CHANEL is not "leaving Las Vegas"..anytime soon - 22/01/09

The ultimate luxury house, CHANEL have just opened their third boutique in Las Vegas.

Despite tough times in Las Vegas where it's been 'down tools' on a multitude of construction sites and major 'halts' to further development plans for many businesses, CHANEL has opened at the Encore at Wynn. According to Barbara Cirkva, division president of fashion, fine jewelry and watches at Chanel Inc. “We took a very specific, ultraluxury point of view in the Encore store and don’t think we will see much cannibalization between Wynn and Encore.”

The store will have one-off unique pieces and really appeal to the ultra high end overseas market. That is true luxury, to open in this uncertain climate with one-off unique, high value pieces. Read more in WWD

The Good News with the Bad News at Burberry - 21/01/09

It was only days ago we reported that Burberry had moved into new digs and it was great to talk about something positive.

Well no surprise that the good news doesn't always last long and in the case of Burberry they have had something of a contrast in their recently reported news. So what do you want to hear first, the good news or the bad news? The good news is Burberry reported a 30 percent rise in third-quarter revenues... The bad news is they are planning to terminate the Thomas Burberry line, close a factory and divest of more than 500 staff in Spain and the U.K. Read more on this in WWD or CNN

The Roll Down Effect on Suppliers to Luxury Fashion - 20/01/09

We are afraid there will be more of these stories to come... A reduction of staff from the many suppliers of raw materials to the luxury industry. One doesn't need to be Einstein to know that when finished goods do not achieve the right sell through percent, the open-to-buy for the next season is reduced. Which has an impact on number of units produced and the associated raw materials that go with this.

Naturally, a reduction in production units leads to higher item per unit costs, so gross margins are being eroded on many fronts.

An article today in Bloomberg.com talks about one such niche industry located in Northern France, "Caudry is home to 10 lacemakers, including two of the world’s biggest weavers for haute couture. Together with nearby Calais, the town has 80 percent of the 100 million-euro ($139 million) global market for luxury lace..."
They have already seen a divestment of 13% of the 800 lace making jobs in 2008 and speculation is that there are more to go. The roll down effect will continue to take its toll on manufacturers and suppliers as the year plays out and retail consumption is pared down.

Lace is generally considered a luxury treatment to a garment so overall design ideas and embellishments are being reconsidered to ensure overall costs per garment are also reduced. The minimalist, non embellished fashion will return by default.

A new HQ for Burberry - 19/01/09

It is refreshing to read some positive news right now in the luxury goods industry... So on that note we read in WWD, Burberry London announced — "Burberry has a new home for the first time in more than 100 years, a high-tech tower of oak and marble just a few steps from the Thames River and from MI5 — Britain’s version of the FBI.

Horseferry House, a 160,000-square-foot former government building with views of Big Ben and the river, houses 850 employees and is meant to offer the ultimate Burberry experience."

What is additionally interesting apart from the fact that it was designed by Burberry's Creative Director, Christopher Bailey it also seems to be addressing environmental and economical issues as well as creating a positive culture by respecting and nurturing employees. Now that wins points on many fronts.

CHANEL to grow but at slower rate - 18/01/09

CHANEL a private company owned by the Wertheimer brothers does not reveal its numbers publicly, however the House's Global Fashion President, Bruno Pavlovsky in an interview with AFP on Friday 16th January, stated; "For 2009 we expect a growth slowdown," he said, but added that "this will not be negative growth." He anticipates this to be down from the double digit global figures to single digit.

CHANEL is a luxury brand with an incredible history, spanning almost 100 years, it has survived many volatile and dynamic economic situations. Such a highly coveted brand with a mixed portfolio of product and well structured financial model has a greater chance of survival than other brands that have grown quickly for the sake of shareholder returns. There are also some brands with a great history but a more recent revival, a lot of their recent growth has been based on 'new recruits' and their first purchase into luxury. As disposable income is shrinking, this leaves some of these brands more exposed to the current financial crisis than others. With age comes wisdom and respect, we believe this is the case for Chanel.

Prada's Transformer forges ahead - 16/01/09

Over many years there has been collaboration between fashion and the arts and Prada certainly supports this and continues to foster and expose unique creative concepts. There is the Prada Fondazione in Milan that houses exhibitions twice a year and becomes a wonderful collaborative showcase for internationally renowned contemporary artists. In addition, Miuccia Prada and Patrizio Bertelli continue to collaborate with acclaimed architects Rem Koolhaas and Herzog and de Meuron on projects outside of the architecturally designed epicentres.

Despite the cutting back of some existing exhibitions and planned marketing and interactive campaigns from other luxury houses, Prada is continuing with its plans for a large scale and ambitious project. According to an article in Luxist, "Despite the economy, the luxury Italian fashion house just began construction on the Prada Transformer, a tetrahedron-shaped "transformative building" designed by starchitect Rem Koolhaas (rendering above), on the grounds of Gyeonghui Palace in Seoul, Korea. Koolhaas, who won the Pritzker Prize in 2000 and also designed the Prada flagship store in Manhattan..."

It's nice to find some positive news amongst the doom and gloom. We look forward to reading and sharing on this as the Transformer hosts art and cultural events later in the year.

