The Business of Fashion – Regulation, acquisition and the slowdown

When the global financial meltdown struck in 2008, many of those with a vested interest in the luxury market watched nervously; high net worth individuals had surely seen many investments wiped out as the recession struck and would thus be more inclined to austerity. While there was a brief moment of humility and caution over indulgence in life’s finer things, it was brief. The luxury market proved surprisingly resilient. Global spend has increased since the recession by around a third, helped in no small part by the explosion of growth in developing regions, China in particular. Orson Welles once said “If you want a happy ending, that depends of course on where you end your story”. Our story, sadly, does not end here.

It was not a good omen when fashion curator and director of the Musée Galliera in Paris Olivier Saillard said during New York Fashion Week last month, “We are in a moment that’s very bizarre in fashion: there are too many clothes”. Business of Fashion lamented both a lack of quality and vision in contemporary collections,

“Fashion seems stuck between the need to surprise using a new array of communications tools and the urge to deliver novelty at the fastest possible pace. Slowing down might be a solution, but that would be a hard route, which will hardly find followers.”

And it is followers that fashion, and the luxury market as a whole, are in need of. Earlier this month the Financial Times reported on the global slowdown of luxury spending. Behind this slowdown lie two factors. On the one hand, there is what are hopefully short-term influences; geopolitical turmoil is rife. Hong Kong continues to see protests that refuse to simmer down, causing disruption to myriad businesses. The city accounts for perhaps 20% of global luxury spending. The Middle East, whose consumer origin or nationality according to Bain & Co. has the biggest average per capita spend, is similarly in chaos, with Syria, Iraq, Afghanistan, Egypt, Libya all in various stages of unrest. Regions like Saudi Arabia and Qatar are caught between a rock and a hard place. In Russia, sanctions have hit oligarchs and their ilk hard. As a result, shares in luxury good companies have been hit hard. Prada has seen profits slide 20% in the first half of the year. Everyone’s darling of fashion innovation, Burberry, has warned of a “cautious outlook”. Mulberry has issued a string of profit warnings and recently ejected its CEO.

McKinsey illustrate the drift of luxury growth from developed to emerging markets

So we can reason that these companies are seeing fewer customers. But they are also attracting new ones, albeit with very different expectations of the service they expect from the companies they have relationships with. This is the longer-term challenge. Millennials may have been treated as a distinct niche group with quirky demands from brands, but next year they will outnumber Gen Xers, according to McKinsey. These utterly digitally savvy citizens have embraced and contributed to a digital fragmentation in the consumer decision journey, the production process and the fundamental nature of buyer / seller value exchange.

“[A] confluence of digital, the rising power of street fashion and changing consumer attitudes… are radically altering the industry. [It is a] consumer-led shift away from ostentatious and mainstream mega-brands towards understated originality”

One of the most obvious ramifications of this has been the trend of ‘logo fatigue’. It is likely to hit those like Gucci particularly hard, while benefiting those like The Row, and little-known retailers like L’Art du Basic. For larger brands there are some examples for inspiration though. Yoox, whom we have profiled in detail before, have gone from strength to strength in embracing effective digital strategy. The fashion ecommerce site reportedly sees 42% of its global traffic coming from mobile devices, and has recently made a significant push into experimenting with instant messaging app WeChat. As elaborated by Fashion and Mash, the account allows users to “shop via an interactive look book, and to instant message customer service teams and personal stylists. Content also invites users to exclusive events and provides early access to specific products”. In the physical world, Ralph Lauren’s hosting of a cafe in its Fifth Avenue store in New York may be less immediately strategic but seeks to leverage the same burgeoning trends. Brands will need to do more of this, more often, if they are to find what works best for them in terms of engaging and converting future prospects.

Also this month, Zeitgeist found itself at an event at London’s Four Seasons hotel off Park Lane, hosted by law firm Baker & McKenzie. Threats, tech trends and M&A were the main subjects of discussion. Zeitgeist scribbled down some bons mots which were thought worth recounting here. Last month, McKinsey produced an insightful piece on the future of luxury growth, indicating growth would come for the most part from what they termed global megacities, a large proportion of which were located in emerging economies. But China is facing a slowdown; no doubt one of the reasons it was recommended in the conference that businesses start to think less of China as an independent market of growth and more of ASEAN as a region.

