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

1.)
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all around the globe, becoming so commonplace that a Google search combining ‘Vuitton’ and ‘ringard’ [French for 'outdated'] gives 390,000 results.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).

2.)
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?

Comments

  • FiveoaksBouquet

    Happy New Year, Nathan, to you and all your readers!

    Trussardi has no further to look for its invisibility in North America than to its own lack of marketing and availability. I’m speaking of their perfumes. They were available locally in the early 1990s and were original and high quality. I have seen neither hide nor hair of Ttrussardi for a couple of decades now. As they say on all those tacky abandoned-locker auction shows, “Bring it!”

    Good for Pendeton! Congrats on making their own fabrics and bringing plaid to the young. I recall getting a Pendleton plaid outfit as my new school outfit entering eighth grade and have not been without at least one Pendleton scarf or blanket any time since. May they long thrive!

    Regarding celebrity scents, I won’t use them, even if they’re well done, because I feel the entertainment industry has become too invasive in every area of life and I’d rather direct my money elsewhere.

    • http://twitter.com/NathanBranch Nathan Branch

      A happy 2013 to you, too!

      I haven’t seen a bottle of anything Trussardi anywhere. Which is likely intentional, as the brand has so little retail presence in North America that it wouldn’t really make sense to spend the bucks on a North American perfume launch. But it does make me question which comes first — the established name, or the perfume. Can a decent perfume drum up interest in a heritage name, or is it always the other way around?

      I feel the same way as you do about celebrity scents. Even if they turn out to be decent, why give my cash to a celebrity when there are thousands of other, just as good if not way better works of perfumery to support? Turning every single consumer purchase into an entertainment industry fuelled popularity contest is not my idea of a good time.

      Long live Pendleton!

      • FiveoaksBouquet

        I just did some checking on the Trussardi website and in an old book I have with perfume notes and even if it did come back, the new Tussardi Donna is nothing like its former self. The Trussardi theme was leather and even the bottles had leather-like coverings. That appears to have gone by the wayside.

        Original notes: coriander, green note, aldehydes, hyacinth, bergamot, ylang-ylang, jasmine, rose, tuberose, orris, geranium, lily of the valley, cedar, sandalwood, patchouly, styrax, olibanum, moss, vanilla, amber, musk, leather

        Current notes: yuzu, citron, water fruits, orange blossom, jasmine tea, water lily, cedar wood, white patchouli, sandalwood

        • http://twitter.com/NathanBranch Nathan Branch

          *shudder*

          That’s a serious step down in reformulation land and a most definite “we’ve lost the thread” move, because what in the world is a perfume of yuzu, water fruits and white patchouli meant to convey about a heritage Italian leather goods brand?

          Beyond market desperation and creative bankruptcy, of course.

  • http://www.facebook.com/vanessa.musson.5 Vanessa Musson

    Hey, Nathan, thanks for the shout out, even in a joky Julius Caesar-y kind of a way. : – ) : – ) I stand by my comment that there is a handful of celebrity perfumes (using the term loosely) that I find well made and pleasant, from Dita van Teese to Hilary Duff, and Tilda Swinton to SJP (though I think she rather lost her way after Covet). There’s even a Kate Moss one (only one, mind) called Velvet Hour that I have a sneaking affection for. So shoot me! Or stab me, rather, hehe.

    • http://twitter.com/NathanBranch Nathan Branch

      I saw your name as the source for the quote and couldn’t resist. And yes, I agree with you — celebrity perfumes are getting better, or at least, some celebrity perfumes are targeting a different market than others.

      In some cases, it’s just about selling a bottle of cheap whatever to a crazed fanbase (Bieber, Beyonce, Gaga, etc.), while others go the route of pleasing the horde of online fragrance lovers in order to drum up attention and sales.

      Take Dita van Teese and Tilda Swinton, for example — they’re celebs, but not at the same global, screaming level as a Beyonce, a Rihanna or a Taylor Swift, so their perfumes need to be a higher quality in order to attract attention and sales; a star like Gaga could be selling coloured sugar water, it doesn’t matter — she just needs to put her name on the bottle and her face in the ad campaign and she’ll instantly sell more than van Teese and Swinton combined.

      And I didn’t even realise that SJParker released any perfumes after Covet. So yeah, I think you’re right — she lost her way. Lovely attracted the attention it did because it was a celebrity perfume that was actually worthy in its own respect. Parker seemed to kind of give up and go with the flow after Covet didn’t do as well.

  • Little Red

    I’ll third the “Long Live, Pendleton!” They were off my radar for a long time but now I get their catalog.

    The Trussardi name rings a bell but I don’t think I’ve seen any ads for them.

    I think I just singlehandedly saved the economy and I have the credit card statements to prove it. :)

    • http://twitter.com/NathanBranch Nathan Branch

      Good, I think we can form our own Pendleton Club, complete with weekly newsletters, shopping excursions and tea & biscuit sessions.

      And the economy thanks you for saving it. Lord knows everyone else was slacking off on the job.

  • http://www.facebook.com/lizricesosne Liz Sosne

    OK … we agree it is all about the money right? I mean in the end. I was about to ask you “when will
    people see this and stop needing these poor quality luxury brands?” But I answered my own question when I
    realized that this knowledge certainly was not realized by myself when
    youthful.

    Trussardi. Am Iwrong, or do I remember Trussardi for small leather goods in NYC back in the
    60s?

    OK, Nathan forgive me I still do not understand what
    Intermix is selling 1st to GAP and then to its customer. Now I may be out of the loop but I have
    never allowed anyone to dress me.
    And when a sales person confidently tells me “this is all the rage, or
    everyone loves this,” I immediately let them know that if that be the case, I do not want it. Does the existence of Intermix mean the youthful buyers of today wish to be dressed by others?

    I have always loved (but not bought) Pendleton. Not bought because I cannot stand wool except for blankets next to my skin. A fine company.

    Holiday sales the worst since 2008, I wonder how this shall affect
    the economy this year here.

    LOVE The Rube Goldberg Machine. Target, the best darn adds in the world! Fun adds. But you know they do not induce me to buy a thing.

    In November I could smell for 2 days. In Dec. I could small leftover Indian Chicken Tika 3 times, a few days ago I had a peculiar smell with me all day without actually being able to smell a thing.
    Ha, in 2012 I purchased just a bit from Mandy on a glorious day when I smelled. I have never opened the items. You might enjoy a book by Molly Birnbaum titled: Season to Taste, How I lost My Sense of Smell and Found My Way. She has already disproven
    the scientific statement by medicine that if you lose your sense of smell after hitting your head – you never get it back. She is a delightful young writer.

    Nathan as always, a treat to read you. Belated Happy New Year to you.