Luxury & Fashion Biz News: Dec. 28th, 2010 (Arnault wants more Hermes; Jimmy Choo gets its man; Social Media expects some attention; and Retailers survive another holiday season)

1.) LVMH CEO Bernard Arnault Ups the Stakes with Hermes . . . Literally:
“Luxury-goods rival LVMH Moet Hennessy Louis Vuitton SA said it increased its stake in the Birkin bag-maker to more than 20 percent . . . ‘Hermes can’t be taken over, especially if the family sticks together,’ said Davide Vimercati, an analyst at UniCredit SpA in Milan (the family controls 70% of the company stock) . . . ‘LMVH should be able to raise its stake to around 25 percent, but that won’t be enough to take control. LVMH looks as though it is positioned in Hermes for the long term, but won’t be able to do much in the medium term.’”

The BF and I were discussing this over dinner the other night, and we both feel that: #1) The Hermes family is playing their own version of the PR game, and it’s unlikely that the entire family is united in a desire to refute Bernard Arnault’s advances. They may simply be talking resistance as a means of telegraphing that their sell-point is a lot higher than Arnault might have hoped; and #2) It’s quite possible that Arnault sees Hermes as simply a very good investment vehicle rather than a takeover target. His stake in Hermes has already gained significant value from where he purchased it, and should he decide to dump and run in the future, he’ll likely come out seriously ahead in the finance department — a financial strategy which can’t be lost on the likes of France’s richest man.

*NOTE 1: It’s kind of a win-win for Arnault, whether he gains control of Hermes or not. The press spilled a lot of ink ten years ago claiming that PPR’s acquisition of Gucci was a stinging loss for Arnault (back when Arnault was making a takeover play for Gucci — official investigations were a part of that transaction, too), but Arnault was eventually paid a hefty sum to walk away from his Gucci shares ($1.9 billion — he owned a *lot* of Gucci shares), so if anyone was crying, it was all the way to the bank.

Much has been said of the Hermes brand’s ability to not just survive the present economic contraction, but thrive throughout it. It’s one of the few (if not the only) global luxury brands that hasn’t over-expanded, over-sold, over-built and over-done itself. Hermes still holds a reputation for fine materials and excellent craftsmanship (though its Shang Xia branding move in China has raised some doubts regarding the overall wisdom of their board), and the French luxury brand’s expansion into Asia has been calm, slow and measured in comparison to competitors (Armani, Louis Vuitton, Gucci) who’ve seemingly planted flagships on every street corner in Beijing and Mumbai, whether they needed to or not.

Speaking of fashion brands and high drama, it’s a not so very Rockin’ Christmas for Rock & Republic: “VF Corp., which also owns 7 For All Mankind and John Varvatos, has acquired the bankrupt Rock & Republic brand for $57 million, reports WWD. Under the deal, VF Corp. will purchase the Rock & Republic brand name, but will not obtain its business operations or retail boutiques . . . Despite R&R’s early success, over the last few years the company has not been able to pay off debts and subsequently filed for Chapter 11 bankruptcy protection on April 1, 2010.”

So founder and owner Michael Ball is out, kicked to the curb along with the unnecessary stand-alone retail boutiques, the failed cosmetics line and every single other aspect of the bankrupt R&R business model. All VF Corp. wants is the by-now familiar brand name so that they can produce their own designs for the label and distribute them to all the same places which presently carry their 7 For All Mankind and John Varvatos brands.

Which is practically every large upscale retail chain store in the U.S. — Nordstrom, Bloomingdales, Neiman Marcus, Saks Fifth Avenue — along with numerous smaller, yet young and contemporary skewing, outlets.

*NOTE 2: VF Corp. describes itself on its website as “a $7 billion-plus apparel powerhouse” and owns a stable of famous brand names beyond 7 For All Mankind and John Varvatos, including Lee, Wrangler, The North Face, Vans, Nautica and Kipling.

Not a bad deal for $57 million, when you think about it. VF Corp. avoids all the cash-draining aspects and snags the one thing that still holds any real value: the Rock & Republic name. The groundwork has already been laid by the previous brand management: video marketing, print ads, consumer awareness and an established presence in shopping outlets throughout the U.S. and into South America, Europe, Asia and the Middle East. Now it’s up to VF Corp. (if the deal gets final approval from the bankruptcy court) to polish up and streamline the brand’s presently tarnished and out of touch image and run with it.

