Thursday, 24 December 2009

Peace, Joy and Health....24/12/09

Now that is indeed a luxury......

The MO DOWN wishes you Peace, Joy and Health for the festive season and a brilliant New Year ahead.

Thank you for logging on and hopefully keeping us in your 'favourites'. We are taking some time out and will be back bright and shiny to deliver more interesting news on global and local luxury business on 4th January 2010.

Do Luxury Brands Have Christmas In The Bag? – 24/12/09

As it is only one sleep to Christmas, we find ourselves pondering the allure of Christmas-specific packaging.

A thought-provoking Seattle Times article has suggested seasonal bags are “mini billboards”.

Consumer psychologist Kit Yarrow says, “Sometimes the bags are more expensive than what's in the bag, but hopefully that person will continue to use it — their lunch goes in, sweater, extra shoes. The bag is not just a billboard, it's an endorsement. If someone you think is cool is carrying the bag, then you think that store is cool.”

Many luxury houses, such as Chanel and Prada, have Christmas-specific packaging, boxes, wrapping, ribbon and sometimes trinkets for animation, which differs from the usual packaging (that is generally beautiful). We believe this adds an additional element to the touch point with the consumer. It becomes a 'limited edition' of sorts, simply due to the packaging. The packaging becomes coveted, which is a Christmas bonus.

Tuesday, 22 December 2009

Luxury Brands Are Passionate About Pop-Up Stores – 22/12/09

Something that keeps popping up onto our radar (especially during the gift-giving season) are luxury brand Pop-Up stores.

A particularly interesting article by Newsweek, Shop Till You Pop, discusses this increasingly popular phenomenon. Some of the luxury brands mentioned include:
- Louis Vuitton (pop-up store in London’s Selfridges)
- Prada (store in Paris's Place Beauvau)
- Gucci (seven stores in places like Miami Beach, Tokyo and Hong Kong)
- Hermes (London)

Linda Hewson, Head of Creative for Selfridges, said, "Pop-up retail is a different take on the whole limited-edition concept. It causes a stir, then disappears, and people are really fascinated by that."

Also, in our October 23 MO Down, pop-up stores were promoted as a way of reducing shoppers’ guilt as “the idea is that pop-ups may not activate the psychological barriers that prevent shoppers from entering traditional stores.”

Our new take on pop-up stores is that it has been a marketing buzz word for the past few years, but to do it properly, it generally costs brands a lot of money, particularly Prada’s pop-up store in Paris, which would have cost a small fortune. So the brand has to be sure of the return on investment within their marketing budget, given it is a brand-building exercise...

Monday, 21 December 2009

Are European Luxury Brands Becoming Too Asian? – 21/12/09

Tyler Brule, a London-based design consultant and editor of Monocle magazine, (former founder and editor of Wallpaper magazine) has caused international controversy (and debate) by saying that European luxury brands are adapting to suit the Asian market and are “putting out products that Europeans wouldn’t touch.” Ouch...

In a Bloomberg report, Brule implies that European luxury brands are risking their prestige and alienating Western shoppers by changing designs to appeal to the Chinese market. Trinkets and key charms anyone...?

He went on to say that European brands “were much more about the craftsmanship, maybe exotic skins for their bags or shoes.” And that “neglect of those values and brasher products aimed at the Chinese may be responsible for luxury brands’ difficulties in the U.S. and Europe.”

Friday, 18 December 2009

Luxury News In Brief – 18/12/09

Ungaro’s President, Mounir Moufarrige, has resigned, according to WWD. This resignation has been linked to Moufarrige’s controversial decision to employ actress Lindsay Lohan (see the MO Down for September 16 for details.) Marie Fournier has been named the new General Manager to oversee all operations.

Versace has announced a new Financial Officer, Francesco Buccola, who was a former executive at the Gucci group. Click here to read more.

Bulgari shares rose more than 3 percent again after HSBC upgraded the stock to "neutral" from "underweight". HSBC said the jeweller was "no longer underperforming in Asia ex Japan and managing costs more effectively." Click here to read more.

World Tricot To Appeal The Chanel Crochet Verdict – 18/12/09

The Chanel crochet court case just won’t ‘dye’ down. We read in WWD Fashion that World Tricot plans to appeal a French court’s recent ruling, which cleared Chanel of counterfeit charges on a crochet pattern.

Last week, this lawsuit resulted in Chanel being ordered to pay Carmen Colle from World Tricot 400,000 euros (AU $640,000) for “abusive termination” of her contract. See the MO Down on November 12 and December 16 for the full story.

Thursday, 17 December 2009

Australian Luxury Retailers Celebrate As Christmas Nears – 17/12/09

As cash registers chime at shopping centres, we are happy to say it looks like the local luxury and premium-end market is appearing robust in the lead-up to Christmas.

With a few key brands, such as Chanel, Louis Vuitton and Gucci, adding additional Australian stores just in time for Christmas, it means that more consumers will need to be convinced that investing in a trusted luxury brand is a worthwhile investment.

The luxury market has certainly evolved in Australia this year. In June, Chanel and Louis Vuitton made the move from high street freestanding flagships to a Sydney shopping centre (see the MO Down for 22 June). Perth’s luxury market also grew with the launch of the biggest Burberry store in Australia (see 3rd September). And in Melbourne, there was the recent crowd-stampeding success of the new luxury precinct in Chadstone Shopping Centre (see November 26).

And while we are on the subject of new Australian stores, we read in the Courier Mail that Hermes plans to open a boutique in Edward Street in Brisbane. Louis Vuitton and Tiffany & Co. are already established brands in that area.

For more thoughts on the local luxury market, click here for our earlier blog entitled ‘Luxury And The Local.’

Wednesday, 16 December 2009

Christian Lacroix’s On Track With New Uniform Project – 16/12/09

Only weeks after the Paris Commercial Court approved a plan to convert Christian Lacroix into a licensing operation (see our December 3rd report for details), Lacroix has a new project to lift his spirits – designing uniforms for French railway operator SNCF.

We’ve given you a sneak peak at the stylish uniforms for around 20,000 SNCF employees, but you can read the full story at WWD Fashion.

Chanel Is Victorious As Crotchet Counterfeit Case Unravels – 16/12/09

A French court has dismissed the counterfeit claim against Chanel by Carmen Colle of World Tricot, who sued for 2.5 million euros (AU$4m) in damages. However, the court ordered Chanel to pay 400,000 euros (AU $640,000) to Colle for “abusive termination” of her contract.

We first discussed this case in the MO Down on November 12, when the Guardian newspaper suggested Colle’s case “could empower the petites mains who work as tailors and seamstresses for powerful brands in France.”

After the verdict was announced earlier this week, Bruno Pavolovsky, the president of Chanel’s haute couture division, told the Telegraph, "World Tricot was quashed; the court ruled there was no counterfeit.”

Colle was also happy with the verdict, saying it is the "first victory for seamstresses. This shows that Chanel failed to respect its contract with World Tricot."

What an interesting end to this case; both parties feeling victorious. We’ll continue to keep you in the loop if there are any future developments.

Tuesday, 15 December 2009

Luxury Jewellery Market Goes From Strength To Strength – 15/12/09

Despite the financial crisis, high-end jewellery is still in high demand. Recently The New York Times went as far to say that ‘Luxury Jewellery Defies The Recession.’

Fabergé’s resurrection in September was an important boost for the industry (see the MO Down for 17 September for more details).

The NY Times article also draws attention to Louis Vuitton’s creation of its first haute joaillerie line. Vuitton ensured its brand identity was at the heart of the collection, which not only features elements of its iconic flower motifs and brown and gold colour palette, but also includes a 30.1 carat diamond specially cut in the quadrifoil form of the Vuitton flower.

High-end jewellery will also share the runway at Paris Haute Couture Week in January (see the MO Down for 26 November for the full story). So the reign of the luxury jewellers is set to continue into a bolder, brighter new dynasty.

Miuccia Prada Caught Up In Costume Catastrophe – 15/12/09

"I cannot clothe them! I need models!"

This controversial comment was allegedly uttered by Miuccia Prada, when she saw the ‘curvy’ (non-singing) extras who required costumes for the Met's upcoming production of Giuseppe Verdi's Attila. The extras will now be recast, according to New York Fashion mag.

We wonder whether it is slightly arrogant to cast dancers based on whether they fit into Prada clothes versus their performance merit? Perhaps you can be the judge! Remember the extras were not being judged on their singing voices…

Generally culture and couture usually go hand-in-hand, for instance Karl Lagerfeld’s show-stopping outfits for the English National Ballet's Ballet Russes were utterly magnificent (click here for our report in June).

Monday, 14 December 2009

Burberry’s Christopher Bailey Wins Top Prize At British Fashion Awards – 14/12/09

Christopher Bailey, who was recently promoted to Burberry’s Chief Creative Officer (see the MO Down for 13 November), has been crowned ‘Designer of the Year’ and also accepted the ‘Brand of the Year’ prize for Burberry at the British Fashion Awards last week.

This is the second time Bailey has been named Designer of the Year. He was also commended in 2005. Click here to read more and see the glamorous photos at WWD Fashion.

2009 has been Bailey’s year. He received a promotion and a M.B.E from the Queen (see the MO Down for June 18 for details).

