Luxury & Fashion Biz News: August 19th, 2011 (Abercrombie & Fitch vs. Jersey Shore, Luxury Used Paper Bags and Million Dollar Perfume Bottles)

1.) Celebrity Contamination – A&F Wants “The Sitch” to Stop Wearing Their Clothes:
“Rafael Nadal’s magnificent athleticism is a fine way to differentiate boring underwear (and) Clooney’s handsome cool energize the products he endorses. But when it goes wrong, as it seems to have done with Abercrombie & Fitch, energy is sucked away from the product. It’s what business academics describe as ‘symbolic boundaries being breached’ . . . every marketer’s nightmare is finding the wrong sort of person adopting his product.”

And this latest “wrong sort of person adopting a product” is reality-tv cast member Mike “The Situation” Sorrentino appearing in the latest season of Jersey Shore sporting brightly colored (and logo-splashed) Abercrombie & Fitch sweat pants.

But there are suspicions that A&F is using its “We’ll pay you to stop wearing our clothes!” statement (issued via press release) as a publicity stunt, especially as Abercrombie released t-shirts last year with Jersey Shore themes.

*NOTE 1: I have to admit to being amused that Abercrombie & Fitch describes itself as an “aspirational” brand.

Drew Kerr, a public relations consultant in New York, said that the A&F statement “reminded him of Larry Flynt offering famous people millions to pose for Hustler. ‘It’s offering something publicly that you know is never going to happen, but you do it because it’s just made for the press,’ he said.”

Though it’s unclear just how successful this particular stunt might be. Jersey Shore is probably the best advertising that A&F has at this point, so to come out with a statement that looks down on the show (and by extension, all of the show’s fans), no matter how jokey or “fun”, isn’t bound to sit very well with the public.

And what do you know? After issuing the statement, Abercrombie & Fitch’s stock plunged by 9% while ratings for the Jersey Shore television show went up: “Abercrombie & Fitch’s stock may have dropped after trying to take down The Situation, but the Jersey Shore cast had the last laugh Thursday night when the reality hit’s ratings went up.”

But hey, does anyone remember the Snooki handbag kerfuffle from last year: “Allegedly, the anxious folks at various luxury houses are all aggressively gifting our gal Snookums with free bags. No surprise, right? But here’s the shocker: They are not sending her their own bags. They are sending her each other’s bags! Competitors‘ bags . . . Snooki’s meteoric and lucrative ascent means that she will soon be able to sidestep the whole issue and buy her own Birkin, thereby precipitating a mass Jonestown suicide over at Maison Hermes.”

*SIDE NOTE: Snookums strikes me as way more the Louis Vuitton type, don’t you think?

Other notable brand contaminations: A.) Britney Spears and Hermes; B.) Gangsta rappers and Cristal; C.) Burberry and the Chavs; D.) Adidas and London’s rioting thugs; E.) Toyota and the Taliban; F.) Levis and the London Riots

There’s also the example of Tag Heuer and Tiger Woods, which falls into a slightly different category, as Tiger Woods was once a very desirable and lucrative brand ambassador to the tune of tens of millions of dollars in endorsement deals from multiple companies; unfortunately, he made himself toxic to marketing efforts when revelations of his personal behavior hit the headlines and brand names jumped the Good Ship Tiger like rats fleeing a sinking ship.

2.) A Week of Stock Market Woes Shakes the Confidence of Retailers:
“There’s a chilling wind blowing across the red-hot luxury category. Upper-crust shoppers, who have spent lavishly in recent quarters on everything and anything luxury — from Louis Vuitton handbags to Burberry trench coats — may be finally coming to the end of the budgets. With a credit crisis in Europe and the US stock market gyrating after the nation’s debt downgrade, swanky retailers are bracing for the danger that their well-heeled clientele could clamp down on spending this fall.”

In order to appeal to a wealthier clientele that still wants a quality product but is feeling cautious about the budget, Saks Fifth Avenue is expanding its private label business into womenswear: “We will be introducing two collections in the next six months for women under the Saks brand label. One will be more go-to-work and one will be much more casual. So, yes, we are following the lead that the men’s division has and we’re looking at opportunities quite frankly throughout the company for additional ideas.”