Video clip below of a Rock & Republic that seems more informed by the trends of 2003 than 2010:


R&R Spring 2010 – just before the brand hit the brick wall of post-crunch reality

Other big brand news: Yves St. Laurent is rumored to be chasing after designer Haider Ackermann — yes, *the* Haider Ackermann whom Karl Lagerfeld recently announced as his wish-list successor at Chanel if/when Lagerfeld decides to retire (the jury is still out on whether Lagerfeld might just live forever, obliviating any need for a replacement).

2.) Jimmy Choo Takes a Second Look at the Men’s Market:
“Jimmy Choo is realizing that men appreciate their shoes too and they’re bringing men’s shoes back . . . When the line returns in the fall/winter of 2011, it will bring with it dress shoes, moccasins, casual biker boots, sneakers, and evening slippers . . . Chief Executive Officer Joshua Schulman says, ‘The H&M collaboration showed us that our brand is bigger than our business today and that there is a demand for the Jimmy Choo aesthetic in the men’s categories.’”

The Choo flirted briefly with men’s shoes once before but pulled out of that market in 2002, back when a lot of newer, trendy brands were smarting from a nasty post-9/11 hangover. But with global expansions back on the table (and mergers & acquisitions within the fashion industry revving their engines), Jimmy Choo is taking a page from the standard playbook: diversify the product range in order to make the company more attractive to potential investors.

Investors get nervous when a brand relies too heavily on one product or one consumer segment. Too much revenue from one source (i.e. bags or shoes) and supply problems and/or fickle consumer tastes can tank a company in no time flat. Which is why we’ve been seeing Jimmy Choo pair up lately with H&M, expand into sunglasses and scarves, head back to the drawing board with men’s shoes (and perhaps other men’s accessories, like cufflinks, ties, belts and briefcases?) and announce the launch of their first perfume.

Speaking of which, the Jimmy Choo perfume will be released in January of 2011, which completely mystified me when I read about it in December. They totally bypassed launching during the holiday season — the most lucrative time of year for the fragrance industry (with an estimated 39% of all fragrance sales occurring in the month of December alone). Why would the company deliberately do that? Unless, of course, they’re opting for a soft launch, a release that’s not as heavily hyped with lots of accompanying print and video advertising in major markets worldwide, something that would have been necessary to cut through the noise level for a successful holiday season debut.

Releasing in January might give Jimmy Choo the time it needs to roll out the product in stages — a host of small, targeted parties in big department stores and stand-alone boutiques with paparazzi stalking the attending celebrities (as well as Jimmy Choo founder Tamara Mellon) and photographs popping up on fashion blogs, in celebrity mags and throughout gossip columns the world over (or what’s sometimes known as “Free Advertising!”).

Now that your average fashion brand has to think globally, the days of a hedonistic, glamorous, NYC-society studded 1978-era YSL Opium launch party are long gone. Though, to be frank, I think Beijing specializes in that kind of thing now.


Beijing puts the “red” in red carpet parties

3.) Tumblr is the New Twitter is the New Facebook is the New . . . ?:
“Tumblr, based in New York, is garnering attention because it easily entwines with other social media, like Facebook and Twitter, sending updates to those sites as users post new content to Tumblr. The extent to which the minimalist platform, now at 500,000 page views a month, according to the company, has become a part of the social media scene became apparent (when) an outage took Tumblr down for almost a full day, as the blogosphere filled up with groans and complaints . . . the non-hosted (Tumblr) option offers business owners the ability to create their blogs on their own servers. That rules out any issues about ownership of content, such as famously exists with Facebook.”

Tamar Koifman at Fashion’s Collective writes that micro-blogging platform Tumblr has experienced “phenomenal growth” in the past year, including the receipt of “an additional $30 million in funding from a variety of investors” while noting that 20% of the top 1000 Tumblr blogs are fashion related, a factoid that hasn’t escaped the notice of major fashion brands and voices the world over.