Share Rise For Burberry And LVMH – 14/12/09

Burberry shares jumped 3.1 percent last week while LVMH is up 1.8 percent.

Broker Barclays Capital said that the outlook was positive for Burberry, “particularly driven by private consumption growth, strength in emerging markets and stock market performance.”

For LVMH, the broker also initiated an "overweight" recommendation, describing the firm as “its top pick among soft luxury names.”

Click here to read more at Reuters.

Friday, 11 December 2009

Louis Vuitton Sees Melbourne As An Important Luxury Destination – 11/12/09

''A lot of time, a lot of planning, goes into every expansion, so it's very heartening to hear that people are queuing to get in. Melbourne is now one of our significant international cities, with three stores. In my region, only Hong Kong and Singapore have more.''

A quote by Jean-Baptiste Debains, President of Louis Vuitton Asia-Pacific, on Chadstone’s new store. (see the MO Down on 13 November and 20 November for details of this new luxury retail precinct with 12 high-end stores).

Debains continued on to say, “In the Asia-Pacific region, we have maybe 10 projects a year, so Melbourne having three projects happening in three years is most unusual, but it's also linked to opportunities we have here.''

He also reminded us that there are two cornerstones to Louis Vuitton’s business model. ''The first is the quality of the products - we do not compromise - and the second is that we never do any discounts or sales.'' Click here to read more from Debains, including his responses to the hard questions on counterfeiting, the G.F.C. and more.

While this is all positive news on the Australian front, in the U.S, there is still lingering uncertainty surrounding the luxury market.

This week, hedge fund manager Shawn Kravetz suggested “shares of luxury retailers may have rebounded too strongly from lows.” And that he is taking a “wait-and-see approach to see if they fall back to attractive investment levels.” Click here to read more, but we recommend you read the good news (above) first.

Thursday, 10 December 2009

A Re-Education For Luxury Professionals – 10/12/09

Is it time for luxury executives to go back to school?

Yes – says an article in the Financial Times, as selling luxury goods has “become a tougher proposition” due to the Global Financial Crisis.

Jean-Noel Kapferer, a marketing professor at HEC Paris, warns executives to keep calm in the face of crisis. He says, “Panic decisions like slashed prices are typical of a fashion brand, not of a luxury brand. These are two very different business models.”

Joshua Kobb, also from HEC, stresses the need to innovate during tough times. He says, “Innovation can also be on an organisational level, in redefining processes to be more cost effective ...”

Marika Taishoff, Associate Director for luxury at the University of Monaco, suggests global shifts mean that luxury executives need to be able to enhance operational efficiency, and in order to do that, they must “understand areas such as merchandising, the role of vendors and buyers, the legal environment, partnering and supply chain efficiency.”

But while this article raises interesting points, it’s focus is firmly on international markets. Australia, however, has bucked the trend and the luxury brands here have continued to grow in revenue and continue with their expansion plans, namely opening more stores and/or renovating existing ones. So these points may not be applicable here.

Wednesday, 9 December 2009

Valentino Group Set To Lose 1/3 Of Their Debt? – 9/12/09

We have our ear to the ground to hear whether Italian fashion house Valentino will have their debt lightened by one third later this week.

The Financial Times reported that Permira, the Marzotto family and other investors in Valentino are close to an agreement to pay €200m-€300m (AU $325m–AU $490m) to acquire €730m (AU $1.2b) of debt from Citigroup at a big discount to its face value.

We have been following the falling Valentino’s fortunes (see our July 3 article: The Valentino Fashion Group Is In A Financial Bind). So it will be interesting to see what happens. The involvement of the Marzotto family is of particular interest – we wonder if they are aiming to follow in the footsteps of the other 'big three' luxury goods groups, LVMH, PPR and Richemont?

Tuesday, 8 December 2009

Counterfeiting: The Scary And Surprising Facts – 8/12/09

Could you tell a real Louis Vuitton handbag from a counterfeit?

In a research study, a marketing scholar has challenged luxury handbag owners to do the same – with surprising results.

Renee Richardson Gosline, Assistant Professor of Marketing at MIT, showed photos of luxury handbags (both real and fake) to 100 handbag owners. Some of the handbags were on blank backgrounds whilst others were worn by people in social settings. Gosline found “people are more likely to identify a designer handbag as authentic if the individual carrying it wears expensive clothes, or has a certain aura that says rich person.”

The study also revealed that:
• People will pay twice as much for an item when they think they can use it to send cues about wealth and taste.
• Annual sales of counterfeit goods total about $600 billion worldwide, almost 7 percent of global trade. (Although these figures include industries other than luxury goods.)

Counterfeiting is definitely big business. According to Bloomberg, the International Anticounterfeiting Coalition says that it costs U.S. businesses as much as $250 billion a year.

In a separate study, Gosline discovered that buying a counterfeit was a precursor to buying a genuine bag for 46 percent of those interviewed. She said, “The counterfeit actually served as a placebo for brand attachment. People were becoming increasingly attached to the real brand even though they never possessed it at all.”

For us, the key finding to this study is that counterfeits are no substitute. The discerning can always tell…

Monday, 7 December 2009

Behold Chanel’s ‘Paris Shanghai’ Collection – 7/12/09

Last week, we drew your attention to the upcoming launch of Karl Lagerfeld’s Shanghai-inspired Metier D’Arts collection for Chanel (see the MO Down for November 30th). And now we have news on its launch, held on December 3rd.

According to an article in the Telegraph, this collection was inspired by an imaginary voyage to Shanghai by Coco Chanel. It paid tribute to Chinese fashion and heritage, with many dresses a modern version of the Mandarin ‘qipao’ gown, and accessories such as face-framing hats and embroidered felt “Chinese warrior’ boots. An impressive show indeed, which should put Shanghai’s new Chanel boutique on the map…

Click here for more pictures from the Telegraph’s gallery.

Friday, 4 December 2009

LVMH Joins Forces With Singapore’s Sincere Watch Ltd. – 4/12/09

Thankfully, it’s time for some positive news on the luxury watch industry. We heard from Bloomberg that LVMH plan to invest in Sincere Watch Ltd, a Singapore-based retailer of luxury timepieces.

LVMH plans to back Sincere when negotiating for retail space and share its database of high net-worth customers.

Tay Liam Wee from Sincere said, “We are seeing signs of improvement in luxury spending as the global economy recovers. With the backing of two of the strongest global icons, we will be able to sharpen our competitive edge and accelerate our growth plans.”

LVMH Rose 2.2 Percent After Upgrade – 4/12/09

According to Reuters, shares in LVMH climbed 2.2 percent after RBS upgraded it to "hold" from "sell." The broker said the luxury goods company is a "safer haven in still rough waters."

PPR Begins To Lighten Its Retail Load – 4/12/09

Last week, we announced that PPR was set for a major overhaul where they plan to sell many of their retail companies (see the MO Down for 25 November.) This week, the first stage – the initial public offering of its African distribution co. CFAO – has been a huge success. We read it was “oversubscribed by nearly 2.5 times.”

In The Wall Street Journal, it states that PPR “raised at least EUR $806 million.” PPR also said it was very satisfied with the price and called the operation a "big success."

In other share news, Nicola Bulgari, Vice Chairman of luxury jewellery firm Bulgari, sold 4 million shares, or 1.33 percent of the share capital, to investors to finance “personal projects.” To know more, click here to go to WWD Fashion.

Thursday, 3 December 2009

Armani Sees The Advantages Of Online Shopping – 3/12/09

News has come to us from Bloomberg that Italian fashion houses like Giorgio Armani SpA and Valentino Fashion Group SpA, are embracing the internet to boost revenue for this holiday season.

Recently, Armani created a Christmas website - – where you can view both Giorgio Armani and Emporio Armani products and make a wish, which can then be shared on social networks like Facebook and Twitter. A very clever idea indeed. In fact, it’s something we would expect from Burberry, currently the most popular luxury brand on Facebook (see the MO Down on September 21 for more facts.)

According to Deloitte’s 2009 Christmas Survey, greater choice, avoiding crowded stores and having little time to shop were given as reasons to buy online. Being unable to touch or directly see the items was described as the main shortfall of the net.

Luxury shame was also mentioned as a factor that may be driving internet-based sales (see our report on 23 October for a detailed critique of luxury shame). And make sure you visit Armani’s Christmas website and make a wish…

Lacroix May Be Converted Into A Licensing-Only Operation – 3/12/09

The luxury world is in shock after the Paris Commercial Court approved a plan to convert Christian Lacroix into a licensing operation.

As we said earlier in the week (see December 1st), this would mean the end of Lacroix’s couture and prêt-à-porter lines and the axing of almost all jobs.

But, according to WWD Fashion, there is a glimmer of hope. Nicolas Topiol, C.E.O of Lacroix, said the Falic Group would continue to negotiate with prospective buyers even though the court-observed administration period has ended.

Topiol said, “I am working on finding a solution for the company. Everything is still possible.”

You can also read more on this development in the Financial Times.

Wednesday, 2 December 2009

LVMH Wins Another eBay Counterfeit Clash – 2/12/09

In another huge step in the battle against counterfeit goods, eBay has been fined €1.7 million (AU $2.8 million) for “the unlawful marketing” of Christian Dior, Givenchy and other LVMH perfumes.