3D printing was a matter of much conjecture, but it was pleasing to see that the regulation of such materials was already being considered. One speaker offered the technology would be a greater problem for toy manufacturers than luxury, but cautioned that fast fashion and high customisation were a potent mix. Current UK regulation allows for printing any designs (of one’s own creation or not) at home for personal use for no gain. Such laws may have to be re-examined as 3D printing becomes more widespread. It is difficult to protect the IP of a fashion designer’s work, and difficult therefore to know where to draw the line between inspiration and infringement. The case of the red shoe, specifically between Yves Saint Laurent and Christian Louboutin, has illustrated such difficulty. In the case of 3D printing, one speaker suggested that printing could be limited via restriction similar to how publishers use paywalls, or a more sophisticated version of the DCMA. The importance of protecting the source code of 3D printing designs looks set to be important; Pirate Bay already has a section for such product. Social networking as a new source of IP was also discussed. David Yurman sought opinions on styles to be included on a Valentine’s campaign; users could drop hints to their partner. Bergdorf encouraged fans to design Fendi bags over social, too. But there have been slip ups; Cole Haan offered to pay fans $1,000 for taking pictures of their shoes, without making it clear it was part of contest where someone would win and that the company was sponsoring the activity. They got off with a warning from the regulator, but luxury brands must treat that as a cautionary tale as they continue to experiment. “The law is not keeping up with the technology”, as one speaker sagely confessed.

David Yurman’s Facebook campaign suggests new IP possibilities for businesses in the future

The M&A chat was equally of interest. Speakers ruminated on the rise of vertical integration as LVMH et al seek to own the whole process. It’s a brave step for companies that traditionally haven’t involved themselves with supply chains or distribution, according to those speaking. Acquisitions were taking two forms: one was spotting missing gaps in the portfolio. For LVMH, the hole in their portfolio was jewellery, which lay behind their purchase of Bulgari in 2011. More recently Giorgio Armani – or as one speaker referred to the man himself, “King George” – reclaimed control of Armani Exchange as it attempts to leverage fast fashion trends. The other form was that of acquisitions in support of brand development – innovation, technology, CRM in Mandarin, social media, etc. More of these sorts of acquisitions were expected on the horizon.

How do these deals play out today? Private equity buyers have a lot of capital and access to cheap debt, but traditionally many of the targets of a buyout have been family-owned businesses who were not ready to relinquish control to a PE firm. These firms are much quicker and more aggressive at deals; they can quickly globalise a brand, can improve the supply chain and stretch the brand up and down from the original price point. Of course, adding new assets, like social media, makes due diligence – and knowing how to allocate risk to a mercurial medium – much harder. Owning supply chains carries risks of more exposure (see Apple and Foxconn). One of the most thorny issues that speakers envisioned was for a luxury good empire known for provenance and quality to be acquired by a a company in a jursidiction that is not known for such things. What if Alibaba bought Balenciaga from Kering, for example?

Digital is expected to drive, on average, 40% of projected luxury sales growth from 2013 to 2020

Next year will see the return of John Galliano to the runway stage to the helm of a fashion house, this time at Martin Margiela. A recent article on the designer’s flameout while creating works of wonder for Christian Dior emphasised the way in which Galliano “had been cloistered off into a strange protective bubble. Sometimes, we isolate (and elevate) talented creatives so much in the fashion industry that they lose connection with reality”. It is arguably a similarly protective bubble that the fashion industry itself has often been accused of being in, and we would argue it is in now with regards to the need for greater digital sophistication and a more significant investment in digital strategy as it concerns customer insights and the law. It is plain to see that the luxury industry continues to face disruptive challenges, be they at the hands of digital, demographic or geopolitical trends. Some of these disruptions will hopefully, as mentioned earlier, be more temporary in nature. The more fundamental shifts in consumption, though challenging, also present myriad opportunities for businesses that are brave and agile enough to test what works best to capture and retain the customer of the future. Last month Exane BNP Paribas published a report illustrating just how important digital sophistication will be (see above chart), and naming those most likely to benefit from such changes. They could do worse than start by reading our previous post on the future of retail.

Luxury still too good for a digital strategy

Chanel is one of the key culprits when it comes to lack of digital innovation

A recent McKinsey report declared that, for businesses, “The age of experimentation with digital is over“. That may be for most B2B and B2C private sector companies, but not for the luxury goods industry. Bemoaning the woeful development and investment in strategic initiatives for luxury brands online is something this blog has done once or twice before. There are understandable reasons why the industry has been reticent to commit to online retail, based on customer insight (the assumption that HNWIs don’t like to shop for something without being able to see and touch it for themselves) and conflicting priorities (physical store expansion into China and more experiential events has been the name of the game in recent years). But with a China slowdown mooted, particularly in the area of luxury gifting, and no real concrete research to show that HNWIs aren’t just as digitally savvy as their less liquid counterparts, there becomes less and less justification for what are, across the industry, woeful examples of digital strategy and innovation.

