Luxury & Fashion Biz News: July 29th, 2011 (More Halston news, Wealthy shoppers spend less, and How an easily recognizable brand can be a blessing and a curse)
1.) Big Wheels Keep On Turning at Troubled Halston:
“After months of chaos and infighting that culminated in the recent departure of Harvey Weinstein and Sarah Jessica Parker, the flailing fashion label said yesterday that Ben Malka, the former president of BCBG Max Azria, will become Halston’s new chairman and chief executive . . . Armed with a war chest of $20 million from Hilco Consumer Capital, the turnaround bid will be capped with the hiring of a new designer to resuscitate Halston’s runway for fall 2012 collection, according to a source briefed on the plans.”
That “new designer” is rumored to be Marie Mazelis, the creative director of the Hervé Léger and Max Azria lines. Ms. Mazelis just recently gave notice to the Azria brand that she was leaving after ten years, with no public announcement of where she was headed, so it’s a good bet that the rumors are true and she’ll end up at Halston.
BCBG Max Azria is a huge global company that can carry on just fine without both Malka and Mazelis, while sidling on up to Halston can give both of them the opportunity to revive a famous name pretty much from scratch, with likely a good amount of creative freedom stirred into the mix. Not to mention that investment firms in this kind of bad situation will often throw percentages of a company at new executive hires in order to sweeten the deal.
The scuttlebutt is that any high-end Halston collection is out of the picture for now, with Hilco Capital preferring to spend its resources on developing the less expensive Halston Heritage imprint that Sarah Jessica Parker was formerly in charge of designing before she was bought out by Hilco over creative differences — The NY Post is reporting that Hilco wanted the Halston Heritage line to be priced at $200-$300, while Parker was insisting on a price level of $400-$700.
We already know who won that battle of wills.
“Most people are afraid to leave the road or the channel they’re on for their whole lives,” said Mr. Malka during an interview in 2009, and by leaving his safe, well-paid position as president at BCBG Max Azria to head up the far riskier Halston revival, he’s showing his lack of fear once again (as well as a big old bucket full of confidence in his ability to finally turn the label around — a feat that’s eluded investor hopefuls for years).
*NOTE 1: A Salon article from 2007 states that the Halston signature perfume was one of the biggest-selling perfumes of its time, ranking only behind blockbuster Chanel No. 5, and that Halston the designer battled fiercely with the Max Factor company over the creation of both the bottle and the fragrance itself.
Speaking of best-selling perfumes, below is a subtitled video clip of Chanel perfumer Jacques Polge talking about the creation of Chanel No. 5:
“Many stories are told about No. 5, both true and false”
And it looks like Starwood Capital may be considering a sale of the Annick Goutal brand, after all, though nothing has been officially decided yet. The Korea Herald is reporting that South Korean cosmetics giant Amore Pacific is in talks to acquire the boutique French fragrance and skincare label in order to bolster its global reputation: “‘The possible takeover will pave the way for us to go global in the mid and long-term, even though we are currently focusing more on the Asian market,’ an (Amore Pacific) company official told The Korea Herald. ‘If officially decided, it will be the company’s first case of merger and acquisition.’”
In 2008, managing director of Starwood, Mr. Russell Sternlicht, talked of polishing their little Annick Goutal gem into a much bigger and brighter diamond, with plans for household linens, cosmetics, jewelry, potpourri and the installation of Annick Goutal spas in Starwood hotels. Apparently, that hasn’t quite worked out.
2.) Wealthy Shoppers Get Nervous, Cut Back on Spending:
“Unity Marketing’s measure of consumer confidence among the highest earning U.S. consumers, the Luxury Consumption Index (LCI), took the steepest quarterly plunge since the Great Recession . . . Corresponding to the decline in luxury consumer confidence, the average amount spent by affluent consumers on luxury goods and services in the second quarter 2011 declined by 8.4 percent from the first quarter and dropped 18.4 percent year on year.”
The article goes on to note that the plunge in spending is concentrated mainly among high-earners who don’t have a corresponding high net worth. High Net Worth Individuals (HNWI, in marketing speak) will have an extensive stock portfolio that boosts their ability to pull in spending-money, and since the stock market has been performing quite well for connected HNWI investors, there’s been plenty of cash to splash out on high-ticket items, like leather bags and Swiss watches.
Case in point, Forbes writer Hannah Elliott reports that “the biggest gains for LVMH came in the watches and jewelry group, which saw a 27% jump in revenue over last year.”
*A CHIP OFF THE SAME BLOCK: French luxury conglomerate PPR, LVMH’s main competition in the luxury race, isn’t doing too shabby, either: “French luxury to retail company PPR beat expectations by posting a 7.3% rise in first-half sales compared with a year earlier, driven by sustained demand for its luxury goods products . . . Sales at the luxury division, home to the company’s star Gucci brand as well as Bottega Veneta and Balenciaga, rose 39% fueled by demand in China.”