We read in The Wall Street Journal that LVMH called the decision “an important step” against unlawful practices. “Selective distribution ensures the security and quality of products for consumers. It generates numerous jobs and contributes to the ongoing world-wide success of European luxury goods brands,” the company said in a statement.

eBay, unsurprisingly, was annoyed by the verdict, saying, “It has taken steps to hide LVMH products from French shoppers and that the illegal listings LVMH submitted contain misspelled brand names or only pictures of products, which enabled them to slip through the cracks.” No excuse eBay, no excuse…

Tuesday, 1 December 2009

Chinese Big Spenders Zero In On London – 1/12/09

A Times Online article on Chinese consumer habits in London attracted our interest today. It reveals that “Chinese shoppers were the highest-spending nationality on Bond Street” during the summer.

Also, statistics by the New West End Company, which represents the retailers of Bond Street, Oxford Street and Regent Street, show Chinese nationals spent 127 per cent more this October than September. And across these three streets, the average Chinese transaction was £780 (AU $1,402), and £1,038 (AU $1,865) on the luxurious Bond Street.

The key luxury brands the Chinese gravitated towards included Louis Vuitton, Gucci and Burberry. These are all brands with strong, identifiable signatures and logos on their products.

In our eyes, London is an appealing luxury goods destination for Chinese shoppers due to the exchange rate, its number of stores, and the wide variety of brands available.

Christian Lacroix Bailout Is Looking Unlikely – 1/12/09

Is Christian Lacroix doomed to be liquidated?

That is the question we are asking ourselves as an AFP report said, “Neither the Emirate sheikh nor a French firm who have both expressed interest in acquiring the prestigious fashion house submitted financial guarantees to back their proposals by a deadline, which expired last Thursday.”

This new development means the Paris Commercial Court will be free to decide this week on whether to accept the liquidation plan submitted by the house's owners, U.S. firm Falic.

The plan would involve axing almost all jobs, winding up the couture and ready-to-wear business and paying off the house's creditors with its licensing deals. What a sad end to an impressive talent.

For background information on this story, see our reports on 19 November and 29 October.

Monday, 30 November 2009

Good News For Bulgari And Burberry Shares – 30/11/09

According to Reuters, Goldman Sachs has upgraded Bulgari to ‘buy’ from ‘neutral’, with the luxury brand rising 0.5 percent.

On Bulgari, the broker says, “the company is well positioned to benefit from a normalisation of sales and would benefit from surprise from its very low base of comparison in Q3 2010. The progressive end of destocking at retailers and good cost containment efforts are also expected to help the firm in the third-quarter.”

To read more about Bulgari’s finances, go to our November 16 report: Bulgari Sales Receive 10 Percent Boost.

Burberry has also been upgraded by Goldman Sachs from ‘sell’ to ‘neutral’.
The broker says, “Burberry's returns were improving, following strong first-half figures last week, and forecasts sales to grow 8.5 percent in 2011 and 10.9 percent in 2012 estimates, both above I/B/E/S consensus.”

Chanel Creates A Chic New Shanghai Boutique – 30/11/09

Some call Shanghai "the Paris of the East". So luxury brand Chanel appeared to spare no expense to ensure their new Shanghai boutique, in the Peninsula Hotel, is both chic and comfortable.

We read in a Luxist article that the store was inspired by the Paris apartment of Coco Chanel. According to the architect, “The idea was to give this new boutique a residential feel by combining hand picked art, antiques and other objects with a refined store decor.”

The art of shopping is to be a subtle experience at this store where customers enter the apartment-like space, can sit on sofas and have individual items brought to them. What a wonderful way to make the customer feel valued and at ease!

Karl Lagerfeld designed exclusive products to celebrate the store’s opening. These include a classic quilted flap handbag with an inside signature "Shanghai Karl Lagerfeld", sling-back heels with a metallic CC logo and other items.

Shanghai is also receiving more special treatment with Lagerfeld unveiling his latest Metier D’Arts collection for Chanel there on December 3rd. This is the eighth Metier D’Arts collection to follow shows in Paris, Tokyo, New York, Monaco, London and Moscow. Click here to read more at WWD Fashion.

Friday, 27 November 2009

LVMH And Swatch Shares Rated As A Buy – 27/11/09

According to a Marketwatch report, luxury goods makers Swatch and LVMH are both rated as a buy at ING.

For Swatch, ING predicts “a gradual recovery in 2010 for top-line growth and margins.” LVMH, meanwhile, is recommended due to its “well-balanced portfolio of companies and substantial potential for top-line growth.”

Tiffany & Co.’s Profit Takes One Percent Tumble – 27/11/09

Luxury jewellery brand Tiffany & Co. said its third-quarter profit fell due to weaker domestic sales as shoppers continued to limit their discretionary spending.

But despite the 1 percent profit decline, the results exceeded expectations, and Tiffany has raised its full-year forecasts. Read more at Forbes or the Associated Press.

Thursday, 26 November 2009

Chadstone’s New Chanel Boutique Is Off To A Lucrative Start – 26/11/09

The media can’t stop discussing Chadstone’s new luxury precinct (see our reports on 20 November and 13 November). And for Chanel in particular, the news was all about the initial sales frenzy.

We read in a report in The Australian that “16 Chanel handbags sold within the first 30 minutes.” Each bag was priced at AU $4910. Only 100 of these limited-edition gold quilted bags were created by Karl Lagerfeld specifically for the opening of this boutique.

Unfortunately, our other piece of local news is not as uplifting. The Prada boutique located in Martin Place, Sydney, was ransacked this week, and thousands of dollars worth of “new line stock” was stolen. Click here to read more.

Jewellery To Share The Runway At Paris Haute Couture Week – 26/11/09

Next January will mark a new era in the Paris’ haute couture week with fine jewellery to be showcased, alongside the fashion.

The jewellery houses who will display their wares include Boucheron, Cartier, Van Cleef & Arpels, Chanel Joaillerie, Chaumet, Christian Dior Joaillerie and Mellerio dits Meller.

According to an article in The Independent, this is the first time that has happened in the more than 150-year history of Paris’ haute couture. So it will be an event worth watching although the jewels may be a little blinding…

Hermes heirlooms: Going, Going, Gone! – 26/11/09

When French based auction house Artcurial hosted one of their bi-annual Hermes auctions on November 10, some items, including a Birkin bag, sold for above their estimate and even the original retail price. Which is proof that Hermes is still regarded as an investment item.

Read more about the timeless appeal of Hermes scarves here at the Luxist.

Image shows a ‘Mexique’ Hermes scarf, designed in 1985, which is available for purchase at, which the Luxist suggests has the most comprehensive collection of vintage Hermes scarves on the market.

Wednesday, 25 November 2009

PPR Set For A Major Overhaul – 25/11/09

Under the direction of C.E.O Francois-Henri Pinault, PPR plans to sell retail businesses that generate 70 percent of group sales, in order to focus on clothing and accessories brands within its luxury Gucci Group and Puma, the sports wear company.

The first move in this overhaul is the planned flotation of CFAO, their African distribution business. Next, the business hopes to sell Fnac, a high street book and music retail chain, Conforama furniture stores and the Redcats catalogue business.

But according to a Financial Times article, Pinault “is not interested in slimming PPR down to a pure luxury player and is looking to replace the lower-margin retail businesses with mid-market brands.”

The Wall Street Journal also featured an interesting article on this subject. It revealed that PPR’s retail business has proven a drag on profitability. In the first half of the year, PPR said it made 1.7 to 3.3 cents on the dollar in its retail business, and 18.6 cents on the dollar in its luxury division.

Tuesday, 24 November 2009

Alarm Bells Ring As Watchmaker Chopard Is Forced To Cut Costs – 24/11/09

Another watchmaker has hit a rough patch. Chopard, Switzerland's largest family-owned watch and jewellery company, has had to temporarily close a store in Palm Beach, Florida, and lay off workers. It is also expecting sales to fall by up to a fifth this year.

We read in the Wall Street Journal that Karl-Friedrich Scheufele, co-president of the watchmaker, says that despite these cost-cutting measures, he realises the 149-year-old company will have to invest for their long term future. In the past Chopard has sponsored some of the biggest social events of the year, including the Elton John AIDS Foundation's annual White Tie & Tiara Summer Ball.

Burberry Set To Expand Their Leather Goods – 24/11/09

Last week, we reported Burberry’s profit had dropped 24 percent (see the MO Down for 19 November). This week, Christopher Bailey, Burberry’s Chief Creative Officer, has expansion on his agenda.

We read in a Reuters article, Burberry To Expand In Shoes And Handbags, that the main areas of expansion will be leather goods, children’s wear and sportswear.

Bailey said there is solid demand for new types of Burberry goods such as belts and shoes. He also suggested, "We will be growing the range with a bigger emphasis on shoes."

Currently, non-apparel items make up around one-third of Burberry's revenue.

It was only last month that we reported Burberry also has a cosmetics line in the pipeline (see the MO Down for 27 October).

Lanvin Lures A Mystery Minority Investor – 24/11/09

After a lengthy search for a financial partner, French fashion house Lanvin has found a minority investor to take a 12.5 percent stake, according to Reuters.

Lanvin said in a statement last week that the operation had been carried out through a capital increase. The identity of the investor was not revealed.

The luxury brand, best known for its intricate trimmings and embroideries, said the move would help its long-term plans for global expansion.

