Luxury & Fashion Biz News: Louis Vuitton sales are not impressing the analysts, Chanel knows that exclusivity is what matters, and the search for missing Vittorio Missoni plane continues

1.)
Luxury conglomerate LVMH reports a 19% increase in sales for 2012, but analysts are saying that the Louis Vuitton brand didn’t participate in that growth, with sales for Louis Vuitton remaining flat for the year.

Bernard Arnault mentioned that plans for the Louis Vuitton brand will focus on improving existing retail locations rather than the steady march of new openings, as well as a slight change in direction as LV scales back on logo-covered products to avoid consumer burnout on the high-end: “‘Of course it would be easier for Louis Vuitton to boost its revenue, all it would take would be to launch 10 new products with the monogram product, but down the road it’s not a good strategy,’ Arnault said. ‘There is no real change, just an adjustment to the strategy, but Louis Vuitton wishes to focus on the long term.’”

From the article, Louis Vuitton won’t be ‘commonplace’ in China“Arnault said Louis Vuitton, which recently launched a major television ad campaign, was not planning to open boutiques in second and third-tier cities in China to ‘avoid becoming too commonplace.’ Analysts said Arnault’s comments mean Louis Vuitton would probably not open shops for some time, a strategy that helped boost revenues in the past.”

“And within fashion and leather is the iconic LV brand, which is not delivering”

*RELATED: Swiss luxury conglomerate Richemont, which is far more a pure luxury player with an intensive focus on fine jewellery and timepieces (LVMH is a more egalitarian mix of fashion, luxury, wine & liquor), missed recent sales growth forecasts and stated that growth slowed in all regions except for North America.

*BUT CHANEL IS DOING SO WELL: An article in Bloomberg News revealed the Chanel brand’s secret for remaining so enduringly popular — exclusivity.

From Fashionista: “While the luxury goods industry faces its slowest growth since the global financial crisis, customers are still splurging — but not everywhere. Brands like Chanel and Hermes are doing particularly well. Why? Perhaps because they’re not as ubiquitous as brands like Burberry and Gucci. ‘We have to find the right balance for our customers’ between availability and scarcity, Bruno Pavlovsky, Chanel’s president of global fashion, told Bloomberg. The brand seems to have struck the right balance this season, as everything stocked in stores in November has essentially sold out. ‘It was quite a surprise,’ Pavlovsky said.”

The article in Bloomberg goes on to note that Chanel is not at all keen to expand its digital presence to include e-commerce for its fashion and leather goods, selling only its cosmetics and perfumes online. Mr. Pavlovksy stated that all digital fashion initiatives are geared towards bringing the consumer into the Chanel boutique to see and feel the clothing and accessories in person. “Fashion is about clothing, and clothing you need to see, to feel, to understand,” he said.

Still, Pavlovksy acknowledges that this may not always be the case, and if the Chanel customer starts to become unhappy with the lack of e-commerce options, then the company will have to reconsider its boutique-only stance for its clothing and leather goods in the future.

*RELEVANT ASIDE: Chanel may have established an exclusive high-end position in the apparel and leather goods segment, but Pavlovksy revealed that the majority of its 6.5 billion euros in retail sales comes from its far less exclusive (and considerably less expensive) perfumes and cosmetics. So in a way, their ready to wear and haute couture runway shows are merely multi-million dollar, exceptionally labor-intensive advertisements for a much more lucrative perfume, colour cosmetics and nail polish business.


Chanel haute couture Spring 2013 — flaunt that eye shadow, ladies!

*Speaking of Asia: The relative health of the Australian economy, plus its close proximity to the coveted Asian consumer, has made it a new go-to destination for big name fashion brands in search of tourist dollars (see: Dior Opens First Sydney Store as Luxury Brands Seek Out Asian Demand).

Not to be entirely left behind, New Zealand has gone head to head with its Aussie neighbours to win the “world’s best luxury destination” award from the Shanghai Travelers Club. So does that mean Auckland will get its own Dior boutique, too?