*NOTE 2: Private Labeling is when the products or services typically produced by one company are offered under another company’s brand name; for instance, the cashmere sweaters with the Saks Fifth Avenue label are not manufactured by Saks Fifth Avenue or in a Saks Fifth Avenue factory, but by a third party that agrees to produce its goods to be sold under the Saks name.

And Macy’s has jumped into the “Let’s make luxury affordable!” fray by enticing major high-end brand designers to create low-priced collections for them to sell exclusively.

The first big news was the Karl Lagerfeld + Macy’s deal, and now it’s been confirmed the uber-glam Giambattista Valli will be designing for Macy’s, as well: “By the end of October, Macy’s stores all over the country will be filled with “feminine fabrics, bold prints and riotous color, lace, tweed, brocade, fake fur and point d’esprit tulle.” And with prices between $50 and $150, the collection is sure to appeal to ‘fierce fashionistas’ who want to save money.”

Though something tells me that this isn’t about getting anyone to “save” money so much as getting them to spend it, since true Giambattista Valli customers won’t be haunting the likes of Macy’s for an officially sanctioned made-in-Indonesia knockoff.

*NOTE 3: Miuccia Prada sums up the affordable-luxury co-branding movement succinctly: ” I don’t like the idea of a bad copy of what one does for the main brand. If I had an ingenious idea to do fashion that costs less but that wasn’t a bad copy of something else, with completely different criteria and ways of doing things, I would do it…For now, what I see, more or less, is the bad copy. Also with clothes that cost little, you need to ask why they cost so little. Because no one ever asks themselves that.”

It’s always mystified me that any self-respecting designer would participate in these low-end co-branding schemes when the end result is always an inferior copy of what they’re known for. Though perhaps the thinking is that they may as well profit from the cheap copying since the cheap copying is going to happen whether they agree to it or not?

*RELATED: Things have gotten so tight in the budget arena that Korean consumers have even turned to brand-name embossed shopping bags as the newest way to flaunt status — because a paper bag with a logo is *way* cheaper than a quilted leather handbag:

“Some women in Korea are spending up to $30 to buy used bags from luxury brands — used shopping bags, to be exact. Bags from Burberry, Vuitton, Cartier and Prada were for sale during a Wall Street Journal writer’s recent trawl of a second-hand online shopping site . . . ‘In Korea’s collective culture, consumption is not just personal behavior,’ Hwang Sang-min, a psychology professor at a Korean university, told the WSJ. ‘It is not so much about my need as it is about whether other people in my peer group have it. So if your next door neighbor has it, you should have it too.’”

So even if the latest stock market hiccup has wiped out half your net worth and you’ve stashed the rest of your cash under your mattress, you can still look like you’re a big spender by toting around a used paper shopping bag with a luxury brand logo on it.

I know. I felt a little ill just writing that.

As haute perfumer Mandy Aftel sagely noted in her interview with Carrie Meredith: “Luxury is an internal experience. Status is an external one.”

*RELATED (in a scary kind of way): Below is a fascinating (albeit 3+ hours of fascinating) documentary about the use of Freudian psychological theory to create the Consumption Society — a political strategy to keep the masses docile. Well worth the time spent watching:


“The all-consuming self, which has come to dominate our world today”

3.) Louboutin Is Still In Limbo Over Court Ruling:
“Louboutin’s lawyers urged U.S. District Judge Victor Marrero in New York not to convert his earlier refusal to bar Yves Saint Laurent from selling its own red-soled shoes into an outright cancellation of the U.S. trademark. The judge said today he will delay a ruling while Louboutin appeals his decision. ‘The better course is to simply allow the appeal to proceed and halt any further proceedings till we get guidance’ from the New York-based federal circuit court, Marrero said.”

The judge was supposed to rule today as to whether Louboutin will even get to keep its red-sole trademark at all, but because the Louboutin camp appealed his decision to allow YSL to release the red-soled shoes in its Fall 2011 collection to stores, he’s letting their appeal to a higher court proceed before he makes any further decisions.

Because a higher-court could overturn his decision to dismiss Louboutin’s injunction request against YSL, and it’ll be a whole different ballgame after that.