GQ Magazine gave brief credence to Tumblr as a neo-wave fashion force when it interviewed the steezy (but still anonymous) author for Tumblr’s style blog of the moment, Fuck Yeah Menswear, and Tumblr itself launched a fashion shopping site for emerging designers — Of a Kind — in November of 2010, going head to coiffure against the likes of Google and eBay, both of whom stretched their massive digital reach into the fashion retailing biz earlier this year.

Which begs the question, how is a poor fashion brand supposed to keep up? First they had to be on MySpace, then Facebook, then Twitter and now Tumblr? And don’t forget operating their own blogs and e-commerce sites while developing original video content for YouTube and keeping tabs on every blogger, tweeter and FourSquare champion who mentions their very branded names. It’s no wonder that some big brands (like Chanel and Hermes) just refuse to join the Social Media party.

But tempting though it may be, it’s a mistake to ignore digital media altogether — but what might be prudent is a more focused approach. MySpace (which saw 54 million visitors in November alone, a drop from last year but still not a number to easily dismiss) has a youthful movie and TV friendly demographic that attracts big media buyers looking to sell celebrity and entertainment; over 50% of Facebook users are 18-34 years old (with another 30% in the 35-54 year old range) and 70% of those live outside the United States — a prime audience for global brands looking to target a child raising, pet owning target audience; and Twitter, while one fifth the size of Facebook, has a user base that’s 15% more brand loyal and 40% more active online than Facebook users on a daily basis, which makes Twitter an ideal place for brands to regularly and personally engage with their most passionate fans (aka “brand whores“).

Take Burberry and Oscar de la Renta as two separate but effective examples. Burberry successfully utilizes Facebook as a means of disseminating cool new advertising techniques enjoyed by over 3.5 million (and counting) brand followers — Live Runway Shows! 3D advertisements! Music Video promos! — though it doesn’t bother responding to feedback on its Facebook page, since that’s not really what Facebook is about. If a brand wants to spend its time engaging personally with fans, then Twitter is perfect for that, with Oscar de la Renta’s OscarPRGirl a near note-perfect example of how a brand can promote its products, image and name while still (and daily, as in “all day, every day”) engaging its fans on a personal level.

The point is not to establish a presence on every single new platform that pops up — that’s a recipe for PR exhaustion — but to work with the strengths of the ones that make the most sense for what the brand represents and who the brand targets. If you want to push new campaigns while remaining cool and aloof: Facebook. If you have a smart, sparkly intern that loves the brand and loves to chat all day with other brand passionate users: Twitter. If you’re a small brand with a flair for selecting photos and the perfect post-ironic one-liners: Tumblr.

And then there’s just the good old fashion blog format for discussing ideas in more depth than MySpace, Facebook, Twitter and Tumblr can manage combined.

*NOTE 3: The point is to be engaged no matter which format is chosen. The biggest criticism of big fashion and luxury brands is that they spend a lot of money on image and advertising, yet utterly fail at communicating with their customers, continuing to talk *at* them rather than conversing *with* them: “Promotional posts comprised 71% of authorised updates, measured against 5% constituting an effort to start a conversation.”

While Tumblr doesn’t seem particularly suited to the rarefied world of luxury goods (though it’s great for small brands and shop owners with lots of pictures to publish), Facebook can be useful for hosting large-scale live-streaming events (as many high-fashion brands have already discovered), Twitter can be a good place for engaging consumers on a personal level, and I’d love to see a smart, in-depth and gorgeously designed official Chanel or Hermes blog . . . wouldn’t you?

4.) Retail Sales Rose 5% Over Last Year (but there’s still concern for 2011):
“‘The American consumer is back, big time,’ said Craig Johnson, president of Customer Growth Partners. ‘He has singlehandedly strapped the economy on his back, climbed out of the ditch, and is off and running — despite 10 percent unemployment.’”

When I read statements like the one above, I sometimes wonder if some people in the retail analysis industry are so afraid for their jobs that any sign of an uptick whatsoever makes them go insane with relief.

First off, a 5% growth over last year is certainly a good thing for retailers, but last holiday season wasn’t so hot (a meagre 1.1% increase from 2008, and if you’ll recall, 2008 was abysmal, with “many chains reporting the worst holiday shopping season in decades, and the stores are entering the new year so weakened that some might not survive”), so a 5% uptick in growth compared to the blacker side of awful isn’t “off and running” by any stretch of the imagination . . . unless your imagination is located squarely in cloud cuckoo land.

