Even Chanel and Hermès Susceptible to Current Climate | Intelligence | BoF. NEW YORK, United States — There’s no question the past year has been a difficult one for luxury brands. In 2015, the global market for personal luxury goods grew to €253 billion (about $284 billion), up only 1 percent on the previous year in real growth terms, according to a report by Bain & Company, a global consulting firm. “The luxury market is stuck in a holding pattern for the foreseeable future,” says Claudia D’Arpizio, a Bain partner and the principal author of the study, which cites slow US holiday sales, decreased tourism in Europe, instability in the Middle East and the downturn in China as prime factors behind the slow growth.
In the current climate, even elite luxury brands like Chanel and Hermès — which emerged from the Great Recession virtually unscathed and were once thought to be immune to market headwinds — are showing signs of distress. Brands like Chanel and Hermès, which are very exclusive, are the last ones to be cut. Technology upgrades can also help. Luxury Goods Market Hampered by Terror Threats, US Election | News & Analysis | BoF. MILAN, Italy — The terror threat in Europe, a strong dollar and uncertainty over the US presidential elections have eroded the confidence of the globe's big-spenders, holding luxury purchases flat in 2016, according to a study released Thursday. Spending on luxury apparel, accessories and other personal items is expected to hold steady at €249 billion ($273 million) this year, a study by Bain Consultancy for the Altagamma association of Italian high-end luxury producers.
Add in spending on luxury cars, yachts, jets, cruises, hotels, fine art, design and food, and the market tops a stunning €1 trillion. As political events and monetary policy exert greater influence on luxury spending patterns, brands have turned their focus to wooing buyers in their home countries rather than counting on tourist arrivals to buoy sales, said Bain partner Claudia D'Arpizio.
"This is not happening by default," D'Arpizio said. "Currently, London is the cheapest luxury market," D'Arpizio said.
First look: AllSaints launches pop-up in Selfridges | News | Drapers. Sainsbury's raises fashion stakes with launch of Tu Premium | News | Drapers. Harvey Nichols to curate Italian-themed series of events. Called 'Britalia', and devised in partnership with the Italian Ministry of Economic Development and the Italian Trade Agency, the campaign will see the retailer showcase a series of exclusive partnerships, events, installations, window displays, hospitality and culinary surprises, inclusing tastings. The campaign will be rolled out globally – a first for Harvey Nichols – across all stores in the UK and Ireland, harveynichols.com and the seven international stores. "Britalia" will be supported by print and online media. Stacey Cartwright, CEO of Harvey Nichols, said: "We’re thrilled to be working with the Italian Ministry of Economic Development and the Italian Trade Agency to bring the best of Italy to our customers.
Italian culture is experiencing a renaissance at the moment and we’re extremely excited to be part of this by introducing limited edition products, emerging brands, theatre and talent to Harvey Nichols this winter. " Comment below to let us know what you think. Burberry to Unify Brands Under One Label in Bid to Boost Appeal | News & Analysis | BoF. LONDON, United Kingdom — U.K. luxury goods maker Burberry Group Plc plans unify its collections under one brand to make it easier for customers to understand its product offering. Burberry will phase out the Prorsum, London and Brit labels by the end of 2016, Chief Executive Officer Christopher Bailey told reporters Tuesday.
The new brand, known simply as Burberry, emphasizes the company’s British roots and underscores that all products are designed and developed in London, he said. “We believe this will make it simpler and more intuitive for our customer,” Bailey said. “This is certainly not cosmetic. It is a huge change.” Bailey also unveiled plans to build a new manufacturing and weaving facility in Leeds, England. The moves come after Burberry last month forecast a second year of declining profit because of weakness in Asia. By Andrew Roberts, Lyubov Pronina; editors: Matthew Boyle, Kim McLaughlin. Ralph Lauren unveils redesigned Beverly Hills flagship.
Earlier this week a woman sat at a leather tabletop desk inside Ralph Lauren’s Beverly Hills flagship, pressing against the desk’s surface. She looked up with each motion to review her selections on a screen that bore an image of the handbag she was in the midst of designing. The store’s interactive handbag salon lets shoppers personalize the company’s bags — everything from the Ricky to the Tiffin — making choices on monogramming, color and hardware before it’s produced in Italy.