Since the population of Sydney, Australia alone (4.6 million) is greater than that of the entire country of New Zealand (4.4 million), my knee-jerk guess would be no.

2.)
A piece of luggage from the missing plane that was carrying Vittorio Missoni was found washed ashore on the Caribbean island of Curaçao three weeks later, which has helped narrow the focus of the continued search for either wreckage or sign of survivors.

Should anyone be wondering why the Missoni family is still intensively hunting for a missing plane when it seems apparent that it crashed into the ocean taking everyone aboard with it, it’s probably good to keep in mind that Italian law does not allow a missing person to be declared legally deceased until twenty years have passed.


Missoni Menswear Fall 2013 — the collection debuted shortly after Vittorio’s disappearance

Vittorio Missoni was one of the major shareholders and decision makers of a several hundred million dollar global fashion brand, and who knows how the executive voting rights and private stock shares were split among family members. In a worst case scenario, the family being forced to wait twenty years before any major executive decisions can be made in Vittorio’s absence is a recipe for the ultimate collapse of the house of Missoni.

So it’s not at all surprising that family members are pushing hard to find something, anything, that can bring a definitive answer to what happened to the plane that was carrying Vittorio Missoni.

One single bag washing ashore, however, is not enough.

*Speaking of brands on the edge of collapse: Christian Louboutin announces a bespoke embroidery service for its shoes, and uses examples that look straight out of an Oh-So-Last-Season Ed Hardy catalog.

Louboutin_EdHardy

“Requiring three months from the day of order to the finished product, the shoes will travel through the hands of artisans in Italy and India before finding their way to their owner’s feet. The price for the bespoke ‘tattoos’? Between €1,060 and €4,000.”

Paparazzi Red Carpet!!!

3.) QUICK HITS

A.) You know, Chanel is very happy to promote a connection to Marilyn Monroe, but when an article pops up in the media that mentions that Sylvia Plath wore Chanel No. 5? Nary a peep.

Just think of the thousands of depressed lit-chicks they could rope in as buyers for life. It’s an opportunity lost, I’m tellin’ ya.

B.) High-end designer Narciso Rodriguez is partnering up with The Woolmark Company to promote the use of merino wool as a luxury fashion fabric: “The designer’s upcoming line at New York Fashion Week will boast merino items when it debuts on February 12. He will continue working with The Woolmark Company into next year and will gradually use merino more and more in his lines.”


Narciso Rodriguez Spring 2013 – “a true craftsman and true designer”

Narciso Rodriguez hired “garment district fixer” Robert J. Wichser in May of 2012 to help him get his brand back on track, with Wichser said to be encouraging Rodriguez to sign more collaborative deals: “Mr. Wichser (pronounced “wisher”), 62, is known as a Garment District fixer, an executive who can help a creative genius get his business act together. His recent projects include stints at Sean Combs’s Sean John line and at the John Varvatos label, where Mr. Wichser helped evaluate prospective partners and position the label for a sale to private investors in April.”

The partnership with Woolmark will give Rodriguez access to Woolmark’s extensive design archives, as well as provide much needed boosts in marketing and fiber-technology.

C.) Another day, another low-wage garment factory fire — but this time, companies are being held accountable, and a public backlash against outsourced garment factories is brewing: “Bangladesh police have detained the chairman and managing director of Smart Export Garments following a deadly fire that killed seven workers at the company’s Dhaka factory . . . “Survivors said the factory’s only exit was locked when the fire started during the lunch break and there was no emergency exit or any fire equipment in the two-storey building,” police deputy commissioner Mollah Nazrul Islam said.”

Spend more, buy less” takes on greater urgency now that our cheap fashion era is literally burning garment workers alive (not to mention the toxic sludge of the low-wage outsourced leather industry).