Monday, 23 November 2009

Behold The New ‘House of Burberry’ – 23/11/09

Norwegian artist Jens Werner thought it would be “fun” to paint his house, located in Larvik, in Burberry’s famed plaid pattern.

This image, from a Daily Mail report, shows the finished makeover. We wonder what Burberry think. We don’t think they will appreciate his art, which has been called “tacky”. In fact, they are suing a pets accessory chain for using their plaid pattern (see our report on 21 October: Burberry Is Being Dogged By Plaid Plagiarism)

On the other hand, Burberry may not care as they may be too busy with their expansion into India.

We read in a Times Online article that Burberry is poised to enter a new joint venture with Indian fashion retailer Genesis Colors. C.E.O. Angela Ahrendts said," Obviously, India is on a different curve [to China]. We only have about two stores there now, but I see the same growth potential.”

Chanel Set To Release Their First In-House Magazine – 23/11/09

Click here to enter a whole new world – one dreamed up by Karl Lagerfeld and Olivier Zahm, from France’s Purple Fashion Magazine.

Your passport to this world is through the Chanel boutiques. This free in-house magazine will be distributed worldwide and is named 31 Rue Cambon, the name of the first ever Chanel boutique. We definitely can’t wait to get our hands on it.

Friday, 20 November 2009

Our Critique Of Chadstone’s New Luxury Mall – 20/11/09

We talked last week about the proposed grand opening of Chadstone Shopping Centre’s luxury retail precinct (see the MO Down for 13 November), but now we have flown down to Melbourne and explored it for ourselves – along with the reputed 5,000 people who queued for the launch.

The stores that opened included:
• Louis Vuitton
• Gucci – a new look store, the first of which in Australia.
• Chanel, Tiffany & Co., Coach and Jimmy Choo.
• Prada, Miu Miu, Burberry, Omega and Ralph Lauren are due to open later in the year and next year.
• And there’s Hardy Bros. and Swarovski as well.

We read that there were long lines of people queuing, some apparently overnight, for the first look at some of the international luxury and premium end brands that opened their doors. This week was a soft opening for most brands with official launch parties to unfold over the coming days/weeks, culminating in the overall Chadstone official launch on 2nd December.

We thought the vibe was 'sunny' in every sense, with 30 degree+ temperatures outside and wonderful natural light filtering through the centre. Every store visited was beaming with happy staff and happier clients, notably crowded were Chanel, Gucci, Louis Vuitton, Tiffany & Co. and Coach.

Going by the reactions we witnessed, it certainly seems as though Colonial First State Global Asset Management, managers of the Chadstone property, are on the right strategy.

Click here to read The Age’s article, which reports that Chadstone was “overwhelmed by crowds” for this luxury opening.

Cartier Expands Cheaper Lines For Christmas Time – 20/11/09

Luxury jewellery brand Cartier has expanded its range of more affordable products ahead of Christmas, according to Reuters.

The brand launched its latest collection, "les must," earlier this month and their C.E.O., Bernard Fornas, said demand so far has been "very, very strong."

The price tags, pitched between 200 euros (AU$320) and around 3,000 euros (AU$4,807), appeal not only to younger clients but also to more mature shoppers looking for presents for teenagers, Fornas said.

Thursday, 19 November 2009

Burberry’s Profit Has Dropped 24 Percent – 19/11/09

The big news today is that Burberry have announced a 24 percent slump in their profits for the first half of the financial year.

But the luxury brand is not down and out. They’re looking to the future. They “expect to perform well in the second half of its fiscal year as it is selling a greater proportion of its goods through its own stores, and is continuing to trim costs in the face of the economic downturn,” according to The Wall Street Journal.

Almost Double The Profit For Online Luxury Store – 19/11/09

Italian online retailer Yoox, which sells premium luxury brands like Armani and Prada, has reported a 48.8 percent rise in sales over the first nine months of the year. They also launched an initial public offering (IPO) in Milan this week.

Their award-winning website,, seemed full of heavy discounting and what they deemed “accessible prices” – making it a bargain lover’s paradise, and a site to keep our eye on.

For more facts and figures about the IPO, click here to go to AFP.

Let’s Hope It’s Third Time Lucky For Christian Lacroix – 19/11/09

The waiting game continues for Christian Lacroix as the Paris Commerce Court postponed their decision for the second time.

This time, the reason for the delay was that two potential buyers, Hassan bin Ali al-Nuaimi and Bernard Krief Consulting, "could not show the documentation certifying the funds needed for the acquisition were available," according to Reuters.

A decision will, hopefully, be made on December 1st. Consult the MO Down for October 29 for background information on this hearing.

Wednesday, 18 November 2009 “It’s eBay For The Mega Rich” – 18/11/2009

Forget eBay, now billionaires have their own online auction place to buy, sell or barter their million dollar jewellery, yachts and mansions. It’s called, a website where the minimum bid is US $1000.

However unlike eBay, this site guarantees all items' authenticity and will not release payment until the goods are delivered.

The site, which collects a fee of up to 5 percent per sale, claims to have 26,000 multimillionaires and "nearly a dozen" billionaires signed up, according to an article in the New York Post. Interesting! Perhaps billionaires can’t resist the website’s catch cry – “so register today, and start bartering like Billionaires”…

Tuesday, 17 November 2009

Place Your Bids For The Yves Saint Laurent Charity Auction – 17/11/09

As bargain hunters chase Jimmy Choo’s H&M range, luxury connoisseurs have their sights firmly on the second Yves Saint Laurent Charity Auction, which begins today.

“Buyers are expected to turn out in numbers,” Jonathan Rendell, Deputy Head of Christie's America, told the AFP.

Click here to see many of the items on auction. And you can also consult our earlier, more detailed report for the facts on this charity auction.

Jimmy Choo’s H&M Range Causes Global Buying Frenzy – 17/11/09

In June, we announced there would be shopping pandemonium when Swedish fashion retailer H&M teamed up with accessory brand Jimmy Choo – and we were on the money!

There was excitement around the globe as the footwear range was released on November 12 and, it seems, sold out by lunch time. Many customers camped out for hours for their chance to own these cut-price shoes, which are now being sold on eBay for double their original price, according to London’s Daily Mail.

Check here to read the MO Down on June 18, which includes our thoughts on the benefits of these types of collaborations.

Monday, 16 November 2009

Johann Rupert To Be Richemont’s New C.E.O – 16/11/2009

Shares in Richemont surged 5 percent last week, after news that Executive Chairman Johann Rupert will be taking over the C.E.O. job at the luxury group.

According to Reuters, Rupert, a South African billionaire known for his hands-on approach, will take over from Norbert Platt as C.E.O from April 1. Platt is resigning due to health reasons.

This article also suggests that consumers' appetites for watches and jewellery, which represent about 78 percent of Richemont's total revenues, is beginning to increase, with Platt commenting that “this year's Christmas sales were likely to be better than last year's.”

For background information on the Richemont watch slump, go to our October 26 report (Swiss Watchmakers Are Alarmed Over Another Sales Slump.)

Bulgari Sales Receive An 10 Percent Boost – 16/11/2009

Shares in Italian jewellery brand Bulgari rose more than 4 percent last week after the company returned to a net profit in the third quarter.

Bulgari announced to Reuters that “sales in its own stores rose more than 10 percent in October, at constant exchange rates, and that it expects the fourth quarter to be the best of the year.”

See the MO Down for 12 October for our detailed report, which attributes gains in the Asian market as the reason why Bulgari is back on top.

Friday, 13 November 2009

Melbourne’s Chadstone Shopping Centre Welcomes 12 New Luxury Brands – 13/11/09

Melbourne's luxury venues will almost double when Chadstone Shopping Centre officially opens its new luxury retail precinct on November 18.

Chadstone will house 12 high-end stores including Chanel, Burberry, Hugo Boss, Louis Vuitton, Omega, Prada, Coach, Ralph Lauren and Tiffany, as well as Miu Miu's first Australian store, and the first stand-alone Jimmy Choo store in Victoria.

Melbourne’s Crown Casino is also increasing its luxury fashion offering with a two-storey Versace outlet to be launched later this month. Crown already boasts Louis Vuitton, Prada and Burberry as its luxury tenants.

We read about these developments in an article entitled Rich Pickings. This article suggests “Australia seems to be experiencing something of a luxury boom. According to IBIS world, there are expected to be 4917 luxury goods boutiques in Australia, a 2.8 percent increase from 2008-9.”

We raised our eyebrows at the above suggestion of 4000+ luxury boutiques. This is where we believe the word ‘luxury’ is being misused. If the journalist was consistent in her article, she mentioned only the international luxury mono brands in terms of the first and second tier brands, the number of distribution points (including airport, duty free and department store) would be closer to 200 – obviously there is a very loose application of the word luxury.

The Japanese Shun Hermes For H&M – 13/11/09

As Versace shuts up shop in Japan (see the MO Down for 8 October) and Hermes sees a significant sales slump (see the MO Down for 25 September), low cost Swiss fashion chain H&M moves in to reap the benefits.

According to a recent Wall Street Journal article, Japanese sales of H&M have been steadily increasing all year. This week, the company plans to unveil its first full Japanese "concept" store in Shinjuku, which will feature men's, women's and children's clothes as well as its new Jimmy Choo collaboration shoe line (see the MO Down for 18 June for our report on this joint project.)