Raw materials prices are rising, real unemployment levels in the U.S. are said in less optimistic corners to be above 20% and retail industry bible WWD reports that consumers are unlikely to keep the pedal to the metal in 2011: “‘You’re going to see discounts of 75% in January,’ predicted Marshal Cohen, NPD Group’s chief industry analyst. ‘[Profit] margins are going to look a little less rosy than the sale volumes . . . Retailers have been discounting their way to get consumers to come into their stores,’ said Cohen. ‘It will be an OK holiday, but not a great holiday.’”


The Bergdorf Goodman windows are an unfailing source of holiday cheer

I don’t know about you, but discounts of 75% in January are kind of a silver lining, although, I guess, it depends on just what it is that’s being discounted. I’m not so certain I need another sweater: “Year of the sweater” sees rising retail sales

Did any of you even know that 2010 was The Year of the Sweater? I thought it was The Year of the Metal Tiger. I’m so out of the loop.

Although, it’s also The Year of the Watch. In China. Because, you know, the Chinese crave Swiss watches? I don’t know, nothing makes sense anymore.

5.) INDUSTRY QUICK HITS:

A.) Stella McCartney Returns to Russia, just a little more low-key this time: “Through the window of Moscow’s premiere department store, home of her new boutique, Stella McCartney can look out at the glitzy shop that, at the peak of Russia’s lavish spending, used to be all hers . . . The comeback, via a partnership with TSUM, was more subdued than the grand opening of McCartney’s own store in 2007, which closed after only 18 months when the financial crisis halted Russia’s seemingly insatiable demand for expensive clothes.”

A look below at what Ms. McCartney will be selling her Russian customers for Spring:


“A very strong story of a very particular woman”

Although I do find it suspect that any professional media outlet would include an interview snippet with Salma Hayek fawning over Stella McCartney’s designs. Not because Ms. Hayek can’t hold any informed opinions about fashion and design, but because Hayek is married to the man who owns a controlling interest in the Stella McCartney brand. Conflict of Interest, anyone? Disclosure, maybe . . . anyone?

I swear, the normal rules of journalism simply don’t apply when it comes to pushing fashion at the masses.

B.) Push-Up bras see a sales lift for the holiday: “Last holiday season, basic necessities like winter coats, coffee makers, and even diapers were hot sellers. This year we may see more frivolous, pricey items like perfume, cashmere sweaters, jewelry, TVs, and iPads selling out. Likewise, in recent years more customers stuck to shopping for others, but this season retailers have seen more people out buying for themselves, too . . . pricey “Miraculous” bras at Victoria’s Secret are flying off the shelves.”

The paragon of journalistic integrity Coco Perez reports that “sales of breast enhancing bras (like the ‘Miraculous‘) are up 33% compared to last year.”

That’s a lot of sales lift.

C.) Are Shoes To Women What Watches Are To Men?“A professional acquaintance I was chatting with recently offered an interesting bit of insight on the issue of women and shoes. He believes that shoes are to women what watches are to men. Strangely, that made me feel better about collecting shoes. After all, I’ve never met a serious watch collector who feels badly about his watch collection notwithstanding the small fortunes they drop on repairs, maintenance, etc. So why should I feel bad about my shoe collection? They give me joy.”

Totally. Enough with the guilt! If you’re going to buy something, there should at least be some enjoyment involved; otherwise, it’s just a sad act of masochistic retail dystopia.

Although a recent survey destroys the fantasy of women and sexy, high-maintenance shoes with this little nugget of practical wisdom: “Only 12% of women are prepared to wear uncomfortable heels on Christmas Day, while 31% are opting for comfort by planning to wear slippers with four per cent wearing trainers. Mums and daughters alike will spend the big day in comfort, opting for furry boots (14%) whilst three per cent even admitted to wearing comical Christmas slippers if they knew they would guarantee blissful foot comfort.”

Punctuated with the always entertaining video of what men think of high-concept women’s shoes:


“Look at me — I’m shiny and kind of tacky!”

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