The notion of luxury is evolving, but into what? This answer becomes a little clearer when examining two fashion houses: Ralph Lauren and Versace.
Tag: luxury brands
Luxury retailers are finally feeling the pinch. So, how is Prada responding? Under pressure, the company has decided to go public.
“The recession has been good for us,” says Steve Cannon, Mercedes-Benz’s vice president of marketing, only half kidding. While this quintessential luxury brand faced a more challenging environment, Mercedes still managed to emerge from the recession with renewed momentum, launching five new models and building share of market, as it is looking to its 14th consecutive year of sales growth in 2011.
“Big cities have international people,” Ralph Lauren said. “Tourists come wanting to buy souvenirs.” So the biggest one-man brand in fashion is getting bigger on Friday, when Polo Ralph Lauren opens a 22,000-square-foot store at Madison Avenue and 72nd Street in Manhattan. The store, built to resemble a mansion, will be the brand’s largest women’s store and will also feature home collections and new lines of lingerie and fine jewelry.
K-Mart and Marc Jacobs have something in common: low- and high-end fashion products tend to have less conspicuous brand markers than midprice goods, according to a paper soon to be published in The Journal of Consumer Research. Rather than rely on obvious logos, expensive products use more discreet markers, such as distinctive design or detailing. High-end consumers prefer markers of status that are not decipherable by the mainstream. These signal group identity only to others with the connoisseurship to recognize their insider standing.
Billionaire investor Warren Buffett, often dubbed the Oracle of Omaha, has seen the future of fashion in the most unlikely of places, bearing a "Made in China" label better known for its cheap than chic. "I threw away the rest of my suits," beams Buffett in the 2007 video, adding that he and Microsoft founder and Bill Gates are fans of Chinese suit maker Trands and would be great salesmen for the company based in the northeast Chinese city of Dalian. Trands is one of a handful of emerging Chinese brands that someday hope to take on the likes of Gucci, Armani and Prada in the lucrative luxury goods market. Sales of luxury goods in China grew 12 percent in 2009 to $9.6 billion, accounting for 27.5 percent of the global market, according to Bain & Co. In the next five years, China's luxury spending will increase to $14.6 billion, making it the world's No. 1 market.
Burberry has launched what is being billed as the first interactive extension of a luxury brand. By launching the Autumn-Winter 2010 collection as a fully interactive, motion-responsive experience, users are able to click, drag and control how they view each item of merchandise featured on the ad and seasonal collection – including merchandise, products and models.
Although luxury brands remained surprisingly isolated from the downturn in 2007 and 2008, 2009 was tough on all sectors, including haute couture. Even the acclaimed Christian Lacroix was driven out of business. Naturally, when circumstances call for bold actions, it's tempting to expand your market to enhance your bottom line. But is it possible without compromising the luxury nature of your brand?
Last year was the worst year ever for global luxury goods, with worldwide sales falling 8%. But in a look at the world's most valuable luxury brands, Forbes identifies 10 that are poised to thrive in better economic times. These brands, including BMW and Louis Vuitton, share some qualities that help keep them strong even when wealthy consumers are curtailing spending.
A review by the team at PSFK shows that most luxury brands are unprepared to leverage the changes in web use that products like Apple’s iPad and iPhone are driving. Out of the top 10 luxury brands ranked by Forbes in 2009, none of their websites worked sufficiently to match their desktop-web-experience. Only Gucci seems to have created a site that can handle the technology requirements that Apple has placed on its mobile devices.
Popular psychology simplifies the different functions of our brain hemispheres by using “left brain” to indicate analytical thinking and “right brain” to mean creativity and emotion. That may be a bit of an oversimplification, but it’s a useful shorthand. In The Luxury Strategy, authors J. N. Kapferer and V. Bastien emphasize the need for a management team that has both characteristics.
Looks like affluent people are feeling safe about spending again: Coach says its fiscal third-quarter sales jumped 12%, and Burberry says that its retail sales gained 15% in the second half. Patricia Pao -- head of the Pao Principle, a New York-based consulting company -- says she isn't surprised, and that the strong pickup some luxury retailers saw over the holidays is building steam. "The Chanel boutique in Houston basically was out of merchandise four days before Christmas," she tells Marketing Daily. "During the recession, it was not considered 'cool' to shop. So right now, people with money are spending because of that pent-up demand. And interestingly, so are people with less money, not just because of pent-up demand, but also due to the new merchandising direction of prints and bright colors."
