's surprised you so far? A: What surprised me is how famous Marc is . . . The best thing about [tweeting] has been listening to what people have to say, and these are real consumers. People were commenting about what they bought and how they long they'd kept it and when and where they'd bought it. That's really been an eye-opener for me."

The above question and answer is from an interview with Style.com where Duffy talks about the future of the Marc Jacobs brand, the future of the fashion industry in general, taking advantage of new media opportunities to connect directly with consumers, their relationship with LVMH ("Once you start making money, everybody loves you"), that the days of being able to start a mega-brand are over and how the decision to establish diffusion lines back in 2004 has helped keep the Jacobs brand afloat during the recession -- their customers traded-down from the more expensive Marc Jacobs line to the Marc by Marc Jacobs diffusion collections, so they essentially kept the trading-down in-house.

Smart.

He also mentioned that the Marc Jacobs website will soon have an e-shop: "People have come to me within the organization and said, we must have an e-commerce site; but I said, not until I figure out a way that I'm going to enjoy this."

I have to admit to being surprised it's taken this long for them to get an e-shop up and running, especially with how popular the Marc by Marc Jacobs brand is with a younger demographic that's more than comfortable shopping online. But better late than never, and hopefully they'll have a more engaging online shopping experience than you'll find with, say, Oscar de la Renta or Valentino.

The diffusion line that saved the day

Speaking of Oscar de la Renta: "Rumor has it that Oscar de la Renta is designing a new beauty deal . . . sources suspect a private equity deal is brewing which would infuse capital into the fragrance business and possibly expand the the company's offerings into makeup and skincare."

The de la Renta brand just recently reacquired the rights to its own name for fragrance licensing, and beyond re-establishing itself as a fragrance contender by reworking a lineup that's gone stale, they now want to expand into cosmetics, and who could blame them? De la Renta clothing and accessories are famously high-end luxury purchases, yet in the present economy, the brand needs product items at entry-level price points to keep the mainstream consumer interested. What's more entry-level than lipstick and wrinkle cream?

Not so entry-level friendly

To underscore the seriousness of the present economy's impact on luxury brands, the beer, wine and booze industry, once considered recession proof, is also reeling, with conglomerate Diageo reporting a 10% drop in profits as sales of premium spirits decline: "Diageo, the maker of Guinness, Smirnoff vodka and Cuervo tequila, said Thursday that its fiscal first-half net income dropped 10% on weaker sales volumes in the U.S."

Even worse, European Champagne exports were down 25%, with notable drops in the markets of US and Japan.

3.) The Oscars Aren't So In Love with Fashion, After All:
"When the Oscar nominations were announced last week, there were few surprises to be found . . . But for fans of fashion, there were two glaring omissions in the best documentary category. Director R.J. Cutler's 'The September Issue'' ... an extremely well-made, entertaining, and semi-educational film about the (fashion) industry and just how powerful it is . . . and Matt Tyrnauer's 'Valentino: The Last Emperor', which looked at the powerhouse designer's touching relationship with his partner, as well as his final days heading up his label before his retirement."

While the red carpet parade of designer dresses and accessories gets an enormous amount of global attention on awards night, it would appear that Hollywood wants its big show, once it actually gets started, to be all about them, instead.

Trailers for "The September Issue" and "Valentino: The Last Emperor" below. I've seen "The Last Emperor", which I found to be both maddening and fascinating, often at the same time. "The September Issue" is on my "to view" list:

Enter the Dragon Lady?

Queens, Preens and Limousines!

Since we're already talking about Valentino, Giancarlo Giammetti, long term partner of Valentino and the former business mind behind the brand, took to Facebook to express his displeasure with the latest Valentino Haute Couture show, not really understanding just how far the ripples of social media can extend: "On Wednesday, Giammetti told WWD his observations 'provoked such a mass of comments from friends on Facebook' that he was prompted to 'decide to delete [the quotes] because it was becoming [too] heavy.' Giammetti concluded both he and Garavani 'are always supportive of the designers of Valentino, even if we don't approve of their effort to be cool at all costs. But we will always be [supportive] of them.' The house of Valentino declined to comment."

So chin-up, teenagers -- even wealthy and influential 70-some year olds post hot-headed things on Facebook that they later regret.

4.) European Luxury Stocks Fall on Concern About Economic Recovery:
"'The markets are very jittery, and luxury stocks are taking the biggest hit,' said Chicuong Dang, an analyst at KBL Richelieu Gestion in Paris. 'Investors are nervous about Europe with its current economic problems, and there is some concern about China as well. Luxury makers like LVMH have a lot of business in these markets' . . . Europe's major stock indexes fell for a third day on concern that efforts by Greece, Portugal and Spain to reduce their deficits will further hurt their economies and slow down the global economic recovery."

LVMH CEO Bernard Arnault stated that 2010 would be a difficult year for the luxury industry -- that while several luxury groups saw an uptick in the 4th quarter of 2009, their projections for all of 2010 remain conservative (to say the least), while Hermes CEO Patrick Thomas gloomily predicts that governments across the world will initiate even greater tax hikes on the wealthy to make up for ballooning debts, and that this will significantly impact the ability for luxury brands to survive in this economy, never mind grow.

