Luxury & Fashion Biz News: Ubiquity is the double-edged sword of global success, GAP buys a seat at the high-fashion table, and holiday retail sales sputtered & stalled
Louis Vuitton Experiences the Double-Edged Sword of Global Success: “First things first, Louis Vuitton needs to get rid of its current image –- annoyingly ubiquitous to the point of slightly tacky. Millions of brown canvas bags adorned with the brand’s famous LV monogram have flooded markets all around the globe, becoming so commonplace that a Google search combining ‘Vuitton’ and ‘ringard’ [French for 'outdated'] gives 390,000 results. One French Internet commentator declared utter repulsion of that ‘counterfeited’ brand fit only for the ‘old bags of Paris’ posh neighbourhoods.’”
To their credit, global luxury brands are starting to recognise the precarious position they’re now in, because when your brand walks like a GAP and quacks like a GAP, then there’s not a whole lot of reason for consumers to believe you’re any better than the GAP.
Case in Point: Are Burberry’s and Louis Vuitton’s Ubiquity Hurting Sales? — “‘The need to reach new consumers is beginning to conflict with the perception among those consumers of what constitutes luxury,’ writes Scheherazade Daneshkhu. Other qualities contributing to ubiquity: retail availability, number of diffusion lines, and exclusivity by cost and product assortment.”
Vanessa Friedman writes in the Financial Times that high-end consumers have wised up to the way luxury brands have gamed the retail system with the “accessible luxury” model, posing as exclusive and rare while flooding the market with diffusion brands and low-end merchandise designed to entice the mainstream shopper through the door: “(Accessible luxury is) focused on the pyramid model developed by American brands such as Ralph Lauren and Michael Kors, (where) a luxury collection at the ‘pinnacle’ rests on a base of less expensive diffusion lines that provide the bulk of a company’s profits. These in turn are powered by the high-end image.”
Ms. Friedman goes on to note that even relatively new luxury consumers in China are beginning to value the characteristics that these pinnacle marketing campaigns are meant to convey (but don’t always deliver) — rarity and exclusivity — and turning away from brands that have made themselves too common or too accessible. For example, the increasingly everywhere Burberry recently posted a troubling slowdown in sales numbers while Hermes, with its much more difficult to access boutiques, slower global growth and lack of department-store presence, is still flying high (see: Hermes sees sales increase almost 20% in 2012).
*NOTE Even mainstream brands can find themselves in trouble when they oversaturate the market. Take Ugg boots, for example: “Brands like Ugg — whose very name captures the so-ugly-they’re-cute vibe — inevitably reach a tipping point where sloppy-chic becomes just plain sloppy. The same thing happened earlier this decade to plastic Crocs shoes and Juicy Couture velour tracksuits. Neither Crocs nor Juicy owner Fifth & Pacific Companies has been able to build on the success of the original fads.”
*But Speaking of Expanding: The 102 year old heritage brand Trussardi opened its first ever boutique in mainland China to offset slowing sales in Europe and a serious lack of consumer awareness of the brand in North America: “Tomaso Trussardi said he believes the market is now ready for a brand such as Trussardi’s, which, he said, has much more than a popular logo. The Chinese, he said, now are no longer obsessed with logos and are instead more attracted to ‘craftsmanship, quality products and Italian lifestyle.’”
Trussardi Fall/Winter 2012-2013 — designed by Umit Benan
What makes Trussardi unusual for a contemporary heritage brand is that Trussardi Group CEO Tomaso Trussardi stars in many of the brand’s advertising campaigns — an actual heir of the founding family embodying the 21st century Trussardi message to the public. As far as I know, there’s no other heritage brand that can say the same.
*And did someone mention the GAP?: GAP Inc. acquired high-end fashion retailer Intermix in a $130 million dollar deal that some analysts are calling a shrewd move for both parties — Intermix will get the much needed cash and distribution channels necessary for its desired expansion plans while GAP gets a foot in the door of high-end fashion retail, giving it a real-world testing ground for trendier design concepts before rolling them out to the mainstream consumer.