H&M's Japan Country Manager, Christine Edman, says, "Caring about value and quality has been in Japan for a long time, but it's more pronounced now because of the recession. The Japanese know that lower prices do not mean bad quality."

Christopher Bailey Receives A Big Promotion – 13/11/09

Burberry’s Creative Director, Christopher Bailey, has been promoted to the newly created role of Chief Creative Officer.

Angela Ahrendts, C.E.O of Burberry, revealed that Bailey had been promoted in recognition of his contribution to the brand since his appointment as Creative Director in 2001. She said, “The Burberry brand today is more cohesive than at anytime in the company’s history owing much to the clarity, consistency and purity of his amazing vision.”

Click here to read more.

Thursday, 12 November 2009

Chanel Forced To Court Over Crochet Pattern – 12/11/09

A crochet pattern is at the centre of the legal battle between Chanel and Carmen Colle, founder of an ethical clothing company. Colle claims the crochet sample was created by her tailors not Chanel’s.

Colle, whose clients include Christian Dior, Jean-Paul Gaultier and Givenchy, is suing for €2.5m (AU$4m) of damages for alleged counterfeit and breach of contract. If she wins, the Guardian newspaper suggests “her case could empower the petites mains who work as tailors and seamstresses for powerful brands in France.”

A spokeswoman for Chanel denied the allegations, saying, "The making of a crochet sample on the basis of precise instructions given by Chanel's creative studio does not mean that a pattern's creation can be claimed.”

We’ll keep you in the loop on this case…

Another Fashion Designer Is Decimated By The Credit Crunch – 12/11/09

London fashion designer Luella Bartley has become the latest victim of the GFC, with her design company forced to close after they lost financial backing from their main investor, Club 21.

Singapore-based Club 21, which also distributes Giorgio Armani, “reluctantly" decided to withdraw its backing after the closure of Luella's Italian production company, Carla Carini, meant that orders for the spring/summer 2010 collection could not be fulfilled. So, as The Independent reports, Luella “is a victim of knock-on effects of the credit crunch, rather than guilty of mismanagement or lack of vision.”

But this doesn’t have to be the end for the Luella brand. As we have seen with Escada, who were rescued by the Mittals earlier this week (see the MO Down for 9 November), there are white knights out there waiting to save designers in distress…

Wednesday, 11 November 2009

The New Luxury Gift Service With Lagerfeld’s Tick Of Approval – 11/11/09

With perfect timing for Christmas, London’s new premium luxury gift service, Bokks, has launched this week, endorsed by actor Dustin Hoffman and supermodel Veronica Webb. Karl Lagerfeld is also involved and called it “a genius idea.”

According to a report in The Independent, Bokks is the brainchild of Walter Bugno, the ex-boss of Australia's Sydney Football Club.

Items available through the service will cost from £250 (AUS$450) up to as much as £1m (AUS $1.8m). Bugno says: "There is nothing cheap. It may be expensive but not expensive for quality." He also wants to have the gifts hand-delivered, so is offering customers the option of hiring a white velvet-gloved "bellhop" porter to deliver their gifts.

We thought that the site was visually impressive, looking every inch what it promises to be: a “Portal to Luxury”. Visit it for yourself at Meanwhile, we’ll keep you posted on whether this service wins over the luxury clientele. Having Lagerfeld on board is definitely a big plus.

Tuesday, 10 November 2009

Luxury Brands Embrace Emerging Markets – 10/11/09

Earlier this month, Louis Vuitton opened its first store in Mongolia. This is a prime example of the luxury market’s new focus on emerging/untapped markets.

In an AFP article, Louis Vuitton’s Chairman, Yves Carcelle, said Mongolia is “a country that is taking off economically."

During the store’s launch, Louis Vuitton showcased a special saddle in a nod to Mongolia's "nomadic roots and strong horse riding culture." (click here to read more).

This expansion into Mongolia is a big step for not only Louis Vuitton but the entire luxury market. These emerging markets may become very important in years to come, perhaps influencing style and design. For decades, luxury brands have designed with the European market in mind, but that was when they knew which side their bread was buttered on…

Monday, 9 November 2009

Hermes’ Revenue Rises By 10 Percent – 9/11/09

We’re starting Monday morning off on a high note by announcing that Hermes has achieved a 10 percent rise in revenue during the third quarter.

This rise was attributed to the popularity of the Birkin bag and other high-end leather goods. Click here to read more.

Important Insights On The “New Luxury Wave” – 9/11/09

Click here to read a brilliantly researched WWD article on the future of the luxury landscape. It includes interviews with major industry figures, including Karl Lagerfeld, plus C.E.Os from LVMH, Gucci, Yves Saint Laurent, Chloé, Hermes, Prada, Versace and Coach.

Many important issues are raised in the article. One point that caught our eye was that “consumer expectations are likely to be higher than ever, with craftsmanship, service, heritage, and longevity among new priorities.”

Pierre-Yves Roussel, C.E.O of the fashion division at LVMH, said customers “want it all: the quality, the creativity, the exclusivity, and the service. You tend to forget that in good years because in good years it’s easier. Being in luxury, we have to be perfect in everything we do.”

The “growth of e-commerce and social networking and eco concerns” were also mentioned as factors that will shape the luxury industry in years to come.

Escada Lives On – 9/11/09

Insolvent German brand Escada has finally been purchased by a family company – the Mittals.

In a statement, Megna Mittal said, “Our first priority is to ensure that the great heritage of this iconic company is translated into a strong and successful future. Despite recent difficulties, Escada has the potential to redefine its place in the world of luxury brands and become synonymous with fine quality and elegance.”

According to WWD Fashion, Escada’s current C.E.O, Bruno Sälzer, will remain at the helm of the company.

We’ve been following the Escada insolvency since day one. Click here for our detailed report on August 13.

Sales Jump Significantly At David Jones – 9/11/09

Local premium-end retailer David Jones seems to be reaping the rewards of renewed consumer confidence, with The Australian reporting “the group has seen the biggest jump in sales in more than two years.”

Their first quarter sales were also up 2.2 percent on the year, or 0.8 percent compared to this time last year.

Myer also announced a 5.2 percent rise over the quarter, or an 2.9 percent increase compared to this time last year.

Friday, 6 November 2009

Is This The Key To Tiffany & Co.’s Success In China? – 6/11/09

Tiffany & Co. are following in the footsteps of many luxury brands by customising their online marketing campaigns to appeal to the Chinese.

Last week, Tiffany launched their Keys collection with their ‘Journey Behind The Door’ campaign at This site showcases a photography exhibition starring mainland celebrities, each adorned by a Keys necklace (as pictured).

Click here to read more about Tiffany’s new campaign.

Thursday, 5 November 2009

The Gucci Group Commits To Conserving The Rainforest – 5/11/09

The Gucci Group has taken another big step towards being the greenest luxury corporation. Earlier this week, they joined forces with the Rainforest Action Network and pledged to conserve paper.

According to WWD Fashion, their new paper policy will encourage all of the group’s brands to reduce paper use, eliminate those containing fibres from forests of high conservation value, and to purchase recycled paper certified by the Forest Stewardship Council, all by December 2010.

The Gucci Group’s Executive Vice President of Global Communications, Mimma Viglezio, said, “Standing rainforests are not a luxury, they’re a necessity if the world wants to stop climate change.”

The Gucci Group definitely has our vote for the greenest luxury brand. It was only last month that we revealed Gucci was sponsoring a Ph.D. on sustainable fashion practices (see the MO Down for 14 October). This is yet another indication that green is fast becoming the new black…

Wednesday, 4 November 2009

Designer Handbags Have Become Collateral In Hong Kong – 4/11/09

Hong Kong finance firm Yes Lady Finance has caused a global sensation by offering personal loans in exchange for ladies’ designer handbags. Yes, you heard right - a second-hand Birkin equals big bucks.

According to Reuters, Yes Lady Finance is providing loans of up to 70 percent of the value of the item in the second-hand market and charging borrowers interest as low as 28 percent a year with a three-month maturity.

A Louis Vuitton handbag valued at US$2,600 in the second-hand market would fetch a US$1,800 three-month loan, we read in an AFP report. This article also suggested owners would lose the bags if they failed to settle the debt on time.

Yes Lady Finance Co-founder, Wallace Tung, said the scheme was “a good fund-raising option for some tai-tais*.”

This is a surprising first for the personal-loan market. But we doubt the idea will be adopted in Australia any time soon.

*Tai-tais is a slang term for the wives of wealthy Hong Kong businessmen.

Tuesday, 3 November 2009

A Peek Into Beijing’s Billionaire Playgrounds – 3/11/09

A few months ago, we reported that Beijing was home to many high rollers (see the MO Down for 26 August). Now an AFP article has reminded us of just how rich they have become…

In this article, entitled ‘What Crisis? China’s Billionaires Live It Up’, Beijing's Jinbao Street, where you can find Gucci, Cartier, Rolls-Royce, Bugatti and Lamborghini, is revealed to be a popular billionaires’ haunt.

Rupert Hoogewerf, the founder of the Hurun Report, confirmed, “China's wealth is growing at breakneck speed.”

The store manager of the Cartier store in Jinbao Street also had compelling proof of Hoogewerf’s observation, saying, “Our business is very good in China. Our clients are very rich. Many buy without looking at the price.”