It can’t be easy for profitable businesses like LVMH, with an eye on quarterly earnings, to make drastic investments in the online space. Luxury’s brand equity often comes from provenance and tradition; a company’s roots are in its founding stores, the connotations of Milan, Florence, Paris, etc. They also worry about their neighbours; a flash-sale site or, worse, one full of counterfeit knock-offs, is always just a click away. From a logistical point of view, there is also the issue of back-end infrastructure to contend with. For several years, PPR (now Kering) ran much of its e-commerce business through Yoox, as we’ve talked about before. It would be wrong to single out those in luxury. L2 Thinktank recently tweeted with much excitement about Bacardi’s “cocktail discovery site” that worked seamlessly across web, mobile and tablet. Well, forgive us if we don’t leap for joy in an ecstasy of delirium, but this is 2014, that should be the minimum deliverable. Still, luxury is a sector in blatant need of redirection.

eConsultancy eviscerated many luxury brands’ online presences in a recent article

Burberry is lauded by many as an outlier in this world of luxury goods, a company that has truly embraced digital. For all the talk of such innovation though, the website itself is utterly dominated by a rote e-commerce site, as are its social networks such as Google+. It is the physical stores where technological innovation has been injected. And this is supposedly the company pushing the rest of its peers forward. It comes as little surprise then that eConsultancy published a superb piece at the end of April excoriating the sector, leaving no brand unscathed. Headlines included, “painfully slow load times“, “awful UX” and “not making much effort“. But the worst and most perplexing atrocity had to be the above screengrab on the purposeful hiding away of an e-commerce platform, one that was presumably quite expensive to source and implement in the first place. We can’t overestimate the necessity of having a clear user journey through to purchase, just as it would be difficult to overestimate the amount of luxury good companies that are guilty of this sin for which Dolce & Gabbana have been singled out for here.

On this note, Gucci’s recently relaunched mobile site – replacing among other things a tablet site that had been left to wither since 2010 – was welcome news to us, as it seemed to be also (logically) to those wishing to actually part with their money on Gucci wares. L2 in May reported the news, saying that the new site now accounts for 27% of all traffic, a 150% YoY increase. Sounds good, except that means traffic through the mobile site in 2013 was a miniscule 0.18%, right? Terrible.

There are signs of hope. Gucci’s move to invest in a new mobile site, though monumentally belated, is a welcome one. As more brands cotton on to the importance of online, the Financial Times recently reported on the moves many are making to secure ‘.luxury’ suffixes, in the wake of IPv6, if only to avoid the complications of cybersquatting. And Michael Kors, which seems only to be going from strength to strength every quarter, has praised its own social media presence for “driving international sales”. We’ve almost entirely focused on fashion brands here, but other companies within the luxury sector are getting the message loud and clear. Take the auction house Christie’s, a legacy company if ever there was one, having been founded in 1766. Not only have they dedicated time and energy to investing in major online auctions, they have also recently created a new sector vertical of ‘luxury’ within the house itself. New thinking might well take new talent, it will also take C-suite buy-in, as well an acceptance that digital commerce is an integral part of business now, no matter how exclusive your product is.

Selling the extraordinary

“Everything has become more experiential”

– Dante D’Angelo, brand and consumer development director at Valentino

It is an odd state of affairs indeed for the retail sector at the moment. On the one hand, consumers are flocking to digital devices like never before, particularly for their shopping. Conversely, this means that the physical experience of shopping becomes rarer, creating more opportunities for specialism. An article in the Financial Times a few weeks ago read as if a commercial plague had swept through the UK high street over the past few years. With 4,000 stores affected, 2012 was, according to data from the Centre for Retail Research, the “worst year since the start of the credit crisis in 2008”. Names of erstwhile stalwarts like Woolworth’s, Jessop’s, Peacocks and Clinton Cards have all fallen under the knife. As we wrote at the beginning of last month, what little salvation there is lies in embracing digital technologies.