As industry writer David Birnbaum wrote in his editorial, ‘Crossing the Line on Ethical Behaviour‘: “The global garment industry is very hard: not hard as in difficult, but rather hard as in ruthless . . . The Bangladesh garment industry, for all its faults, cannot provide a remedy. They are trapped by their customers, many of whom come with price lists from previous years, with the expectation that suppliers will provide the same prices this year as last year, or lower . . . The reality is that rising wages and the cost of providing better safety and working conditions will not force Wal-Mart or any (other) customer to go to a country with cheaper labour; because there is no country with cheaper labour. As every garment sourcing professional is aware, in the race to the bottom, Bangladesh is not just the winner, it is the only contender.”

I know the argument is that globalisation is supposed to lift countries like Bangladesh out of poverty through free trade, but the stories of repeated factory fires and toxic rivers don’t make it seem as if bettering the lives of third-world workers is at all a priority.

Comments

  • FiveoaksBouquet

    It’s kind of fun to think of the Chanel suit as a sort of loss-leader for the more mass-produced items. One of the reasons Chanel and Hermès are maintaining a stong following could be that they are both very meticulous in making sure their tradition and current image are aligned. There is a sense of constancy that emanates from these companies and that imparts to me a sense of dependability. We know they are just as after the big bucks as other companies but they don’t have that aura of desperation or trying too hard we see with some other “luxury” houses.

    • http://www.nathanbranch.com/ Nathan Branch

      Five — Hermes makes very few missteps in image alignment as they don’t rush to push out collection after collection, or bag model after bag model. And they seem to have bought back licensing and distribution rights for the majority of their pre-Jean-Claude Elena perfumes, as I no longer see them piled up in discount stores everywhere.

      Chanel is more of a “fashion” brand than Hermes, so makes a few more mistakes, but only because they’re pushing themselves harder in the public arena. I think the Brad Pitt advertising move was a serious image misalignment for Chanel, and though they’re now trying to spin the months of public pointing and laughing as “millions of dollars worth of free advertising”, mockery is not the sort of PR that a global luxury brand craves.

      Maybe it honestly didn’t hurt sales of their perfumes and cosmetics, I don’t know — but on the strength of Raf Simons’ recent work for Dior, plus Hedi Slimane’s rock star mood for YSL, I can only imagine that Chanel is a slight bit more nervous about its beauty brand crown these days.

      Because just one more Brad Pitt type mock-session in the public arena and they might not be the coolest nail polishes on the block anymore.

      They didn’t used to have to work quite so hard to be “cooler” than Dior and YSL, which is a strange position for them to be in. It’s almost as if there are two Chanels — one is the consistently high-quality, luxury level fashion and leather goods brand that doesn’t sweat the competition, while the other is a much more trend driven, celebrity dependent, street friendly beauty brand that’s far more bottom-line driven.

      The two occasionally pull in opposite directions, but it hasn’t been a problem so far.

      • FiveoaksBouquet

        Good points, Nathan. For a moment there I had forgotten about Brad Pitt. I guess my mind blocked the ad out because I didn’t want it to be there. LOL Will there be a time when the financial impact of the ad, positive or negative, will become known? I certainly don’t wish bad on Chanel because I want them to keep turning out some of my favourite perfumes, but this time it might be fitting if it’s negative, just so they won’t do anything like that ever again!

        Shucks, I’d like to see some of those early Hermès perfumes piled up at discunt stores!

        • http://www.nathanbranch.com/ Nathan Branch

          I think your previous point that Chanel has meticulously maintained its image is likely the reason why you were able to so easily gloss over the Brad Pitt fiasco — because it was a rare (and easily forgiven) misstep.

          I remember back in 2008, shortly before Hermes began to really tighten up its distribution chain, when Amazon and other discount perfume sites were glutted with drastically discounted Hermes perfumes offered by what seemed like a hundred grey marketers.

          That’s all gone, now. There are still some Hermes perfumes online, but not much, and the prices are a lot higher than they used to be on average.