The Managing Director of Lamborghini, Wilson Ho, agreed stating, "For some people here, money is nothing, they come and they buy a car in one hour... and they settle the payment in full. We're talking about cars that are six, seven, eight million yuan!"

Louis Vuitton is also said to be a hot commodity, with Chinese consumers bringing “armfuls of purchases to the cash register”.

For more observations on the spending habits of Beijing’s wealthy, click here to read more.

Monday, 2 November 2009

Prada Orders Exceeds Expectations By 10 Percent – 2/11/09

Last week, Versace announced a quarter of their workforce will be axed (see the MO Down for 30 October). But it’s a different (much happier) story at Prada where the luxury brand is experiencing “a speedy return to full production.”

According to Reuters, Prada is shortening temporary suspensions* for some workers by three weeks after orders for its Spring/Summer 2010 clothing collection exceeded expectations by 10 percent.

*The Milan fashion group signed an agreement with union workers a few weeks ago to put 250 from a plant of 3,000 into "cassa integrazione" (temporary suspensions where workers receive reduced pay).

Friday, 30 October 2009

Will French Luxury Brands Charm The Chinese With cColbert? – 30/10/09

In our recent article on Customer Connection Is Crucial, a marketing expert suggested that European luxury brands have to woo the Asian market by educating potential customers about their brands. His exact words were, “Tell them a story, tell them the history. A watch, a bag, a pair of shoes can become so much more if you educate people."

So now it seems the French luxury brands at least are listening. This week’s release of cColbert is proof.

cColbert is a website designed by the Comite Colbert, France’s leading luxury federation, that’s targeted at Chinese consumers and designed to create “a virtual voyage through French luxury.”

According to its website -, “the Comité Colbert, a group representing 70 French luxury houses, invites you to embark on an interactive journey in three dimensions to discover the world of French luxury.”

Whether or not cColbert will win Chinese customers over, we can’t predict, but we do think this is a step in the right direction for French luxury brands intent on charming the Asian market.

Boucheron Set To Sparkle In China? – 30/10/09

High-end Gucci Group jeweller Boucheron has inked a deal with Sparkle Roll Group Limited, a major Chinese distributor of prestige products, to create a chain of six to ten stores in China over the next five years.

“With their unique ability to bring luxury to the region, Sparkle Roll is the ideal partner to help us develop and strengthen Boucheron’s presence in China,” said Boucheron’s C.E.O, Jean-Christophe Bedos, in a FWD article.

Versace Forced To Cut 350 Jobs – 30/10/09

As we speak, Versace is in crisis mode. A quarter of their workforce will be axed and the company expects to make a loss for 2009.

In an AFP article, Versace's C.E.O, Gian Giacomo Ferraris, said, "Trading conditions in the wake of the global financial crisis have been severe and the company expects to make a loss in 2009.”

Versace announced earlier this month that they were closing their Japanese stores (see the MO Down for 8 October). Let’s hope all this cost-cutting combats their financial downturn.

Thursday, 29 October 2009

Christian Lacroix Buy-Out Hearing Adjourned – 29/10/09

We expected Christian Lacroix to have a new owner by now. But the latest word is that the French tribunal set another hearing for November 17, due to procedural delays.

According to an AFP report, an Ajman sheikh, Al Hassan Bin Al Nuaimi, is the frontrunner in the buyout. Other contenders are Bernard Krief Consulting and La Financiere Saint Germain.

For more information, consult the MO Down on October 1.

Giorgio Armani Ready To Retire? – 29/10/09

"I'm already organizing staff who will continue my work. Of course I am not eternal, there comes a time when you must hand it over." - Giorgio Armani.

There you have it – straight from the horse’s mouth (via Reuters). Or is this just Armani’s way of toying with the media?

We can’t be sure. All we know is that earlier in the month, there was a major reshuffle of Armani’s senior management team (see the MO Down for 2 October) so perhaps an official announcement is imminent?... We’ll keep you posted.

Wednesday, 28 October 2009

Examining The New Breed Of Luxury Customer – 28/10/09

The ‘Luxe Market Faces [a] Wealth Of Challenges’ according to an Adweek article we came across today.

This in-depth four-page article put many interesting issues on the table. However, the section that caught our attention was subtitled, ‘The Importance Of Pedigree.’ Its crux was that a luxury brand's long-standing heritage is often an important part of its value to shoppers. Milton Pedraza, C.E.O. of the Luxury Institute, supported this argument, saying, "There are very few new luxury brands. It's extremely hard to be a luxury brand without the pedigree and longevity… In this market, people are gravitating toward quality and history.” This has always been a simple truth to us.

Another section that stood out was the ‘Rise And Fall Of The 'Aspirational.’ It stated, “One problem for the luxury market, though, is that it came to rely partly on customers who weren't really wealthy enough to be buying such goods in the first place -- the "aspirational" consumers who relied on credit to indulge in the luxe life.”

It also goes on to suggest that wooing the genuinely affluent customers requires a completely different marketing strategy. Another argument we strongly agree with. For more of our thoughts on this, consult our earlier article: What The Luxury Customer Always Wants.

To read the full article, click here. There is also a Part 2 to be released next week.

Tuesday, 27 October 2009

Burberry Branches Out Into Cosmetics – 27/10/09

The latest word from WWD Fashion is that Burberry has a cosmetics line in the pipeline.

This cosmetics line, to be produced by Inter Parfums SA., will incorporate a “complete colour line with about 100 references for eyes, lips and skin.”

We wonder what Burberry will call this range - ‘Colour Me Plaid’, perhaps?

On a more serious note, we suspect Burberry cosmetics will be successful. Their perfume range has proved very profitable for Inter Parfums. In fact, when Inter Parfums released their third quarter sales* last week to Reuters, their C.E.O., Jean Madar, singled out Burberry perfumes, saying, "Despite the difficult launch schedule comparison and the weak economic environment, [there was] strong growth of Burberry fragrances (up 19% in local currency) …”

* The third quarter net sales for Inter Parfums were $117.5 million, 5 percent below last year’s third quarter net sales of $123.5 million.

Monday, 26 October 2009

Asian Luxury Sales Predicted To Rise, While Other Countries Drop – 26/10/09

There are some “glimmers of hope” on the horizon for the luxury industry, in the wake of last week’s Bain & Co. annual ‘Luxury Good Worldwide Market’ study.

Claudia D`Arpizio from Bain & Co. said, "Luxury has been down, but it’s not out. The world of luxury will see dramatic shifts in the decade ahead."

Bain & Co. predicts that 2009 sales will be down 16 percent in America, 10 percent in Japan and 8 percent in Europe versus 2008 levels. But 10 percent projected growth in Asia will partially dull the impact of those declines.

Online sales are also proving to be a growth area, with a roughly 20 percent increase worldwide, but this channel still accounts for less than 3 percent of total sales.

Other predictions included:
- Jewellery, watches and other hard luxury items will be hit hardest in 2009, with a forecast decline of 18 percent.
- Apparel sales will fall by 11 percent worldwide.
- Perfume and cosmetics are expected to drop by a more than anticipated 4 percent in 2009.
- Leather, shoes and accessories will hold the line with only a projected 1 percent decline.

To read more of the Bain & Co. predictions, click here to go to Reuters.

Swiss Watchmakers Are Alarmed Over Another Sales Slump – 26/10/09

Time has not healed all for the Swiss watch industry – in fact Reuters revealed that demand slipped 26 percent in September, reversing the improvements seen in the previous two months.

These latest figures revealed, “Exports to Hong Kong, the industry's biggest market, slumped 30 percent, while demand in the United States fell 43 percent. China was down 1.1 percent and exports to Singapore fell 3.3 percent.”

Due to this disappointing data, Richemont shares also dropped 1.6 percent.

How times have changed. If we go back to late August (see the MO Down’s special Richemont report), Swiss watchmaker IWC, part of the Richemont Group, was said to be performing “astonishingly well” with “Hong Kong proving to be robust.” It looks like luxury customers are back to watching their spending…

Friday, 23 October 2009

Which Do You Prefer? Chanel Snoopy or Hermes Snoopy? – 23/10/09

We never thought we would say this but Snoopy is looking pretty suave these days. In honour of Japanese Fashion Week, everyone’s favourite cartoon dog has been dressed by Hermes, Chanel, Chloé and Balenciaga.

We adore the Chanel Snoopy and want to take him home! To see all of Snoopy’s high-end looks, click here to go to WWD Fashion.

Shop ’Til You Drop… The Guilt – 23/10/2009

Shopping has long been described as a guilty pleasure, but according to consulting firm Bain & Co., the economic crisis has caused the guilt factor to override the pleasure for some luxury shoppers.

Bain & Co. suggested “shoppers are suffering from luxury shame.” Brand strategist Martin Lindstrom agreed, saying, “Guilt has really increased in the last year.”

This Wall Street Journal article discussed how luxury brands might absolve that guilt, including: “touting a special justification for splurging—profits are channelled to a charity, for instance—or offering novel shopping experiences that can make people forget their guilt.”

Internet shopping was also promoted as a way of reducing guilt. As was the use of pop-up stores -boutiques that exist for a few weeks or months - in unexpected places that aren’t traditional luxury shopping districts. “The idea is that pop-ups may not activate the psychological barriers that prevent shoppers from entering traditional stores.”