*THERE’S MORE: PPR is also in the midst of sizing up family-owned Italian menswear brand Brioni as a possible acquisition, for the sizeable chunk of $500 million: “One industry source said Brioni’s need for a cash injection is now a priority and the sale is highly likely, according to Reuters.”
Another robustly performing market is the “prestige” cosmetics segment, where consumers can still get a jolt of vibrance from the name brands they covet without having to empty out their bank accounts: “Nail color and products grew by a whopping 57%, with many priced under $20, led by Chanel Le Vernis Nail Enamel, Lippmann Collection Nail Enamel and Estee Lauder Pure Color Nail Lacquer. Lip color sales were also especially bright, up 13%, with MAC Lipstick, Lancome L’Absolu Rouge and Chanel Rouge Coco Shine the top 3 sellers.”
But a surprising bit of market trend news, however, is that wealthier consumers don’t necessarily feel the need to splurge on recognized designer brand products at the cosmetics counter: “As the times are changing, so are women’s shopping habits, with a third of the survey respondents saying they are buying store brand/private label more now than they did this time last year”, with 64% of women in the $100-$150K income bracket choosing private-label skin and beauty products over name-brand offerings. If they think the “quality and performance is on par with a national brand, they will buy it.”
After all, moisturizers and serums don’t sport brand logos once they’re applied to the skin, so their function as wealth signifiers is limited, yet the emotional impact of the purchase is still very (and vitally) present: “consumer satisfaction is greatest when the cosmetics brands help to strengthen positive emotions through the perception of ‘caring for oneself’ and removing feelings of worry and guilt about not taking care of one’s appearance.’”
Wow — fueling purchases through the stimulation of consumer guilt. It’s so diabolically cynical that I kind of feel a swell of admiration for whoever came up with the concept.
*Getting back to news of economic gloom: Recession Took Bigger Bite Than Estimated and The US Is at the Start of 500-Day Retail Recession — neither of which spell good news for the U.S. retail sector.
*A different angle on what sells in a down economy: Are artisan brands recession-proof? – “Many consumers are drawn to brands that stand for something other than profit-making. Called affinity brands, they inspire a community of diehard evangelists, drawn by a common cause or set of values . . . quality and craftsmanship — the little guy fighting the good fight.”
The article uses the example of Vanilla bikes, a Portland-based custom bicycle company that charges between $5,000 to $12,000 for each handmade bicycle, yet still has a waiting list of over five years. Take that, Hermes.
Oh! Speaking of Hermes, did you hear? LVMH CEO Bernard Arnault has somehow managed to get his hands on even more Hermes shares, upping his stake in the company from 20.2% to 21.4%, despite the Hermes family’s best attempts at keeping him away. It really does seem like only a matter of time before the cat swallows the canary, doesn’t it?
Though Mr. Arnault is having more trouble with the Bulgari acquisition than he anticipated: Italian regulator examining Bulgari bid complaint
*NOTE 2: A diet rich in canaries might cause indigestion now and again.
And as long as we’re talking about indigestion: Coach names former Pepsico exec as new Vice-President and Chief Financial Officer — because “luxury” leather products and soda-pop that sells for fifty cents a can have so much in common, apparently. Well, at least, this is the signal that the executive team at Coach is now sending.
Way to stay classy, Coach.
3.) Former Fashion Designer Helmut Lang Shreds his Archives to Create Art:
Says Lang: “In 2009 and 2010, I donated a large volume of my body of work in fashion to the most important fashion, design and contemporary art collections worldwide. After a fire in the building where our studio in New York is located, which could have destroyed the rest of the archive, and after going for months through the pieces to see in which condition they are, I slowly became intrigued by the idea of destroying it myself and using it as raw material for my art. I shredded all the pieces without remorse or preference. It was about erasing the difference of what they once stood for.”
But hey, if I were Helmut Lang and I heard that David Beckham was now calling himself “a designer“, I’d spin into a shredding rampage, too.
David Beckham also has a new celebrity scent in the works — of course. Because we just can’t get enough of those, apparently.
*Speak of the devil: Britney Spears Launches Tenth Fragrance and Selena Gomez to release perfume in 2012 and Taylor Swift To Unleash New Perfume In October and Celine Dion to launch another perfume in September and Dita Von Teese says her new fragrance is for “grown-up girls” and Alan Cumming Launches his New Perfume and . . . *sob*
I can’t take it anymore!
Admittedly, Alan Cumming is more humorous about the whole “cashing in on my celebrity” game than most:
Wait, were those a**less chaps he was wearing?