The luxury sector however has its own special, gilt-edged cards to play. In St. Tropez, the Christian Dior boutique’s ample courtyard has recently been made use of with an all-day restaurant. Louis Vuitton have a cinema screening classic Italian films in their Rome boutique. It’s no wonder such brands have also branched into the hospitality sector, the former working with the St. Regis to develop branded rooms, the latter into full-scale hotel management. Ferragamo have been involved in the hotel sector for years. Two recent examples show how companies can extend the experience for visitors, and help drive revenue at the same time.

The auction house Sotheby’s will tomorrow auction a rather large collection of surrealist art. One of the few things that definitively puts it ahead of Christie’s is that it has its own cafe, which, last week and this week, is pushing the surrealism theme into its catering (see above menu). It’s a simple, creative idea that creates a cohesive brand, celebrates a big event, and ultimately hopes to drive revenue from peripheral streams around the auction. The RA’s current Manet exhibition is taking a leaf from this tactic, opening later but charging double the usual rates for a special experience, including a drink and a guide. The other interesting news of note was a new tactic being employed by the fashion company Valentino. Not content merely with having a major exhibition at London’s Somerset House, the label is also tinkering in an innovative way with its event structure. As detailed last week in Bloomberg Businessweek, Valentino is opening a new boutique in New York later this year, during which the typical glitterati will be in attendance. However, the new idea comes in the form of the company inviting prized customers to the opening for the chance to rub shoulders with said VIPs, for a steep price. Similarly, Gucci is offering its non-VIP customers tours of its Florence workshops for the first time.

Something that Zeitgeist has been noticing for a couple of years now, recently echoed by Boston Consulting Group (BCG) senior partner Jean-Marc Bellaiche, is the importance, particularly for those in their 20s – like Zeitgeist – that people place in defining themselves by what they’ve done rather than what they own: “In an era of over-consumption, people are realizing that there is more than just buying products… Buying experiences provides more pleasure and satisfaction”. On a macro level there is significant bifurcation in the retail market; not everyone will be able to afford in creating extraordinary experiences for their customers. A recent BCG report helps illustrate this, noting that while the apparel sector as a whole saw shareholder returns fall by 1.3% for the period 2007-2011, the top ten players produced a weighted average annual total shareholder return of 19%. Expect then for retailers – those that can – to increasingly provide exclusive experiences to their customers, beyond the celebrity, whether it be early product releases, tours, or events. Just don’t expect it to come without a pricetag.

For Luxury, what price service?

Whither the sage of a shop assistant? At a time when we as consumers have access to all the information we could want about a brand and its products via our smartphones, of what use is it to have someone tell me something that I am unlikely to take at face value, working as they are for said brand? Why even bother being in the store at all when I can be buying my item at home? The luxury goods company PPR (owners of Gucci, Saint Laurent Paris, Balenciaga et al.) could be said to have recently adopted a similar mindset. A new joint venture with e-tailer Yoox is sure to shake things up. Honcho Francois-Henri Pinault said recently, “While the whole industry has been resisting e-commerce for the last 15 years it’s now realising it’s inescapable”.

Not everyone believes such a move is inevitable. Chanel is steadfastly refusing to sell its principle collections – from ready to wear to handbags – online for the foreseeable future, according to a recent interview with the CEO. While this might strike some as akin to sticking one’s head in the sand, the reasoning the company gives centres around the unique experience of going into a store to buy a product, rather than sitting at home in one’s pajamas. From a strategic point of view, the idea is sound. Reducing avenues of purchase encourages a scarcity factor that high-end fashion must rely on. It also ensures that the products are seen in the best light possible, incredibly important when justifying such a premium. It’s interesting to note that though the thinking may be sound, it is certainly not appropriate for every luxury brand to be resisting the lures of online shopping in such a dramatic way. Chanel is – and always will be, in multiple ways – a very special company, an exceptional brand, in the literal sense. Like Apple though, it’s practices are to be emulated with caution, as a great paper by McKinsey Quarterly highlights. “Outliers are exactly that…”, the report states.

