1.) It’s Not Just the Big Names That Feel the Knockoff Pain:
“After years of knocking off luxury products like $2,800 Louis Vuitton handbags, criminals are discovering there is money to be made in faking the more ordinary — like $295 Kooba bags and $140 Ugg boots . . . The shift in the counterfeiting industry … plays to recession-weary customers looking for downmarket deals, the authorities say. And it has been fueled in part by factories sitting idle in China . . . ‘If there is demand, there will be supply,’ said John Spink, associate director of the Anti-Counterfeiting and Product Protection Program at Michigan State University. In China, he said, ‘It’s all of a sudden them saying, ‘We have low capacity. What can we make?’”
The article goes on to mention several interesting points — the most notable being that counterfeiters are discovering that they can make *more* money by knocking off lower-priced items. I know, it sounds counterintuitive, but when you see a $3,000 Gucci bag on eBay for $200, then red flags are going to start waving everywhere and you’ll take a pass. But when you see a $300 Kooba bag on a discount website for $180, you’re probably just going to think you found a great deal and place your order.
Added bonus for the counterfeiters — smaller, mid-priced companies like Kooba don’t have the money, the manpower and the lawyers to crack down on counterfeiters the way a company like Gucci can (Gucci is part of the Gucci Group, which is part of French multi-national holding company PPR), so counterfeiters pretty much have the run of the place when it comes to spreading the fake news on mid-level brands like Kate Spade and Botkier.
Said Corinna Sellinger, co-founder of leather goods company Foley & Corinna: “It’s just too frustrating. You can try to do something, but it’s so big and so fast . . . Once it’s out there a lot, people won’t even want the real one because then they’re like, ‘People are going to think it’s fake.’”
But this doesn’t take the heat off the more well-known brand names. In “Knockoff: The Deadly Trade in Counterfeit Goods“, Tim Phillips writes that global luxury brand Hermes is spending increasing amounts of time and money battling counterfeiting — time and money that used to be spent on promoting the brand and developing new products.
Phillips interviewed Joseph Gioconda, an intellectual property specialist that worked on the Hermes account. Gioconda stated that “Hermes had a counterfeiting problem but it was steady and predictable. The quality of the counterfeits was poor and their quantity was manageable . . . (but) the problem has exploded . . . I track the reports from customs … It used to be two or four bags, now it’s 2,000 or 4,000 (fake Hermes bags) per shipment, and that’s just what gets caught.”
And as we mentioned in a previous posting, if China is responsible for two-thirds of these counterfeit goods (as is thought to be the case), then it’s against their own best interests for the Chinese government to put a stop to counterfeiting as their country’s very economic survival depends on the continued, if not growing, manufacture and exportation of counterfeit goods — especially when consumer demand is slumping across the globe, yet the millions of Chinese citizens who’ve left rural areas and flocked to the urban manufacturing centers still need employment.
As long as we’re talking about China: there’s talk that China’s real estate market is overvalued by as much as 60%, presaging a potential bubble-burst and subsequent economic quagmire bigger than what we’ve experienced in the U.S.: “China’s banking regulator told lenders last month to conduct a new round of stress tests to gauge the impact of residential property prices falling as much as 60% in the hardest-hit markets” with speculation that there are about 64.5 million empty apartments and houses in urban areas of the country, a number roughly five times larger than the 12 million in total US public home inventory available currently.
Add to that the reports of widespread loan shark ponzi-schemes unraveling across China, with civil unrest said to be percolating under the surface, and I’m the color of concerned.
So when companies like the Gucci Group, Polo, Prada and LVMH reported their latest fiscal numbers for the first half of 2010 — and the numbers were very positive, with luxury bloggers and industry types breathing sighs of relief (if not jumping up and down and waving their pom-poms wildly) — it’s a bittersweet affair, because buried in the reports is the troubling fact that the majority of growth and sales for these luxury-fashion brands is coming from, you guessed it, Asia (and mostly China).
2.) High Fashion Can No Longer Afford to Ignore the Curves:
“The designer-level racks at select Saks Fifth Avenue stores are expanding. Beginning this fall, the options for women looking for sizes 16 and 18 will include more high-fashion styles . . . said Sasha Iglehart, deputy fashion director at Glamour, ‘It’s a real investment for these brands to make sizes in that range. It’s not just taking a pattern and making it bigger . . . The proportions are different, and there has to be real thought into what’s flattering to women in that size range.’”
This particular topic of conversation got even hotter this past week when Robert Duffy, president of the Marc Jacobs brand, hopped onto Twitter and engaged in a public conversation with the brand’s followers over introducing plus-sizes to the Marc Jacobs range. But the decision of Saks Fifth Avenue to start stocking designer plus-sizes is a potential game-changer for the whole fashion industry.
Because these same high-end brands that will be supplying plus-size items for Saks won’t even be carrying them in their own boutiques or offering them on their own websites. This appears to be a market experiment, where the reception at Saks will dictate whether this directional move survives or dies (and you can see by the Robert Duffy Twitter conversation that there’s still a lot of debate over it).
It’s also a particularly illuminating barometer of the retail sector for high fashion at this time. The big luxury-fashion brands have always (always!) refused to create plus-sizes, insisting that designing for curves destroyed the integrity of their vision (and probably just because it’s a lot harder to design for larger women — when you’re designing for a walking coat-hanger, you don’t have many structural challenges to worry about) — but all of a sudden they’re open to the idea?
Smells like industry-wide flop-sweat to me. But sure, yeah, everything’s fine and the recession’s over, they’re just now offering plus-sizes cuz they care . . . a lot.
