The notion of luxury is evolving, but into what? This answer becomes a little clearer when examining two fashion houses: Ralph Lauren and Versace.
When Puma transformed a venerable soccer cleat made famous by Brazilian footballer Pelé into a sneaker in 1998, the shoe known as the King sparked a global fashion sensation and an eightfold surge in Puma revenue in as many years. Yet ever since the German sporting-goods maker was bought by French luxury house PPR in 2007, the brand has performed like David Beckham during his Los Angeles Galaxy years.
As the luxury market rebounds, powerful global brands including Gucci, Prada and Dior are starting to press for more control over the way their products are presented and sold in U.S. department stores.
For her debut as Gucci's women's designer five years ago, Frida Giannini picked sweet floral prints from the Italian house's archives as her starting point. Ms. Giannini's early designs—a repudiation of her predecessor Tom Ford's raw sexiness—earned her low grades from fashion critics. Women's Wear Daily said of Ms. Giannini's runway in 2006: "Trends do not start here." Critics be damned. They were a commercial success. Old fashion is hot again, and Gucci is banking on its heritage.
Is imitation truly the sincerest form of flattery? The luxury handbag industry apparently doesn't see it that way. After a surprise dawn raid on Dec. 8, 2009 of 30 counterfeit vendors on New York City's Canal Street netted $1 million in phony handbags, the lead investigator said the campaign to neutralize the distribution of fakes was instigated by a group of luxury firms. The confiscated fakes sported nameplates that included Chanel, Gucci, Coach and Cartier. No arrests were made that morning, and counterfeiting will continue. Ever wonder why the relentless black market hasn't eviscerated the high-flying business of designing and selling the real thing? I have. I spent two years researching this question. I'm convinced that there's a symbiotic relationship at play. The designer brand makers may not understand it, but phony bags are potentially a potent sampling tool.
Image is everything to luxury fashion companies. Preserving prestige is what sets brands such as Gucci and Hermes apart from Gap and H&M. But that same elitism is keeping certain luxury brands from engaging in social media, one of the most powerful forms of marketing at the moment. Luxury fashion companies are known for setting trends when it comes to their products, but their media preferences are surprisingly dated. Most prefer to simply buy ad space in publications where they can present--and control--their image in glossy two-page spreads. While traditional media will remain an important advertising vehicle for high-end fashion companies, social media needs to be part of the marketing mix too.
Luxury goods consumers in China rank third in the world behind the Americans and Japanese, spending an average of US$ 6.5 billion a year. While the financial crisis has convinced many in the US and Japan that they can do without that Fendi bag, similar decreases in consumption of luxury goods in China have yet to appear.
The store was empty, although a handful of tourists were seen milling around the entrance, looking around in awe, and taking photographs. They smiled politely but shuttled off when one of the well-groomed members of the Armani staff approached them. The 12-storey Armani House, so perfectly situated in the centre of the Ginza district in the heart of Tokyo, reflected the current state of almost every luxury brand you can think of - sleek, stylish and…silent.