Another strategy is that companies are putting more emphasis on the "guilt-free shopping" that is said to come with buying environmentally safe products.

This article really got us thinking. If you felt the same, click here to read more.

Thursday, 22 October 2009

Louis Vuitton Streaks Ahead Due To Strong Demand In China – 22/10/09

This week is continuing to be a rollercoaster of ups and downs for the luxury goods industry.

We’ll start with the up side: Bloomberg reported that LVMH Moet Hennessy Louis Vuitton SA’s third-quarter revenue beat analysts’ estimates after “exceptional” demand for Louis Vuitton bags in China. LVMH shares also rose 3.4 percent, to their highest point in more than a year.

Now to the down side: The Wall Street Journal revealed that PPR SA announced a 7.6 percent decline in third-quarter revenue as sales slumped in almost all divisions. "PPR faced the convergence...of several unfavourable factors," said Chairman and Chief Executive François-Henri Pinault, citing a lacklustre macroeconomic environment and lower tourist activity. He said the company plans to re-double their efforts to revitalise its business units with marketing initiatives.

Unfortunately, the bad news continues with Coach reporting a 3.4 percent drop in their fiscal first-quarter profit. But according to The Wall Street Journal, they are planning to reverse that trend by opening a flagship boutique in China and an Asian distribution centre. They are also wooing the budget-conscious consumer with their new Poppy collection, and are expanding their lower-priced handbag range.

For our detailed critique of Coach, consult the MO Down for July 20: Coach Is A Clear Winner In Tough Times.

Wednesday, 21 October 2009

Burberry Is Being Dogged By Plaid Plagiarism – 21/10/2009

Burberry definitely didn’t want to let sleeping dogs lie after they caught pets accessories chain Pets At Home using a plaid design on their dog coats and baskets, sold in 250 stores. Burberry claims this amounts to a copyright infringement - so Pets At Home may be in the legal doghouse…

Read more on this case in The Guardian.

Mixed Results On The Luxury Industry Recovery Front – 21/10/09

Today we are torn between two conflicting reports on the future of the luxury goods industry.

If we believe a Financial Times article, the glass is half full and the headline reads: ‘Luxury Goods Industry On Track For Recovery.’ And within this article, a Bain & Co. consultant is optimistic, saying, “Markets are stabilising. We are seeing less discounting and markdowns and more signs of increasing consumer confidence. Growth will be timid in 2010 but it’s movement in the right direction.”

But on the other hand, the glass is definitely half empty over at the Wall Street Journal, where the headline reads, ‘Luxury-Goods Sales Still Soft, Recovery Unlikely Before 2011.’ Referencing the same consulting firm as the Financial Times, Bain & Co., this article predicts the luxury goods industry “won't fully recover from the downturn until 2011 or 2012. This year's decline in sales of luxury goods, including apparel, jewellery and fashion accessories, will be steep, off 8% to about $227 billion.”

So which article do we believe? We definitely prefer the Financial Times report; their talk of “cautious optimism” and “fast-growing luxury goods sales in China will return the industry to growth next year” is music to our ears.

Tuesday, 20 October 2009

French Government Pledges Aid To Struggling Couture Industry – 20/10/09

French couture artisans are slowly becoming a dying breed. But their chances of survival are destined to improve if the French Government goes ahead with plans to offer them a rescue package.

We read in a Wall Street Journal article that France's Prime Minister, Francois Fillon, is meeting with government advisers, luxury-goods executives and artisans to draw up an aid package for the country's craftsmen.

The article also goes on to remind us that “in an attempt to preserve technical know-how and guarantee quality, some fashion houses have sought to buy up the artisans themselves. Over the past 15 years, Chanel has bought out several Paris-based artisans who make garments for ‘haute-couture,’ the highest-end of the designer clothes spectrum.”

We hope that France can save its haute-couture industry, which some say is fighting for its life. We would hate to see it go out of fashion. As we concluded in the July 12 MO Down, it is ‘the top of the pyramid’, the lofty heights most customers aspire to. It also helps to sell brands’ ready-to-wear lines, accessories and, most importantly, their fragrance and beauty products – making it very valuable indeed!

Monday, 19 October 2009

Luxury Brands Should Update Their Social Networking Status – 19/10/09

According to Facebook statistics, 96 percent of the next generation of luxury consumers - Generation Y - are using social media. And 27 percent of them claim their purchase decisions are influenced by such sites. These facts, sourced from a Forbes article, are another clear indicator of the growing power of sites like Facebook and Twitter.

This compelling article argued that social media can not be overlooked, saying “Brand makers that don't create their own conversation with their most passionate customers through social networks risk having a passionate consumer create that presence instead. Facebook and Twitter are cluttered with brand sites that weren't created and aren't maintained by marketers. And, what happens when brand makers don't initiate the conversation? Two good examples can be found on @123dolcegabbana on Twitter and the Emporio Armani fan page on Facebook. Both feature fans boasting of their discount brand purchases and fashion critiques, but no voice from anyone who officially represents the brand."

We had a quick look at 123dolcegabbana on Twitter and found they had 2,800 followers. And the Emporio Armani site had 204,725 fans. That’s a large window of opportunity for these brands, one that would be a huge shame to waste.

For more on the social media debate, consult our recent MO Down reports: Luxury Car Brands Hitting The Brakes On Social Networking and Louis Vuitton’s Paris Fashion Show To Be A Facebook Spectacular.

What The Luxury Customer Always Wants – 19/10/09

"Luxury consumers buy from brands they trust and part of that trust is authenticity. Part of the reason why consumers buy from a particular brand is because the brand's heritage and history resonates with them. These have always been important to the luxury consumer and I doubt this will change” – Desiree Tung, Executive Director, Asia Pacific and Middle East, Worldwide Business Research*.

This is a vital point from an Emirates Business 24/7 article. It is an important truth that all luxury brands should keep at the heart of their business development plans.

Tung also continued on to say: “Also what will not change is their demand for quality, value and exclusivity. For luxury brands, the importance of fostering long-term relationships with luxury consumers and continually ensuring their brand resonates with them cannot be understated." Tung is a very wise man in our eyes.

*Worldwide Business Research will host the Leaders in Luxury Middle East conference in Dubai from November 2.

Friday, 16 October 2009

Giorgio Armani For Senator – 16/10/09

We did a double take today when we read in WWD that Giorgio Armani has been nominated for the Italian senate by his fashion rival, Santo Versace.

This news came as such a shock to us that we quickly researched other sources and discovered it was indeed true. Armani has been recommended for a Senator of Life position*. And Versace did nominate him - for his “earnestness, creativity and excellence”, saying to WWD that “there is nobody that deserves it more or who better represents our country.”

This is a huge honour for Armani and if he does become appointed, we expect Italian politics to become much chicer.

*The Senator for Life post is appointed for outstanding merits in the social, scientific, artistic and literary fields. Only five Senators for Life can be appointed at one time. And there is only one post vacant at the moment.

After Yamamoto’s Lucky Escape, Is Escada Next? – 16/10/09

It is clear that you can’t keep a good brand down. Yohji Yamamoto, the Japanese designer who filed for bankruptcy this week, is being bailed out by Integral Corp., an investment company based in Tokyo, according to Bloomberg.

And in another Bloomberg report, we discovered that Escada, who filed for insolvency in August, has received acquisition bids from at least five investors. So, there could be another happy ending on the cards.

For background info on the Escada insolvency, see the MO Down for 13 August.

Thursday, 15 October 2009

Luxury Car Brands Hitting The Brakes On Social Networking? – 15/10/09

The luxury car industry is not jumping on the social networking bandwagon fast enough, according to a study by New York-based consultancies MH Group Communications and Forum Strategies & Communications.

The study, "Luxury Auto Brands and their Presence in Social Media," measured the level of activity on sites like Facebook, Twitter and YouTube and concluded that German automakers dominate the luxury auto business category, while Japanese and American brands are largely absent and unimpressive within social media.

The nine brands that ranked the highest in their social network involvement were:
1. BMW (with a sizeable lead in conversation levels)
2. Porsche
3. Audi
4. Mercedes
5. Cadillac
6. Lexus
7. Acura
8. Infiniti
9. Lincoln

Jeffrey Sindone, President of Forum Media, Forum Strategies & Communications, had this savvy piece of advice for the auto brands: "The use of social media can no longer be regarded as an afterthought, but must be viewed as a foundational element that is part of any holistic communications strategy.”

Yes, you can’t discount the power of positive word-of-mouth. Perhaps the luxury auto brands should look to the luxe fashion sector for guidance. Last month, Burberry even launched their own social networking site,, (see our report on 21 September). And this month, Louis Vuitton pleased their internet-savvy fans by broadcasting their Paris Fashion Show on Facebook for the very first time (see the MO Down for 5 October).

For more key findings from this study, click here.

Wednesday, 14 October 2009

Gucci Looks To A Greener Future – 14/10/09

Our eco-friendly radar has picked up an exciting new development in the Gucci camp.

The luxury brand has pledged to sponsor a three-year Ph.D scholarship devoted to innovations in sustainable fashion and textiles. “We are always searching for innovative new ways to sustainably improve the way we work,” said Gucci spokesperson Mimma Viglezio.

This commitment to greener practices is likely to work in Gucci’s favour. As we said in our earlier report on July 6, luxury brands are keen to please their young, more eco-friendly clients.