But what is the state of stores, and how important is service in these places? For luxury, we can assume a high priority of the physical shopping experience is connected to the person assisting you. Recent experiences at two different luxury goods stores highlighted jarring differences, monumentally affecting the way Zetigeist felt about the brand. Last month in New York, Zeitgeist visited Tiffany & Co. to find a Christening present. Without turning this article into a rambling letter of complaint, the section Zeitgeist found itself in was woefully understaffed, and when help was available, information turned out to be incorrect and, most importantly, not dispensed as if it were important to them. Zeitgeist left without buying anything. The experience was deflating enough to mention to the manager en route to leaving the store. Returning at the weekend to try again, the experience had not much improved. The item needed to be engraved. Taking it into one of the London stores upon returning home meant being greeted with the same mediocre level of service. No passion, no interest. This would be perfectly acceptable for somewhere such as Ernest Jones, but Tiffany is a massively, massively powerful brand. For many it is incredibly evocative, and speaks to nostalgia and deep-seated emotions with very personal connections. There is a dream that is Tiffany, that is replicated extremely well in their above-the-line marketing. It is completely absent in its physical embodiment, the store. Cartier, by comparison, manage to present a fantastical vision of their brand, while also maintaining a consistently excellent level of service in-store that brings cohesion to the image it evinces.

Louis Vuitton could not have presented a starker contrast to Tiffany. The brand had one brief flirtation with TV ads about four years ago. While also a powerful brand, it perhaps could not be said to elicit such powerful emotions as Tiffany, purely on the basis that Tiffany purchases might often be assumed to be gifts. Purchasing what is surely one of the cheapest things in the store, Zeitgeist was delighted to be led through the purchase process by an exceedingly-well trained woman, who was happy to go over the minutiae of the purchase, and knew answers to arcane questions when asked. It made the experience extremely pleasurable. Remarkably, the store went a step further, sending Zeitgeist a random act of kindness and imploring to get in touch if further assistance was required.

That kind of experience simply cannot be replicated online. If Amazon were to start selling Prada clothing anytime soon, the dissonance would be powerful. So while the luxury industry, and many in the retail sector at large, struggle with the idea of the shopper journey online, moreover how and where that connects with the physical journey, we cannot forget basics. The importance of good training, especially for demanding customer who are expecting a premium experience, cannot be overstated. Though smartphones and tablets may hold the data, it must be remembered that the purchase of a luxury product is often an irrational experience. The service and assistance received during purchase consideration may be an irrational influence, but it is an immensely powerful one. If a brand talks the talk, it must walk the walk, or face the consequences of failing to live up to its own promises.

Luxury pushes beyond the store

Luxury brands have found it hard to come to terms with the shift in consumer shopping habits from retail to online. For several years they have dipped their toes in the water of digital, but with little commitment and much hesitation (until recently). This is understandable. Often for luxury products, the justification for higher prices is only evident upon seeing the item in real life, or it can sometimes be intangible. These assets are hard to replicate when seen on a computer screen. A store’s retail environment allows the company to control every aspect of the brand experience. Someone checking out the Louis Vuitton website could be using a slow computer in an old browser; the experience will suffer, and there is nothing the brand can do about it. Much more sensible then to invest in concept stores, such as the recent one in Selfridges. But there needs to be a focus still about managing the brand and courting attention beyond the four walls of the shop.

So it should be of little surprise to see that recently luxury has been looking to broaden its horizons in the physical space, aiming to brand experiences that seamlessly fit into the lifestyle that they think is associated with their brand. This was evident in no small part when Zeitgeist took a trip recently to St. Tropez. Before even entering the town, visitors were greeted with the sight of mega-yachts and enormous Gin Palaces, and – on one of the days Zeitgeist visited – evidence of the relatively recent collaboration between Gucci and Riva (see above picture). Such a partnership probably helps the former more than the latter. It certainly helps validate the clothing company’s brand, which sometimes fails to leverage its relatively strong heritage. Walking away the port – past the recycling collections strewn with empty bottles that had once contained vintage wine and champagne – toward the famous Place des Lices brings you face-to-face with the hotel White 1921. This is one of LVMH’s newest incarnations, an eight-room hotel.

It was a beautiful hotel to behold, and had just opened the week Zeitgeist was visiting. Though much in need of a lunchtime glass of champagne – the brand here makes the most of its ownership of several champagne labels – the dining area was sadly not open until the evening. White 1921 is not alone as a recent example of hospitality being managed by a luxury brand. LVMH’s first such hotel was back in 2010 in Courchevel, named Cheval Blanc. More recently, Bulgari have launched their own hotel in London’s Knightsbridge area, close to the Mandarin Oriental hotel. The St. Regis hotel in New York now has a small collection of fashion-related suites, including the Dior Suite. All this is about embracing a certain idea, a crystallising of what it means to be living a particular lifestyle. The question for LVMH begins to arise as to whether, strategically speaking, having one arm of your company (Dior in this case) having a room owned by St. Regis creates any significant competition between the hotels you are opening elsewhere in the world. The more they open, and the more branded suites appear under competitor’s names, the stickier this situation could get.