Intermix adds a dash of high-level trendiness to the mid-market GAP
Intermix made its reputation by merchandising luxury and contemporary brands in a way that other stores don’t — while most department stores separate brands into their own racks or rooms, the Intermix teams mix and match, inspiring their young fashion-oriented demographic to respond to the colour and style trends rather than just the name on the label.
*Speaking of inspiring a younger demographic: Oregon-based Pendleton announced the introduction of a new “Thomas Kay Collection” geared at the young fashion consumer who appreciates the American Heritage look of classic Pendleton pieces, but with updated colour combinations and a more tailored fit. All fabrics for the new collection will be manufactured in Pendleton’s US mills.
The new Pendleton — where hip meets heritage
*Relevant Tidbit: Pendleton’s flagging retail fortunes were revived back in 2009 when cutting-edge Japanese labels like Comme des Garcons and Junya Watanabe were pushing collections based on classic Americana workwear, including iconic Pendleton plaids and navajo prints (see: Pendleton Woolen Mills blanketing the runways).
It’s Déjà Vu All Over Again: “Limited spending by US consumers produced a lacklustre holiday shopping season for many retailers, which are likely to face pressure on profits and questions over whether they should have fewer stores . . . in a desperate effort to win consumer dollars — even at the cost of profits — many stores resorted to big price cuts in the days before Christmas. Joel Bines, a consultant at AlixPartners, said: ‘Essentially [retailers] averted disaster. That’s the best you can say about this holiday season.’”
CNBC is reporting that holiday sales for 2012 were the weakest since the holiday season of 2008, when financial market jitters and fears over an impending recession scared once-profligate consumers straight.
Forbes Magazine reports that analysts were predicting Americans would spend three to four percent more in 2012 than they did the year before, but the actual increase turned out to be more like 0.7%, forcing the likes of Saks Fifth Avenue to run 70%-80% off post-holiday sales in an effort to clear out unsold merchandise, while WWD reported that “Joe Fresh and Scoop advertised up to 75% off; Vince Camuto, Crate & Barrel and ABC Carpet & Home were all offering up to 60% off; Coldwater Creek said everything was half off, and jcrew.com offered an extra 20% off on final sale items” starting the day after Christmas.
*A Glimmer of a Silver Lining: Some retailers were better than others at managing their inventories. Coach and Macy’s are two of the retailers singled out for tighter inventory control and higher profit margins throughout the holiday season, though the Globe and Mail writes that, overall, “(North American) retailers struggled with cautious consumers who delayed shopping in the hunt for bargains. Many major players recovered toward the end of December, but at the expense of margins.”
*Related: Target shifts emphasis from cheap-chic fashion to the grocery aisle as consumers spend less on clothing and gadgets and more on food and household basics: “On Thursday, Target reported that revenue at stores open at least one year was flat in December — a key holiday sales period. The company, based in Minneapolis, blamed the decline in part on weakness in sales of merchandise such as furniture and electronics . . . For its part, Target has been expanding its grocery selection, particularly with investments in its “P-Fresh” fresh-food section. Out of its 1,782 stores, about 1100 have an expanded fresh food layout and more than 250 have a full grocery store.”
A Rube Goldberg Machine powered Target grocery ad
*Now that we’re all spending less on our wardrobes: Consumers are forecast to spend more on scented laundry detergents and fabric softeners as a way to “invigorate” old and/or cheaper clothing. Think: Le Labo laundry detergent.
*Other Fragrance News: Have Hollywood celebrities taken over the perfume industry? — “Until now, however, there has been a lingering taboo in the perfume industry about buying a famous person’s scent. ‘There is definitely snobbery,’ explains perfume blogger Vanessa Musson, ‘but celebrity perfumes have become classier. For all the questionable ones there are now half a dozen I’d happily wear.’”
Et tu, Vanessa? Et tu?