To read more about Gucci’s scholarship, click here.

Tuesday, 13 October 2009

Imagine A World Where Fans Pay To Keep Brands In Business - 13/10/09

In the wake of Japanese designer Yohji Yamamoto filing for bankruptcy (see yesterday’s MO Down), we thought we would draw your attention to Catwalk Genius, a relatively new fashion investment website, where fans can pay to keep their favourite designers in business.

According to a New York Times article: ‘Putting Your Money Where Your Style Is, the site uses “the Internet’s social networks to raise capital in return for a share of the profits in individual collections.”

The program, which has been operating for a year, has drawn US $11,000 in investments. Not a huge amount, but enough to make us mark Catwalk Genius as a website to watch. If this business model does take off at a phenomenal level, it may herald a new revolution in the fashion world.

Monday, 12 October 2009

Tiffany & Co. Tipped To “Outperform” – 12/10/09

Last week, we revealed that Tiffany & Co. shares climbed a huge 4.6 percent (see the MO Down on 8 October). Today, it’s come to our attention that Zacks Equity Research singled Tiffany out as their “Bull of the Day” on October 7.

We read in a Reuters article that Zacks concluded, “Tiffany is well positioned to deliver robust sales and earnings growth.”

“Tiffany is concentrating more on smaller size store formats that offer selected collections of lower priced higher-margin products, which in turn enhance store productivity.” We’ve previously discussed Tiffany’s expansion of their ‘entry point’ sterling silver lines (see the MO Down for September 9).

Zacks went onto say that cost cutting through “reducing its headcount and trimming capital expenditure with fewer store openings” is contributing to the brand’s improved position.

Another Fashion Designer Files For Bankruptcy – 12/10/09

There has been another crushing blow to the fashion industry - with Japanese designer Yohji Yamamoto filing for bankruptcy protection.

According to a report in The New York Times, Yamamoto’s debt woes stem from the luxury market downturn that caused Japanese women, who were once the world’s most avid luxury shoppers, to turn to cheaper fashion. Swedish brand H&M was named as one of the new labels of choice for many Japanese.

The Yamamoto design house, founded in 1979, will continue to operate under Japan’s corporate rehabilitation law. So perhaps – like Christian Lacroix - there may be light at the end of the tunnel…

Bulgari Sales Are On The Rise Due To Asian Growth – 12/10/09

Two months ago, we announced Bulgari’s Down But Not Out (August 4) after the luxury jewellery brand revealed their second-quarter sales were 20.5 percent down versus last year. Now, Bulgari is back and they’re bigger than ever!

According to a Bloomberg article, “Sales have improved in the second part of the year, led by gains in Asia, its biggest market, and higher demand for handbags.”

Bulgari’s C.E.O, Francesco Trapani, said,“In the last three or four months things have been significantly better than the first part of the year, both for retail and wholesale.”

He also said demand for watches have shown signs of improvement in the past three months.

And there was some surprising news on the Japanese front. Trapani said that Japan remains profitable for Bulgari, and they plan to keep about 40 stores there. We were a little taken back by this revelation, considering Versace’s decision last week to close its Japanese stores (see the MO Down for October 8).

After all this unbridled positivity, the company’s shares jumped 5.9 percent to an 11-month high. More news to celebrate.

Friday, 9 October 2009

Coach vs. Target In The Battle Of The Handbags – 9/10/09

In the case of Coach vs. Target, Coach is adamant that Target copied one of their handbag designs. But it will be up to a Manhattan court to decide whether Target will receive another black mark against their name (Coach also sued Target in 2006 for the same offence. The companies settled outside of court.)

Coach is alleging that Target sold handbags with "exact and/or confusingly similar reproductions of Coach's Ergo designs and Signature Patchwork designs." In a complaint filed at a U.S. District Court in Manhattan, the company requested Target stop selling the bags and pay an undetermined amount in damages, injunctive relief and attorney fees.

Representatives for Target were said to be reviewing the case and have defended their actions, saying that it is their policy “to respect the intellectual property rights of others."

We will be watching this case carefully, and will let you know when the judge makes his final ruling.

Click here to read more on this case.

Christian Lacroix Rumoured To Be Sold – 9/10/09

No official word has been given yet, but according to a reliable source (WWD Fashion), Lacroix’s new owner is an Ajman sheikh, Al Hassan Bin Al Nuaimi.

If this is the first you’ve heard of the Sheikh, see our comprehensive report on the 1st October. And keep watching this space for confirmation.

Thursday, 8 October 2009

Versace To Close Their Japanese Stores – 8/10/09

Versace is set to say ‘sayonara’ to Japan, as they close down their three Japanese stores and review their business strategy.

“The Versace boutiques in Japan no longer represented the brand image and it was felt to be more advantageous for the company to close them and start with a clean slate,” Versace said in a statement.

This news from Bloomberg once again highlights the major decline in the Japanese luxury market. Hermes CEO, Patrick Thomas, may just be proved right with his recent statement: “I’m not expecting to see the light of the tunnel before 2010. The Japanese economy is not good and we all feel it.” (see the MO Down for 25 September for the full article on Hermes’ Japanese sales slump).

Tiffany & Co. Shares Reach New Heights – 8/10/09

Tiffany & Co.’s shares have risen to the highest level in more than a year, after Citigroup recommended buying their shares, according to Bloomberg.

The stock climbed 4.6 percent after a Citigroup report announced, “We believe Tiffany will benefit from market-share gains given capacity withdrawal -- liquidations, store closures -- beginning in the fourth quarter of 2009 as consumer spending stabilizes.”

For more facts and figures, read the full Bloomberg article.

Wednesday, 7 October 2009

The Sweet Scent Of Success For Jimmy Choo? – 7/10/09

Breaking news: Jimmy Choo will be branching out from footwear to fragrance. The brand has signed a 12-year global fragrance licensing agreement with Inter Parfums SA, according to WWD Fashion.

Inter Parfums holds numerous high-end fragrance licenses, including Burberry, Lanvin, Van Cleef & Arpels, Paul Smith and Christian Lacroix, so we are expecting big things from this licensing deal.

Licensing is a hot topic on the MO Down. If done well, it can expand the brands’ market presence. We discussed this very issue in detail earlier in the year (see the MO Down on 16 June: Licensing Still Has Its Place In The Luxury Industry).

Tuesday, 6 October 2009

Customer Connection Is Crucial – 6/10/09

Q: What could be holding luxury brands back from succeeding in Asia?
A: "Service is the weakest link in the luxury business model," according to Michel Phan, Assistant Professor of marketing at the Paris-based ESSEC Business School.

Talking in a Reuters article, Phan continues on to say, “It's not enough to say 'Our brand is expensive, or known'. You have to make customers connect with your brand, especially during this crisis, when they're more reluctant to buy on the spur of the moment. You have to give people a good reason to buy."

When wooing the Asian market, Phan also believes “luxury retailers need to educate potential customers about their wares.” In reference to the Chinese consumers, he said, “Tell them a story, tell them the history. A watch, a bag, a pair of shoes can become so much more if you educate people."

We believe Phan is a man after our own heart. Customer Relationship Management and adapting to each market is crucially important (for more of our thoughts, refer to the MO Down for August 21).

Tod’s Shows More Signs Of Recovery – 6/10/09

Italy's Tod's rose as much as 3.5 percent to levels last reached in December 2007, after UBS upgraded the luxury shoe and bag maker to "buy" from "neutral", according to a Reuters article.

UBS says it sees potential benefits for Tod’s from increased store traffic and expects the negative sales trend of handbags to reverse next year.

The MO Down pegged Tod’s as showing signs of recovery in July (see our report: Tod’s Plays On Their Strengths In Shoes.)

Monday, 5 October 2009

Louis Vuitton’s Paris Fashion Show To Be A Facebook Spectacular – 5/10/09

For the first time in history, Louis Vuitton will offer a live broadcast of its Women’s Spring/Summer 2010 show exclusively on Facebook on October 7.

On Facebook, a Louis Vuitton event invitation announced:“Current and future fans of the Louis Vuitton Facebook page will be able to watch the latest Marc Jacobs creations for Louis Vuitton streamed live from Paris Fashion Week. Viewers will also be given the opportunity to comment on the event live from their Facebook status. Following the event, the video of the show will be available on demand exclusively on the fan page for 24 hours.”

We were alerted to this development by an article in The Independent, which suggested this event comes “as part of a trend that sees brands increasingly involve the masses instead of focusing on just a select 'high-end' audience.”
We’ve certainly noticed a growth in luxury brands focus on social networking sites. Refer to the MO Down on June 25 for our thoughts on this recent communication revolution.

Who's behind the MO DOWN

Melinda O’Rourke is the founder and Director of MO Luxury, a dynamic, Sydney-based management firm specialising in luxury brands and services. Melinda and her associates at MO work with local and international brands across prestige retail, fashion, fine jewellery, timepieces and specialised services. Melinda is well-connected, well-read, and well-versed in the demands of the luxury market and its client base. Her advice is firmly based in objectivity and ultimately, accountability. Melinda offers constructive counsel and both strategic and creative thinking and is able to draw upon a strong network of specialised talent to compliment the MO Luxury team as needed. Melinda enjoys excellent industry relationships and is regularly quoted in the business and fashion media. Read more about MO Luxury,