Releasing products that compete for the same consumer type is never a good idea, and is a mistake General Motors made. A very good essay on this is available in Richard Rumelt’s ‘Good Strategy / Bad Strategy’. The market is becoming crowded. Hermès has side-stepped this by designing luxury apartments in Singapore. Some companies have thought at a more granular, perhaps relevant, level. Trunk-maker Moynat have teamed up with the famous Le Meurice hotel in Paris by providing French chef Yannick Alléno with a roll-in trunk so he could cook breakfast for guests in the comfort of their own room. It’s an inspired idea that retains the original idea of what makes the brand special and heightens it by creating a unique experience for the consumer. The New York Times reports,

The chef’s breakfast trunk is genuinely designed to travel, its porcelain plates held upright with leather straps and its cutlery in drawers. Mr. Alléno already has plans to send it to hotels where he has connections, first in Dubai in September, then to Courchevel in the ski season and on to Marrakech. At each destination, he will make a personal appearance and demonstration.

Similarly, Prada has thought about how best to showcase its ready-to-wear line, in this case including its clothing in the sumptuous film The Great Gatsby, due out next summer. The highlight of Zeitgeist’s time in St. Tropez was in visiting one particular boutique. Christian Dior, while not be a brand one immediately associates with good food, featured an open courtyard that hosted a cafe dedicated to indulgent delights. Mr Alleno was also responsible for the food here. It was an impressive exercise in brand management… and excellent profiteroles.

Managing Luxury Online

After the New York, London, Paris and Milan Fashion Weeks – which Dazed condenses into some key trends – comes the hard sell. We know that increasingly people are shopping online, not only while in the comfort of their home but also while out and about, with 25% of shoppers on their phone looking at a store’s website at the same time as they are in a physical shop, according to ForeSee. The stats for those luxury demographics bear even more consideration; Luxury Daily recently reported that 20% of those earning $150k p.a. or more shop via their phones.

As usual the Louis Vuitton show in Paris was streamed live online. The brand was one of the leaders in pioneering the idea of making such events available to hoi polloi. While some esoteric fashionistas may turn their noses up at the democratisation of luxury, they are increasingly swimming against the current as such efforts become more commonplace. Mere days after Marc Jacobs had taken his bow at the end of his latest collection for Louis Vuitton, the site fashionshow.louisvuitton.com was alive with myriad content, including in-depth interviews with Jacobs et al. It’s a beautiful microsite and worth checking out. At the weekend Zeitgeist decided to browse the Vuitton website from the comfort of his bed on his iPhone. One of the nice little things about the Louis Vuitton website is that to navigate there, all you need type in is “lv” and you are redirected to the site. Unfortunately, the same cannot be said for the mobile internet, where Zeitgeist was instead directed to a website for car insurance. Not a pleasant experience. It’s all the more important to have bought these keywords for mobile devices when the user will find typing less easy and is also likely to have less time than when they are using a desktop computer. It’s a shame because otherwise Vuitton’s digital presence is above reproach.

Worse still was when Zeitgeist then tried to visit Gucci by typing in “Gucci” into their Safari browser on the iPhone. The Gucci logo appeared and all seemed well until it transpired that he had arrived at the German site. Rookie mistakes like this do a disservice to a brand, and hurt it all the more the more luxurious it is.

On the more impressive side, the always admirable Lanvin, doyenne of Mount Street and invader of Savile Row, has finally launched a European e-commerce site, showcasing, as Luxuo puts it, “Lanvin’s dynamic style, the spirit of Alber Elbaz, and the creative wealth of its collections”. The site as whole manages to convey elegance, insouciance, history and contemporary style. Luxury brands have had a hard time adjusting to the online revolution, uncomfortably wondering how to translate the rarefied atmosphere of a boutique into the world of the Internet. Fashion’s Collective puts it best, in an article on redefining exclusivity,

The answer is to redefine what exclusive means. Rather than exclusive being the clientele the brand attracts, it should instead be the experience the brand conveys. Here, the focus shifts to the brand to provide value online just as they do offline. By curating the images, videos, copy, content and experience a brand publishes online, exclusivity is created.

While others have floundered, Lanvin passes the test with flying colours. Very impressive and very distressing news for the Zeitgeist credit card.