*Related: Inter Parfums posted a 7% overall gain from sales in the same quarter of 2010, with the new Jimmy Choo and Montblanc perfumes moving better than expected. The Lanvin titles logged a 14% increase in sales, though their Burberry and Van Cleef & Arpels products experienced declines from last year.
4.) How She Learned to Stop Worrying and Love the Bag:
“When Pakistan’s new foreign minister, 34-year-old Hina Rabbani Khar, landed in India for talks this week, a media frenzy erupted around her style: the pearl necklaces, elegant costumes, Cavalli sunglasses and a stylish Hermes-made Birkin bag worth at least $9,000 . . . Back in Pakistan, though, opinion was divided amid arguments about sexism, dynastic politics and the propriety of carrying a pricey handbag . . . To critics, (Hina Khar) is emblematic of Pakistan’s over-privileged ruling class, (with) the term “Birkin” (now) set to enter the local political lexicon.”
Another article at the Indian Express examined “The Politics of Style“, with writer Dilip Bobb stating: “For the media, it was more about style than substance. Her Hermes bag, what it costs, her Cavalli glares, the South Sea pearls and her outfit was a greater focus of attention than what she personally brought to the India-Pakistan table.”
Such a commotion was kicked up about the visiting dignitary’s flashy accessories that the Wall Street Journal even chimed in with an article titled, Hina Rabbani Khar’s Birkin Bag in Spotlight: “As soon as Ms. Khar touched down on Tuesday evening, her ensemble and accessories became the talk of fashion and media circles on both sides of the border. The Birkin black bag that Ms. Khar was seen carrying as she touched down at the Air Force station in New Delhi, remained one of the top trending items on Twitter on Thursday, a day after Ms. Khar met with her Indian counterpart, S.M. Krishna.”
All I can say is, execs at Hermes and Roberto Cavalli must be rubbing their hands with glee at so much free, and glowing, media coverage of the potently glamorous effect of their accessories. If you ever wondered why anyone would spend the extra cash on an Hermes bag or a pair of designer sunglasses, now you know.
People really do notice (and often think better of the person for it — I know, it flies in the face of reason, but that’s humanity for you).
*SADLY AND HORRIBLY RELATED: For a look at how an instantly recognizable product design or company logo can also cause chaos for a brand, look no further than the media coverage of the Norwegian mass murderer Anders Behring Breivik.
In several repeatedly broadcast photos and video clips, Breivik is clad in Lacoste, the easily identifiable alligator symbol now seared into the minds of millions as the kind of thing only an insane mass murderer would wear.
Below are some articles that outright mention the damaging association between Breivik and Lacoste:
A.): Norway killer Anders Behring Breivik refuses to accept guilt: “Wearing a pink T-shirt and red Lacoste sweater, Breivik wore a satisfied smile as he was photographed sitting in the back of one vehicle.”
B.): Stricken Norway is asking: Who is Anders Behring Breivik?: “The portrait of the blond haired, blue-eyed Breivik, the collar of his salmon-hued polo shirt poking straight out of his black Lacoste sweater, seemed to stare out from newspapers and television screens everywhere here.”
C.): Norway killer Anders Behring Breivik’s cultural references: “Breivik lists the French company (Lacoste) as his favorite clothing brand. He arrived for his court appearance wearing what appeared to be a red Lacoste sweater.”
D.): Norway massacre: the end of innocence: “(Breivik) had wanted to wear a uniform, but the judge had ruled that out, so he appeared with a Lacoste pullover, which Breivik had revealed is his favorite brand. Just as Breitling Crosswind is his favorite watch, and Montblanc his favorite pen, all of these details recorded in his manifesto.”
E.): Branding horror: “It’s often said that if you don’t define your brand, someone else will. Sometimes, that someone might be a monster . . . Yesterday, a representative from Lacoste reached by La Presse said their thoughts were with the people of Norway but offered no comments on the potential branding issue – a wise move.”
Only days after the Norwegian murders were first reported, I received a mass email from Saks Fifth Avenue with photographs of models clad head to toe in Lacoste. All I could see was bloodshed:
When a monster hijacks your brand image
I can’t imagine that this is anything but catastrophic for the Lacoste brand, with management undoubtedly running in devastated circles around the boardroom, helpless to do anything about the damage (when “no comment” is the best they can offer, you know the situation is untenable) — or is it possible that once the story fades from the headlines, the little alligator will return once more to its symbol of carefree preptitude rather than unspeakable horror?
*NOTE 3: My own high-school photo is of me in a navy-blue Lacoste sweater over a light blue shirt, circa 1987. You can bet that if I were having my picture taken today, I wouldn’t be anywhere near a Lacoste sweater . . . or a Lacoste anything, really. *shudder*