Luxury & Fashion Biz News: Is there a Luxury slowdown in progress?; plus, Ad campaigns and Perfume deals
The big luxury conglomerates are releasing their sales and profit figures, and while the numbers aren’t as bad as they were in, say, 2008/2009 when the financial crisis first rattled the nerves of the world’s big-spenders, there are signs that growth is slowing.
PPR (which owns Gucci, Bottega Veneta and Yves Saint Laurent): Luxury sales growth slows for PPR in Asia — “Gucci, the biggest unit, posted like-for-like sales up 7% in the latest quarter on a similar curve, but PPR said Gucci sales in the Asia-Pacific region were up just 2% . . . Jean-Marc Duplaix, chief finance officer, said there was ‘high single-digit growth for Gucci’ in China, but demand was ‘soft’ in Taiwan and South Korea, (that) there was a shift under way in China, with consumers in the most developed cities becoming more discerning in favour of more sophisticated products.”
Gucci Spring 2013 — a softening of demand for luxury tropes
*RELATED: Nike just posted their financial results, and while they grew sales by 8% in China, their earnings declined due to rising costs, income collapse and a slowing Chinese economy.
From The Business Insider: “Okay. Finally, China. Lots of forces at work here and as you’ve heard us say before, the consumer is becoming more discerning and sophisticated. They want clearer choices. They want more innovation and better services that are tailored to them. At the same time, the economy appears to be slowing, creating short-term impacts for any company doing business there . . . This is a natural evolution that we’ve seen in many markets, so it’s not a surprise. What is a surprise, like everything in China, is how fast they got here.”
I think it’s important to note that the speed of the rise-and-fall of the retail scene in China is taking everyone, including luxury brands, by surprise. And that the steep fall-off of the aspirational consumer is a problem that most brands were hoping they wouldn’t have to face quite yet.
To his credit, PPR CEO François-Henri Pinault realised back in 2010 that Gucci would have to change its aspiration-tinged, logo-covered ways if it wanted to survive in the new recession-blanketed marketplace, but then it’s like they all took a bite of the addictively sugary Chinese-Shopper cake and promptly forgot that hard-earned wisdom.
And now they’re paying the piper (see: Louis Vuitton Risks Logo Fatigue as Chinese Tastes Mature) — hell, even Apple is getting a taste of what it night be like to lose its crown and come tumbling down — “Wang Hui, a 25-year old, was also in line, and said she wanted to buy the (Microsoft) Surface tablet because of features such as its Type Cover and sleek design. ‘I feel like everyone has an iPad. I don’t want to buy the same thing as everyone else,’ she said.”
*NOTE: The article states that Apple’s iPad has a dominating 69% foothold in China’s computer tablet market. Which is a staggering figure, when you think about it.
LVMH also posted some profit numbers that left analysts a little worried: Clouds Are Gathering For LVMH, Luxury: Sales Increases May Be More Modest — “LVMH is the world’s lead in luxury goods, and of course a meaningful prism through which to view the industry. They reported solid revenues for nine month of 2012 and the third quarter (the company reported 10% organic growth for the 9 month period and 6% for the third quarter of 2012.) – This indicates a smaller increase in revenues than the first half of the year.”
And British cool-girl fashion brand Mulberry sent shivers through investors’ wallets when it warned of a slowdown of sales in Asia: “A profit warning from Mulberry wiped £187m off the designer’s market value yesterday and sparked a sell-off across the luxury sector as it became the latest brand to highlight weak growth in China. Its sought-after ‘It bags’, such as the £795 Alexa bag or its classic £695 Bayswater, have failed to lure enough overseas shoppers, while its wholesale shipments slumped 4%, sending the company’s shares down by 24%.”
Mulberry Spring 2013 — what the cool girls aren’t wearing?
Though maybe this has something to do with it all: Global wealth falls for first time since financial crisis
*RELATED: And UK designer Anya Hindmarch has some further thoughts on the whys and hows of the rising-falling luxury market: “There is a growing demand in the established luxury markets, such as in Europe and the US, from customers who yearn not to be members of a club, but individuals. This is a return to why people bought ‘luxury goods’ in the first place: they wanted something personal, something unique, something they had been involved in creating — something that has a story . . . They want their luxury purchase to be about them, not the designer.”
She remarks on the differences between established luxury markets (the US, UK and Europe) and “new world” markets (China, Brazil, Russia, India) — about how new wealth is attracted to logos and bling, while established markets are looking for something more personal and meaningful to their lives. But she also recognises that markets change and mature, and the “new world” consumer won’t stay logo-driven for long.
This is exactly what the likes of Gucci, Louis Vuitton and Burberry are witnessing first-hand.
*MEANWHILE: Men don’t hate fashion, they just hate shopping the way it’s designed for women — “Fashion is the fastest-growing segment of online commerce, and its growth is being propelled by men. Like Kaplan, more and more guys are fleeing malls and department stores and flocking to websites that claim to have taken the pain out of shopping . . . While women’s share of the online clothing market is still more than double men’s, the guys’ market is growing faster, at a 13% annual rate, compared with 10% for women, according to NPD Group. And that gap may widen.”
New ventures are trying all kinds of creative ways to get men to part with their cash — shipping out boxes of items that men can choose from and send the rest back free of charge; sending out tailors to a man’s home to measure him up and create custom clothes to fit; recommend a wide range of fits and items based on personal taste and feedback from other users.