Justifying Luxury

“Luxury lies not in richness or ornateness but in the absence of vulgarity.” – Coco Chanel

If luxury is mostly defined by what it is not, then one can see how it faces an uphill battle in trying to attract the more cash-strapped among us, especially in economically turbulent times. A large part of a luxury brand’s assets are focussed on upselling to the shopper, but currently a brand has to work harder to justify its prestige (not to mention price tag). The following post looks at how some brands have responded by cultivating their image with top auteurs at the helm, while others have sought to bring the brand down to the masses.

Two of the biggest houses, Chanel and Gucci, both recently launched new ad campaigns to promote a new fragrance. Gucci first released a teaser trailer for it’s perfume, Guilty, which by all accounts went ‘viral’ before a 30-second spot went live on Facebook on August 12th, followed the next day it’s exhibition on TV. As Luxuo points out, what everyone is really waiting for though is the director’s cut of the commercial, which will be unveiled live September 12th at the MTV Video Music Awards. By the end of it, the campaign will have done a good job of building up audience anticipation and suspense. The shoot was directed by Frank Miller, the mind behind such films as “Sin City” and “300”, and the commercial’s aesthetics leave you in no doubt as to its author. The MTV VMA audience should dovetail nicely with the demographic Gucci is looking for with this particular product. As PSFK notes, the results could be mutually beneficial. Meanwhile Chanel, (recently branching out into surfing), has been mostly bombarding the cinema with its own ad for its own new brand of fragance, Bleu de Chanel. This advert was directed by the legend that is Martin Scorsese, whose crisp visuals are tinted blue and who can’t resist adding a Rolling Stones track to the background. It’s interesting to see both these powerful brands collaborating with famous / respected filmmakers in order to justify, endorse and build upon the image they are trying to perpetuate. The life shown through Miller’s and Scorsese’s lenses is an unattainable one.

Meanwhile, other brands have been seeking to do the reverse and making themselves somewhat more accessible, playfully or otherwise. Lanvin, one of the bastions of fashion, is reported by the New York Times to be doing a capsule collection for that bastion of mediocrity and crass capitalism, H&M, following similar collections by the likes of Matthew Williamson, Jimmy Choo and Karl Lagerfeld. Last year Lanvin produced a collection over a period of several months in collaboration with Acne Jeans. The latter brand helped make Lanvin more accessible (in that the synergised collection was cheaper than anything one might normally buy from Lanvin), but retained an esoteric air thanks to the jeans manufacturer’s relative anonymity (relative to H&M, anyway). What benefit does this brand dilution – for that is the only thing it can be described as – bring to the fashion house? Well it puts it on the radar of those 20-somethings who might not be able to purchase something from Lanvin outright on their current salary, but will be store it away for future consideration. Rather more cheekily, Issey Miyake recently opened a pop-up store in Tokyo, decked out not at all how you would expect. PSFK quotes,

“The overall concept derived from the Japanese convenience store, with its constant state of dynamic, fluid change… To highlight this association, the shop’s name is ‘24′, and its logo features the kind of stripes you might expect to find on the facade of a convenience store. The packaging, too, comes from food packaging.”

In this case then, Issey is taking it’s high-fashion image and poking fun at itself in its own retail environment. A dangerous move, but also an innovative one, with enough publicity to gain the attention of those fickle shoppers. It stands out from the more overt attempts at aspiration that Chanel and Gucci are creating, and perhaps this self-parody helps Miyake gains more fans than those who might otherwise be put off the more gilded edges of luxury, vulgar or no.

 

Chanel to launch e-commerce site

In the wake of New York Fashion Week, Mashable ran an interesting article on the fashion industry’s relationship with social media. Today, Chanel, not content with their formidable iPhone app, which puts it’s competitors’ apps such as Gucci and Dior to shame, confirmed they will be offering some of their products online.

Chanel sells amongst the most expensive ready-to-wear collections of any luxury label, with a beautiful raincoat for example costing well over £4,000. Other brands, such as Giorgio Armani and Yves Saint Laurent, already offer e-commerce functionality, it just remains to be seen whether Coco’s company can do something special with it. With e-tailers Luisaviaroma.com and Yoox.com already well-established, it will be interesting to see if online shoppers balk at the high markups that might seem more justified in the retail environment of the brand’s flagship store on Avenue Montaigne, especially in a recession. Brand Republic has more.