But there has been some positive news for the industry lately: Prada saw sales rise 14% over last year; Austrian retailer Wolford reported an increase in sales of 5.7% compared to the same quarter last year; the YOOX group, which operates the luxury websites YOOX and The Corner, reported a 44% increase in online sales for 2009; Dolce & Gabbana experienced a 79% increase in profit over last year -- though revenues were down 3% overall; and Avon reported that "beauty sales in the fourth-quarter of 2009 grew 15% driven by gains in fragrance, color cosmetics, and personal care of 11%, 27%, and 19%, respectively." Avon holds the license for Christian Lacroix and Ungaro fragrances.

But now for the bad news: 2009 was an abysmal year for Swiss luxury watch companies, with exports dropping over 20% -- 2010 and 2011 aren't expected to be much better, and a number of bankruptcies accompanied by rising unemployment numbers are expected; fast fashion retailer Uniqlo saw it's January sales decrease by 7.2%; major diamond producer De Beers reported a 44% plunge in sales for 2009 and had to ask for a $1 billion dollar cash injection from its larger shareholders; the global workwear industry is forecasting a 2.5% drop in value during 2010 as rising unemployment levels ripple through the supply chain; IFF (International Flavors and Fragrances) reported a 3.1% dip in revenue and a 15% slide in profits, with weakness in North American and European markets still a drag on fine fragrance sales; and organic & natural personal-care brand Nature's Gate has filed for bankruptcy.

5.) Newsflash! Harvard Study Shows that Luxury Consumers Are Kinda Selfish:
"This pattern of findings suggests that luxury-primed individuals were not more likely to have anti-social cognition, but were less likely to have pro-social thoughts. In other words, when thinking about luxury, people tend to focus more on themselves and less on others . . . Luxury does not necessarily induce one to do harm to others, but simply causes one to be less concerned or considerate toward them."

Now *that's* a penetrating piece of insight, especially when you stop to consider that the concept of "luxury" is, first and foremost, about considering one's own personal comfort and pleasure.

Next, I suppose we'll have a Harvard study that reveals how people who spend most of their time indoors working on computers often suffer from a Vitamin D deficiency.

6.) INDUSTRY QUICK HITS:

A. Ann Wintour Makes Italy's Fashionable Hordes Nervous: "Anna Wintour, aka the most powerful woman in fashion (we're hoping she has that printed on her business card), had the Italian fashion houses teetering around in a high-heeled panic when the news emerged that she'd only be stopping off in the city for a few days between Paris and the Oscars."

We're getting set for a round of Ready to Wear fashion shows, hopping from New York to London to Milan to Paris, and Ms. Wintour has penciled in only a few days for the Milan shows (she generally skips the London shows altogether). Due to a scheduling switch-up last minute, she'll even be missing the Prada and Fendi shows. The Italian press has responded with anger, saying: "She's welcome in Milan, but if she only comes for a fleeting visit, perhaps it would be better if she stayed at home."

B. Consumers are losing trust in social media marketing: "'Social networking used to be innocent, peer to peer conversation and now it's turned into a marketing playground in which almost everything -- blog space, tweets and, in some cases, opinion -- is for sale,' writes ZDNet's Jennifer Leggio . . . The sheer volume of recommendations being pushed, via friends and peers, to social networking feeds each day. Their importance is diluted by these numbers."

The author of the article points out that the increasing number of "friends" on social media sites that aren't really very well known to the user could also be a contributing factor in pushing down the level of trust among networked peers.

It's kind of like that sales assistant at the clothing retailer -- do you really look "great" in those jeans, or is he/she just trying to make a sale?

C. Fragrance retailers notice an increase in pre-Valentine's Day sales due to smaller sized bottles: "Fragrance manufacturers may have been right on the money in offering versions in multiple sizes . . . Karen Grant, vice president and global industry analyst, NPD, says ... 'Smaller sizes are becoming an increasingly important option today. What's encouraging is that they are not just working in women's scents or new fragrances...we are also seeing growth in smaller sizes for both women's and men's fragrances (one ounce and smaller) and classics, as well as new scents.'"

Other scent related news: J'Adore is still a big hit for Dior; Balenciaga launches a new perfume created by Olivier Polge, the winner of the 2009 International Fragrance Prize; Independent/All-Natural Berkeley perfumer Mandy Aftel releases Aftelier: Trèvert, a trend-surfing green fragrance based upon pine needle absolute; the Fragrance Foundation has announced that its annual FiFi Awards Breakfast, where the finalists for the fragrance awards are announced, will be held Friday, April 23 at The Mandarin Oriental Hotel in New York City; and the fragrance industry reorganizes in response to market pressures.

D. Not all stars are created equal: "It isn't pure chic that moves clothes. 'For the most part, celebrities that drive sales aren't necessarily the ones that get nominated' for awards, says Lily Hollander, editorial director of StyleSpot.com . . . High-profile fashion publicist Karla Otto, who recently opened a Los Angeles VIP office, says any appearance by an A-List actress 'sells product from clothing to accessories and, if the consumer can't afford the attire, they might buy the fragrance or the beauty products.'"

Sandra Bullock was mentioned as an incredibly likable and down to earth celebrity that consumers relate to. Her appearance in a designer's product often generates huge sales in return. A video clip below of the likable Bullock on the red carpet:

"If I win the Razzie, I'm so going to go!"