And while there’s definitely a surge of enthusiasm for the online male shopper, this doesn’t mean that the men’s online market is without its perils — Gilt Groupe just recently stated that they’ll be shutting down their full-price Park and Bond menswear segment, while WWD is reporting that Gilt rival flash-sale site Ideeli is “dropping the travel category, phasing out kids’ and exiting the men’s business” in order to renew their focus on the apparently much more lucrative womenswear market.
Or, as the previously mentioned men-shopping article mentioned, maybe sites like Gilt and Ideeli assumed (incorrectly) that they could simply pitch to men the same way they pitch to their female customers . . . and it didn’t work.
*RELATED: Even Coach, considered in serious danger of being overtaken and trounced by popular, trendy competitors like Michael Kors and Kate Spade, has credited its recent success in the marketplace to a 40% rise in sales to Asia, plus its expanded product line for men.
So, I guess, those heavily-photoshopped, airbrushed and otherwise just obviously futzed with makeup ads are supposed to be honest? — Christian Dior mascara ad banned for airbrushing Natalie Portman eyelashes
Cosmetic rival L’Oreal was the one who filed the complaint against Dior, as L’Oreal found itself in similar hot-water earlier this year when a L’Oreal wrinkle-cream advertisement was banned in the UK for showing “misleadingly exaggerated” effects.
Maybelline and Lancôme have also had ad campaigns banned by the UK’s Advertising Standards Authority for similarly misleading illustrations. As NYMag notes, “aiming for truthful ads (i.e., ones that portray a product’s actual results instead of Photoshopped ones) is a worthy — not to mention very reasonable — objective.”
*SPEAKING OF AD CAMPAIGNS CAUSING PROBLEMS: Barneys and Disney find themselves at the centre of a public outcry after Barneys gave Minnie Mouse (among other classic Disney characters) a tall and slenderised makeover in order to fit her into a high-fashion designer dress.
Minnie Mouse on the runway — the new anorexic icon
The ad campaign is called “Electric Holiday” and is scheduled to debut in the Barneys New York windows on November 14th, though Barneys has now been forced to offer a kind of semi-apology due to public pressure, and I’m wondering whether they’ll go through with the campaign after all.
*RELATED: Harrods in London also signed a deal with Disney to feature classic Disney princess characters in their Christmas holiday window displays.
Really frowny, grumpy Christmas princesses, I might add. Those pictures were certainly *not* full of Christmas cheer. Maybe they needed something to eat . . . ?
Karl Lagerfeld may be in trouble for calling the new French president an idiot (which he subsequently denied), but he’s also in the news for having ditched his old fragrance company Coty to sign a new license with Inter Parfums.
Karl Lagerfeld’s Fragrances Get A ‘New Lease On Life’ — “we really don’t come across Karl Lagerfeld‘s eponymous fragrances anywhere. The closest we’ve gotten is seeing the ads for Karleidoscope, a scent only available in European Sephora doors, and the vague recollections we’ve been able to summon of the now retro-looking men’s fragrance Lagerfeld, released back in 1978. But, according to a report in today’s WWD, that’s all about to change now that Inter Parfums, a French fragrance licensee, has signed on to produce perfumes for Karl Lagerfeld B.V., with the first set to hit shelves in late 2014.”
Lagerfeld is one of the biggest fashion industry celebrities today, and has been tremendously successful with whichever brand he touches (Chanel, Fendi, Chloé, Diesel, H&M), so it’s been a surprise to me that he’s never been able to break it big in the fragrance business. Though maybe a part of that has been a desire to not compete directly with Chanel, his hugely influential employer?
Who knows. I am, however, curious as to how this new partnership with Inter Parfums will turn out. Inter Parfums just recently lost their biggest client, Burberry (who decided — like Chanel, Hermes and LVMH — to take their fragrance development business in-house instead of continuing to outsource to a licensee), so it makes sense that they’re now out scouring the landscape for names they can exploit.
And as Coty wasn’t doing a particularly bang-up job with Lagerfeld (being too busy with bigger fish to fry, I’m sure), Inter Parfums saw an opening and swooped in.
The license is a twenty-year agreement between Lagerfeld and Inter-Parfums, and it’s fairly likely that Lagerfeld will live to both amuse and terrorise us for another two decades (at least). He has stated, after all, that he’ll work until the day he dies.
*IN OTHER FOSSILISED DESIGNER NEWS: Roberto Cavalli wants to produce a colour cosmetics line — because he’s certain that women can’t get enough of tiger print eyeshadow and leopard’s blood lipstick.
Roberto Cavalli Fall 2012 — leather & sparkles & animal prints, oh my!
Roberto Cavalli Reveals His Secret Ambition! — “‘Color cosmetics are my dream,’ said Cavalli. ‘Since the beginning, I’ve said to Coty [his licensing company], ‘When are we going to start with the cosmetics?’ They said we had to do the perfume first. But my world, my fashion, is colors.'”
Fasten your seat-belts, everybody.
*ADDENDUM: So, if you’re a supposedly hotshot “it” designer who’s in touch with the hip, cool youth crowd, what’s the first big-name rock band that you get major media press for dressing? The Rolling Stones.
Or, as someone else so aptly put it, the Strolling Bones (with a collective age of 226): “With Jagger and Richards 57, Wood 53 and Watts 59, it means that by the time the new tour starts one of the band will be in his 60s and two others will be approaching the landmark.”
Somehow, the whole “youth appeal” edge is lost on me here.
Could Hedi Slimane be the worst thing to happen to YSL in, like, ever?