Just in case the legal issues involved are making anyone’s eyes glaze over, here’s the skinny: YSL has red-soled shoes they want to sell as part of their Fall 2011 collection; Louboutin has a trademark on red-soles for shoes, so sued in court to stop YSL from releasing their red-soled shoes (i.e. the injunction); YSL requested that the judge not only dismiss the injunction, but also invalidate Louboutin’s trademark, saying that it’s overly broad and unfairly limits competition; the judge ruled that YSL was free to release their red-soled shoes to stores, while giving a strong indication that he was going to cancel the Louboutin trademark; Louboutin attorneys stated they would “fight like hell” to keep their trademark, and so have appealed the judge’s decision to a higher court.

Absurdly simplified, but you get the picture.

Retail consultant Hana Ben-Shabat wisely observes: “At the end of the day, what makes a Louboutin a Louboutin is the fact that the shoes are beautifully made and beautifully crafted. And those who want to be associated with the brand want to be a part of that.”

Again, it’s internal luxury vs. external status. Louboutin is fighting to keep its external pop-culture status signifier when, really, it’s the cut, fit and quality of the shoe that’s the most important part of the game, and it’s arguably what made Louboutin famous in the first place.


Jumping the red-soled shark

A Louboutin will still be a Louboutin without the red sole, and YSL can paint the soles of its shoes red ‘til the cows come home, but that won’t make them Louboutin. Though it might get bling-obsessed pop-starlets to sing about them . . .

*RELATED: But will your social media friends be envious if the soles of your shoes aren’t red? — How brands benefit from envy among friends on Facebook

4.) BEAUTY/FRAGRANCE INDUSTRY NEWS:

A.) Estee Lauder reports revenue increases across the board for 4th quarter: “Skincare was the strongest quarter, with revenue up 15 percent … Makeup sales rose 13 percent, Fragrance revenue rose 9 percent (and) Hair Care rose 4 percent.”

WWD is also reporting that Lauder is planning on taking the Smashbox cosmetics company it acquired last year and making a major global push with it: “Barely a year after its acquisition of Smashbox Beauty, Lauder is restaging the brand with new products and packaging, a new national advertising campaign and a revamped Web site . . . Some observers think Smashbox could one day rival the size of its behemoth sibling, MAC Cosmetics (which sources estimate is a billion-dollar-plus business).”

Lauder controls MAC, Bobbi Brown, Smashbox, Tom Ford Beauty, Clinique and La Mer, among many others.

B.) Sales of celebrity perfumes are declining: “Though sales of celebrity luxury perfumes have declined in the United States — from $168 million in 2005 to $106.2 million in 2010, according to market research firm NPD — there actually are more star fragrances crowding store shelves than ever before. Last year saw 69 new celebrity perfume launches — as compared with 31 in 2005.”

Doesn’t that seem just a tad counter-intuitive — that they’re selling less celebrity perfumes while more than doubling the number available?

C.) Company gives up on creating a great, expensive perfume and opts for creating a super expensive bottle, instead: “The DKNY Golden Delicious Million Dollar Fragrance Bottle is carved from polished 14-karat yellow and white gold and features 2,700 Round Brilliant White Diamonds weighing 15.17 carats, 183 Golden Yellow Sapphires weighing 2.28 carats in a micro pave setting in 14kt. white gold making up the Manhattan skyline that is so iconic to the DKNY brand. The 2.43 carat Flawless Vivid Yellow Canary Diamond adorns the cap of the bottle alongside a DKNY Golden Delicious diamond oval logo.”

The rub? They created a million dollar bottle for a perfume that retails for $42 an ounce. Which means that, after the creators, producers, packagers, distributers and retailers take their respective cuts, it probably cost 12 cents to make.


Status is external — yes, I know!

I’m rolling my eyes so. hard.

D.) More info on that rumored Chanel denim nail polish line: “While they’ll hit Chanel stores–and Chanel.com–September 8, the bound-to-be-coveted polishes will only be available until the end of September. Though something tells us they’ll be gone faster than you can click your pretty polished finger at, so you’ll have to act fast.”

In other words, if you don’t eat, breathe and sleep nail polish, you’re not going to get your hands on a bottle. But honestly, if the colors sell well, they’ll become part of the permanent collection, so I wouldn’t worry.

Although their Jade polish, which single-handedly jump-started the contemporary “nail polish as consumer must have” craze came and went in a limited edition, never to be seen again. So . . . I could be entirely, thoroughly and absolutely wrong?

D**n those marketing geniuses!

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