The age of austerity is over, as the well-heeled splash out on Porsches and Dom Pérignon champagne, according to retailers of luxury goods. The wealthy are more prepared to open their wallets than at any time in the past two years, suggesting they have put the financial crisis behind them. But they are still looking for value for money and craftsmanship, says a study published today. Flashy labels and glitz have yet to make a comeback.
Guess who says the following attributes are most influential in making "important purchases" today: value, price, overall quality, good design and functionality? A clue: 84% of this group texts from cellphones; 78% use social networking; 66% use the mobile web and 57% use mobile apps. It's not who you think it is. In fact, it's a group whose median age is 45, not 19.
Global luxury group Louis Vuitton Moet Hennessy (LVMH) has launched Nowness.com, a web platform that allows luxury brands to showcase high-quality branded film content against a more sophisticated design aesthetic and insider editorial voice that luxury-goods consumers have come to expect – and that the broader audience of YouTube or Vimeo might not currently call for.
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.
The luxury goods industry, struggling through a recession that has threatened some well-known names with extinction, is trying to use technology to its advantage. Many in the fashion business remain wary of the Internet, partly because of continuing legal battles over online sales of counterfeit goods and concerns about diluting carefully honed brand images. Many companies also have failed to execute online storefronts successfully. But executives say that attitudes are softening as brands realize that the Web provides one of the last untapped sources of potential growth.
Japan’s trend-chasing office workers and ladies who lunch are giving up Louis Vuitton handbags and Chanel jackets for Zara dresses and Gap jeans, making what was a favourite market for luxury manufacturers into one of their biggest headaches. The downturn is forcing customers in Japan to scale back purchases of luxury goods, accelerating a long-term shift in consumer attitudes, according to a report by McKinsey, the consultants.
Things can't get much worse for many of the world's top luxury brands. This week Coach, the high-end handbag seller, announced that profits slumped 32% for the quarter. Same-store sales at Saks were down 23.2% in the first five months of this fiscal year. BMW's U.S. sales are off 28.9%. Bain & Company, the consulting firm, is forecasting a record 10% drop in the overall U.S. luxury market this year. According to Bain, luxury won't fully recover until 2012. What can these brands do to battle this malaise? Maybe BMW should try selling ketchup or mayonnaise.
Some brands are cutting prices in the face of decline, but those with real style are raising the stakes. After a decade of unprecedented global demand for luxury, the storm clouds of recession now provide a fascinating backdrop to luxury brand strategy. Conservative estimates, such as that issued by global management consultant Bain & Co, forecast a drop of 7% in sales of luxury goods in 2009, but others predict much steeper declines before years end.
Companies are hosting intimate gatherings to woo high-end customers.
The bad economy and a fundamental shift in the market for luxury goods are forcing an industry that reveres names like Chanel and Versace to embrace a different icon: Mother Nature.
Consumers are embarrassed to flaunt luxury labels. Now what?
From David Letterman to Jon Stewart to Mike Barnacle to the guy in the cube next to you, more Americans are sporting a simmering anger some have termed "vengeful populism." Consumers are angry with bankers, Wall Street and any other cultural elite that has stolen from them lately. Because our pain is not felt equally, class conflict is a near certainty. While populism comes in many flavors, it is, at its core, anti-elitist, and there are plenty of elites to dislike. Income distribution in the U.S. is approaching an L-curve, with a vanishing (and angry) middle class. Because social standing is in so many ways marked through consumption, brands that are "on the wrong side of history" had better watch out. On the other hand, just as in the Great Depression, smart brands will have an opportunity for greatness.
A luxury goods executive might need fortune on his side these days as the industry navigates uncertain times. Richemont, owner of Cartier and Montblanc, warned this year that it saw “no cause for optimism” after reporting a steeper than anticipated 12 per cent fall in sales over the Christmas quarter. Leading US brands such as Tiffany, the jeweller, and Coach, the leather goods company, are also being hit hard by America’s deepening economic woes.
Jaguar and Land Rover have committed to mobile buys worth a collective $1.6 million for 2009, according to AdMob, the ad network that has been tapped to run the automakers' mobile campaigns. The luxury auto brands will split the budget to run mobile campaigns on AdMob's U.S. network.
Given the worldwide economic decline, the once seemingly-recession-proof luxury sector is under siege. It's no longer just the aspirational customer--families with household incomes of $250,000 to $500,000--that are pulling back. It's the buyers of couture products and services: people with liquid portfolios, investible assets of $1,000,000 and more.
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.
Lavish parties and extravagant events are in vogue as the economic slowdown causes marketers to focus on their high-net-worth customers.