3. Cartier Fires a Warning Shot At Flash Sale Sites:
“With a weakened global economy eroding their profit margins, luxury brand marketers have seen their traditional upscale buyers turn away from the brands they once cherished. Instead, many of these consumers are trading down and looking for lower-priced bargains . . . (but) Cartier has brought suit in a U.S. District Court against HauteLook, accusing the e-tailer of making damaged and second-hand Cartier goods available on its site without permission . . . Cartier accused HauteLook of ‘causing immediate and irreparable harm to the Cartier brand and trademark,’ (saying) HauteLook sold used Cartier watches, damaged Cartier goods, and products with defaced authenticity certificates or warranties that do not apply.”
Now that the aspirational consumer has vanished, luxury brands are jealously defending what they consider their sole right to sell their own merchandise, but are these kinds of aggressive turf-war actions too little, too late?
I’ve shopped from Haute Look numerous time and have received only one damaged piece of merchandise (which I sent back) — but this affects my relationship with Haute Look more than it does with the brand name of the damaged item, so I’m skeptical as to the “damaged goods” part of Cartier’s claim. What’s more likely is that suing Haute Look as an unauthorized reseller is the only way Cartier can think of to prevent its name from being associated with the words “sale” and “discount”, two very dirty words in the luxury lexicon.
But really, when your main source of mainstream exposure is Paris Hilton flashing an ostentatious ring on a late night talk show, Haute Look is likely the least of your troubles.
“It’s TV, it’s supposed to be funny.”
I think my biggest surprise was in learning that Hilton has eleven perfume releases — that’s almost two perfume releases a year (her first fragrance was released in 2004). She’s her own one-woman brand dilution machine!
4.) Is It the Internet or the Economy? Fashion Magazine Sales Decline:
“With only a few exceptions, fashion titles saw yet further declines on newsstands in the first six months of the year, placing further pressure on them to hit their rate bases as publishers scurry to ferret out every ad dollar they can. ‘I think it’s fair to say media buyers will be paying more attention and wanting some answers,’ said Jack Hanrahan, publisher of industry newsletter CircMatters, of the first-half figures . . . Teen Vogue fell 30%, W declined 22%, Allure was down 19%, Lucky declined almost 17% and Vogue posted an almost 15% slide.”
It’s difficult to know exactly what to blame in this regard, but it’s most likely a combination of increased (and more candid) fashion coverage on the internet coupled with a continuing recession which doesn’t look like it’s ending anytime soon.
Fashion sites founded and maintained by the fans who love fashion (and not the companies that just want to advertise to them) have exploded on the net in the past couple of years, making the behind-the-curve coverage of old-school fashion magazines not so charmingly irrelevant. When practically the entire customer base for high and low fashion can see every collection, read every bit of gossip and follow links to seemingly every new trend and product as it happens, when it happens, waiting each month for some annointed magazine editor to tell you where you should shop and what you should buy seems hopelessly archaic.
I expect that advertisors will continue to see diminishing returns from traditional fashion magazines, and that Conde Nast will have to figure out a way of attracting consumer attention to fashion coverage that doesn’t involve beauty secrets and celebrity interviews that were widely published six months previously online.
Of course, it doesn’t help that the average magazine consumer was the aspirational one who’s now spending less.
Speaking of spending less, the July retail reports are in, and they’re (unsurprisingly) not good: Many Retailers Post Weak July Sales, Short of Estimates — “Although there were some standout results from a few retailers, the majority of sales reports fell short of analysts’ estimates, and the poor performance was most pronounced among teen retailers. This marks the fourth straight month of weak spending and the end of many retailers’ fiscal second quarter . . . (expect) to see the first half’s optimism fade as we head deeper into the second half of the year.”
5.) INDUSTRY QUICK HITS:
A.) New Bill Could Protect Designers From Being Knocked Off: “It’s a frustrating position for American designers to have little recourse when their designs are copied down to the most subtle details but a new bill gives designers some hope. Late last night, the New York Times broke the news that New York Senator Charles E. Schumer introduced a bill called the Innovative Design Protection and Piracy Prevention Act which would provide “very limited intellectual property protection to the most original design.” So if Marc Jacobs wanted to sue whomever knocked off his bag, he’d have to prove that that his design is a “unique, distinguishable, non-trivial and non-utilitarian variation over prior designs,” and that the knock off is “substantially identical” to the original.”
I’m wondering just how long it will take before every single designer in the United States wishes such a bill had never even been thought of? Lawsuits, lawsuits everywhere!
B.) Celebrity Culture has Changed the Way the Fashion Industry Works: “It’s simply not enough to be a designer anymore. Now you have to be a part-time magazine editor and photographer, a la Karl Lagerfeld, or a blogger-cum-designer, like the Internet stars who designed bags for Coach . . . The game has changed, and designers have to change with it to stay afloat. As the world continues to demand more and more accessible fashion, they also demand more access to the designers themselves.”
Video killed the radio star. ‘Nuff said.
“We can’t rewind we’ve gone too far”
C.) When Even Environmental Issues Become Just Another Sales Tool: “The 24 pages of Kristen McMenamy, shot by Steven Meisel, are realistic interpretations of images of injured, oiled animals that have inundated the news media since the Deepwater Horizon explosion in April. As beautiful and provocative as they are, we can’t help but feel uneasy. Creating beauty and glamour out of tragedy seems quite f***ed up to us, not to mention wasteful and hypocritical, seeing as thousands of dollars of luxury clothing was flown in, and then subsequently ruined for the shoot.”
Maybe they were thinking no one would notice?
D.) Gucci Says Goodbye to the Overly Logo’d: “‘Our groups are moving toward fewer logos, more discreet luxury,’ François-Henri Pinault noted. ‘It’s a question of adapting our ranges very rapidly to this new perception of luxury, a luxury which is more subtle, more sophisticated — which is what we are doing.’ Can you imagine? Somewhere a nouveau riche is crying his eyes out.”
It really is a brand new era.