Bags in the store are tagged with RFID chips so that once they are set on the leather table, product specifications are automatically read and carried over to the screen where customers begin their customization journey. The high-tech feature, the first employed in any Ralph Lauren store, is just one of a number of embellishments to the redesigned Rodeo Drive flagship, which officially opens to the public Friday. A company executive was unavailable to discuss the store further. LSN : Briefing : Curated luxury: Top designers create exclusive items. Louis Vuitton handbags 'cheapest in London' after Brexit vote. Image copyright GABRIEL BOUYS London may be one of the most expensive cities in the world for tourists, but not if you are after a Louis Vuitton handbag. According to research from Deloitte, items from the designer and other luxury goods now cost less in Britain in dollar terms than anywhere else. It linked the trend to the fall in sterling since the Brexit vote, which has boosted tourists' spending power.
The pound has fallen more than 17% against the dollar since June. According to the research, which was prepared for the Wall Street Journal, a Speedy 30 handbag from Louis Vuitton cost £645 in London as of 7 October, or $802. That compared to €760 ($850) in Paris and $970 in New York. 'Demand pull' Nick Pope, fashion and luxury lead at Deloitte, told the BBC a "period of affordability" after the EU referendum vote was proving a "demand pull" for tourists, who account for more than half of the UK's luxury goods market "People don't like paying more for the same product.
" Image copyright AFP. Will Brexit be a boon for tourists? Hotels = retail spaces. Lagerfeld Hotels. Zayn Malik X Versus. Diffusion confusion: do secondary lines devalue luxury brands? | Insight | Brand Union. Over the past decade, you’d have to be living under the biggest fashion rock to have missed its presence amongst the millennial tastemakers. And yet surprisingly, last spring the brand was shuttered. What happened? Lower-priced secondary labels, called “diffusion lines” in the fashion industry, are often launched by a premium namesake product line to attract a broader range of customers with a more affordable price. The discontinuation of Marc by Marc Jacobs (MBMJ), and its absorption into the primary Marc Jacobs line, paints a cautionary tale of how diffusion lines can harm a brand’s equity.
Early on, the MBMJ line of T-shirts, quirky dresses, casual handbags and kitschy accessories were gobbled up by younger shoppers hoping to get a taste of the same “it” factor of luxury namesake Marc Jacobs collection. Plenty of other designers shared a similar strategy in creating secondary brands to become more attainable to the mass market consumer, but they too saw similar fates. 1. 2. 3. 2 become 1: Is It Smart for Marc Jacobs to Fold Its Diffusion Line? - EDITED. A note on abbreviations in this post: to cut down the number of times we type ‘Marc’, we’ll be referring to the brand Marc Jacobs as MJ, and Marc by Marc Jacobs as MbMJ. Just so you know! Last month Marc Jacobs announced Marc by Marc Jacobs would be merging with its signature Marc Jacobs line. The sudden demise of one of the world’s most popular diffusion lines left an obvious question: why? Is it that 2010’s generally accepted wisdom, that diffusion lines are a great way to get through austerity, has aged into irrelevancy?
The premium market, where MbMJ sits, certainly filled out in that time. Just look at J.Crew, Whistles and Diesel. Or is it that social media has sufficiently chipped away at fashion’s insiders-only facade? Team Marc Jacobs is saying MbMJ will be absorbed into the mainline to create “a more aesthetically cohesive range of merchandise and price points”. Sizing it up In order to figure out just how mammoth this merger is, we first looked at the size of both lines.
Say goodbye to Marc by Marc Jacobs. It’s official: after 14 years of harmonising with its main line, Marc by Marc Jacobs will no longer serve up its selection to Marc Jacobs fans. The ready-to-wear line, currently headed up by Katie Hiller and Luella Bartley, is to be merged with the designer's primary collection, combining the strengths of both lines into one. WWD confirmed the news today, adding that the move will "assimilate that collection’s product range and price points into the signature Marc Jacobs collection". It is not known what will happen to the roles of Hillier and Bartley, who are currently creative director and womenswear design director respectively. "In a sense, we’re starting at the beginning," Jacobs told WWD, before adding, "it sounds like a musical... a very good place to start. " Marc by Marc Jacobs began in spring 2001 as a means for a younger demographic to cheaply tap into Marc's world, selling both mens and womenswear at an affordable mid-price point.
Burberry consolidates Prorsum, Brit and London labels into one. The Luxury Brand Balancing Act. LONDON, United Kingdom — Fashion’s luxury megabrands have long struck a winning balance between exclusivity and accessibility, driving strong financial results by creating expensive iconic products, which, paired with elaborate marketing campaigns, emit a halo of perceived exclusivity around lower price products — such as cosmetics, fragrances and small leather goods — designed to sell at high volume to aspirational consumers.