Curb Your Luxury

From the January, 2010 Zeitgeist…

In these stringent times even Zeitgeist have had to cut corners. We have, for example, begun opting for sevruga caviar over beluga. Luxury brands know that their consumers, a large portion of whom were buying on credit, are in danger of not returning to their stores any time soon. So what have these brands been doing over the holiday period to entice people?

On the Friday before Christmas, Zeitgeist received emails from Hermès, Veuve Cliquot, Emilio Pucci and Yves Saint Laurent. Perrier Jouet, Zegna, Tod’s and Selfridges all followed suit over the ensuing days. Only Selfridges’ email was about a sale. Other emails simply promoted the new season or reminded the reader that there was still time to place an order before Christmas. Some have begun to tie their products in to the lifestyle of their prospective customers, such as Veuve with its The Season campaign. It might be thought that these emails missed a trick by not offering some kind of promotion to those people whom the brand deigned to have on their list, to reward their loyalty in the midst of a recession. No such luck, however. For most of these brands, any such indulgence would not impact the bottom line so much as it would impact the image of the brand. Keeping a semblance of dignity while reminding the shopper of their presence goes a long way. For example, Hermès holds discreet sales for loyal customers at the Dorchester Hotel rather than in-store. Moreover, Louis Vuitton never has sales. Surplus products are destroyed.

However, the recession has in some cases led to some fashionista legerdemain. On a trip to Chloé two weeks before Christmas, Zeitgeist was identified as a returning customer and offered a discreet 40% discount on any purchase.

On Christmas Eve, Zeitgeist found Harrod’s had quietly begun its sale, with 50% off a huge array of items. A significant move as Harrod’s is a stalwart for not starting sales until after Christmas. What has brought about these relatively drastic measures? Though some brands are undoubtedly suffering, the recession has more exacerbated already pressing problems, rather than being the problem itself. Some brands, such as Hermès and Louis Vuitton are doing well. Vuitton contributes some 70% of group LVMH’s profit. In truth, the principle reason for such significant discounting is due to customers expecting and demanding them.

Away from the boutiques themselves, both Gucci and Hermès are currently playing on their equestrian roots. Gucci have decided to take advantage of the rather lucrative industry that has built up surrounding used products, recently starting a venture with Christie’s. Vuitton recently began a new campaign, from Ogilvy and Mather in Paris, which shows the artisans at work. The brand is trying to tread the fine line between its brilliant, bling ready-to-wear collection designed by Marc Jacobs, and the immense heritage it has in the luggage it has been painstakingly making since 1854.

During the recession then, most brands have been sticking to their guns (or the fashionable equivalent), waiting for credit to flow once more, so the cycle can start all over again. Chanel’s new surfboards should get things going again.

Sustainable Luxury

From the July Zeitgeist…

What is a journey? If you believe that it’s a process, a discovery of one’s self; that life itself is a journey, then you should have thought of putting that into the copy for your campaign before Ogilvy Paris did it for Louis Vuitton.

Consumers are increasingly comfortable with shopping for luxury goods online, as long as the experience remains consistent with that of the retail environment of their favourite boutique, (witness Luisaviaroma.com and Dior). The Vuitton Journeys site goes a step further, completely immersing the user in the experience of living with their brand. Their website chapters for each campaign feature photography from Annie Leibovitz, with music composed especially for the site and video podcasts.

The campaign strategy imagines Journeys as “individual trajectories”. It focuses on those in politics, art and culture who have had their own remarkable journeys; Gorbachev, Francis Coppola, Madonna. The latest  commemorates the 30th anniversary of the Apollo 11 moon landing, with the label “Some Journeys change Mankind forever”.

Founded over 150 years ago by Mr. Vuitton, the first person to put his name – and thus his brand – on his products, it is part of the holding company LVMH. Both it and it’s archrival, PPR (owner of Balenciaga, YSL, Gucci, and many more) have recently pushed their green credentials to the fore while maintaining their aura of exclusive indulgence (Louis Vuitton has never, ever had a sale). Louis Vuitton’s Journeys campaign is in association with the Oscar-winning, Nobel-winning, almost-President Al Gore’s Climate Project. Supporting copy appears at the bottom of all print ads, and 15% of every online purchase from Vuitton goes to the Project. PPR has just launched a film called “Home” to motivate people into changing the way they live their lives. The film features absolutely stunning satellite imagery of Earth; a glimpse of a place in dire need of saving. Find it on YouTube; it will also be screened in cinemas around the world over the next few months.

Both efforts recognise a real desire with their target audiences to create a more sustainable way of living.