After all, real exclusivity offers little opportunity for scale and the likes of Louis Vuitton and Gucci did not build multi-billion-dollar businesses by selling only to a handful of high net worth customers. But, as Jean-Noël Kapferer, professor of marketing at HEC Paris, writes in Luxury: How Brands Can Grow Yet Remain Rare, “The more the luxury sector grows, the more this threatens the levers of the luxury dream and the sense of what luxury evokes: the notion of rarity and of access to a privileged life, to products of exception.” Digital Access Regaining Balance. Has luxury gone too mass? Has Luxury Gone Too Mass? Luxury brands have long been mass consumer brands. After all, real exclusivity — selling highly select items to a limited audience — offers limited opportunity for scale and business growth.
Indeed, the world’s most elite luxury houses, like Louis Vuitton, Dior and Chanel, have driven strong financial results by creating iconic products as high price points, which, paired with elaborate marketing campaigns, emit a halo of perceived exclusivity around lower priced products, made to sell in high volumes to aspirational consumers. Getting the balance right can be a delicate act, involving art as well as science. Are luxury brands upsetting the delicate balance that made them desirable in the first place? Is luxury fashion becoming too mass? Where Will Hermès Find Growth in a Slowing Luxury Market? | Intelligence | BoF. MIAMI, United States — The pristine sidewalks of the Miami Design District are illuminated by glowing streetlights. Tonight, a champagne flute-clasping crowd gathers around the front of the neighbourhood’s brand-new Hermès flagship. The whitewashed building, wedged on the corner of NE 39th Street and 2nd Avenue, across the street from Louis Vuitton and around the way from the popular restaurant Michael's Genuine Food & Drink, is set to open to the public the next day.
Hermès’ new Miami store is its third flagship in the US, which emerged from the global financial crisis and ensuing downturn much faster and stronger than most markets. It is widely seen as a major opportunity for fashion and luxury businesses, especially as growth continues to slow in a troubled China. The store is also strategically positioned to capture spend from wealthy Latin Americans, who come to Miami to shop.
Inside Hermès' new Miami store | Source: Courtesy To be sure, Hermès has plenty of resilience. When China’s yuan falls, so do the fortunes of luxury fashion brands. China is currently the world’s fifth largest luxury market (pdf, p. 5), but that ranking doesn’t show the whole picture. Chinese luxury shoppers make many of their purchases while traveling outside the country. If you take that spending into account, they become the world’s biggest group of luxury consumers. That’s why, when China suddenly announced it would devalue the Chinese yuan by 2%, luxury brands and their investors shuddered.
Shares of Burberry, Ferragamo, and LVMH, among several others, all slid. Ferragamo, for example, does 13% of its sales in mainland China, the Wall Street Journal reported (paywall). The currency move could hurt them, as well as “accessible luxury” brands, such as Michael Kors and Coach, as their products become more expensive—but only slightly more expensive. The bigger concern may be how it affects Chinese spending outside China, as Chinese travelers now face a yuan weakened in relation to other currencies. Luxury fashion brands puts on a brave face about China. What is fashion week for and why is it changing? Image copyright Jigsaw London's autumn fashion jamboree wraps up on Tuesday, with the last few catwalk shows and presentations.
But this year, as the staff collect up the champagne flutes and stack the chairs, the aftermath is not quite business as usual. There has been much talk of the new "see now, buy now" trend that upends the traditional system whereby fashion houses showcase their new styles but only deliver them to the market several months later. So what exactly has changed and why? What is fashion week for? London Fashion Week comes around twice a year (in September and February), and, as the people behind it are keen to emphasise, it is about a great deal more than hats and hem lengths.
Image copyright Topshop It is the industry's trade show: new styles are launched, fashion journalists take copious notes, and buyers put in orders for stock. He says: "Twenty years ago, there were maybe 300 to 400 brands in Europe. So what is new? Topshop and Jigsaw followed their example. Burberry warns of 'challenging' year in luxury market. Image copyright AP Luxury fashion firm Burberry has warned of "challenging" market conditions ahead and reported that sales fell 1% in the final six months of the year.
Burberry said slowing demand from US wholesale customers and "cautious" ordering by customers elsewhere was behind the gloomy outlook. It is forecasting a 10% decline in sales at its wholesale business in the current financial year. Profits for the year will be at the lower end of expectations, it said. Burberry's business is split into wholesale, which sells clothes to other retailers, and retail, which consists of its own branded outlets. Chinese customers account for 40% of Burberry's retail sales and cutbacks by them have hit Burberry. In Hong Kong, where many mainland Chinese travel to shop, Burberry's sales tumbled by more than 20% in the fourth quarter. That is the third quarter in a row that Burberry has seen sales in Hong Kong decline by more than 20%.
Image copyright Getty Images.