A High End Line for Tods - 16/01/09

Tod's a brand that we would consider premium end or prestige have announced they have plans to launch a high-end line of shoes and accessories in February during Milan Fashion Week. Evidently it is going to be a concentrated collection with limited pieces. An interesting time for a brand that has experienced strong growth of their core products to introduce a more expensive collection, but certainly a confident one. We await with interest to see if it 'steps' away from the fundamental Tod's look. Read more..

France is to Luxury what CHANEL is to Tweed - 15/01/09

Given the luxury industry in France was of equal importance to aircraft and satellite exports the situation and sustainability of this industry is incredibly important for France and as much as 80% of luxury goods produced are for export.

When you look across the luxury industry in France, as reported by an article in The International Herald Tribune in March 2005, and one takes into account "...French perfumes, liquors, beauty products and leather goods they generated about $11 billion in export revenues in 2003, putting those industries in the same league as aircraft and satellite exports..." There has been several additional years of export growth with emerging markets such as Russia, China and India so that figure will have grown further.



Many of the world's leading luxury brands were founded in France, the heritage and rich culture of luxury goods and services is of paramount importance to the culture of France and the association the world has is often France equals luxury or luxury equals most things French.

There is a crisis brewing on the morals and values placed on luxury goods and services and an article in the New York times yesterday "In The Lap of Luxury, Paris Squirms" reports on some of the thoughts on this subject. Economic morality is fast becoming de rigeur.

Exclusivity, Quality and Dependability. The non-negotiables of luxury: 13/01/09

In a great article today by Lauren Sherman in Forbes.com "The New Rules of Luxury Spending", she outlines the core principles of sustainability and success in the luxury industry. Brands that have seen huge growth in the past few years, which could be more accurately described as entry point luxury or prestige brands, will find, in these dynamic times, the disposable income of a greater number of people who could afford to buy into the brand will now fall away. This will have a huge impact on a few brands as their growth and ongoing sustainability was based on the recruitment of new and mostly young clients that wanted to be seen with a designer brand. Priorities will shift and the need and means to purchase will no longer be available.

As great believers of true luxury and the inherent quality and dependability of brands to constantly and consistently deliver on these principles, the keys to longevity of the most premium luxury brands; think Hermes,Chanel and Cartier in particular, lie within. With Louis Vuitton, Bvlgari, Gucci and Prada to follow. A quote extracted from Lauren Sherman's article says it beautifully in our book.. "The days of shopping 'til you drop are over," says David Lamb, chief strategic officer at diamond giant De Beers, which, with London-based market research firm Ledbury Research, recently examined the changing demands of the high-net-worth customer. "Instead of seeking out novelty, they're exploring authenticity," he says. "In this kind of economic climate, you literally can't afford to make a mistake."

Discrete Luxury is the "IT" thing right now - 14/01/09

It is a truism that emerging markets and new clients to luxury will often opt for the more obvious and overt luxury brand with a logo here and there, or they will be more swayed to purchase the 'IT' bag/shoe/frock that features heavily in the luxury brand's campaign and the press have gone mad about... or it is 'obviously' THAT brand because of its colour mix, silhouette, i.e. its signature look.

It is also true sporting luxury brands that attract attention is not the thing to do right now, particularly in this economic climate, it can be seen as somewhat 'tacky' or an ignorant understanding of the situation around you. What is chic and appropriate and has never been out of fashion with those in the know is subtle, discreet and covert luxury, who knows you ask? You, we say! That is the most important thing, a luxury product should be purchased and adorned because you love the quality, the heritage of the brand, the experience of the purchase, the colours and the feel not because you are wanting to 'flag wave' that you have money, or the need to portray your success through logos; or win brownie points amongst those that see you.

Discrete luxury is the IT thing to do right now. The KISS principle continues to apply in our books...Keep It Simple and Sophisticated..

Bethan Cole writes a great piece from the Telegraph.co.uk on just this in her article "Luxe labels are the way forward"

Evelyn Miles to be rebranded - 09/01/09

High end multi-marque retail brand Evelyn Miles, stockist of luxury shoe brands such as Prada, miu miu, Jimmy Choo, Sergio Rossi, Giuseppe Zanotti and Robert Clergerie, ... As well as showcasing handbags and accessories of these designers in some of their five stores, is reportedly to be re-branded under the Figgins Holding other retail brand, Midas. Evelyn Miles has five stores, three in Sydney and two in Melbourne.

The annnouncement was reported yesterday in the Herald Sun with the closing of Figgins other mass market retail brand Shoobiz, 43 stores are said to close. A time of consolidation for the Figgins Group and an interesting observation in that they are choosing to close their extreme ends of the retail spectrum, the high end Evelyn Miles brand and the more mass market Shoobiz and maintain the more commercial Midas brand. It is very often the reverse with the commercial brands falling off the perch first whilst the market tends to divide consumers into the upper and lower ends.

Figgins launched the Evelyn Miles brand over 27 years ago and it was named after Mr Don Figgins' elegant and stylish mother. They were the pioneers of interesting and fashion forward designer premium end footwear. The market has become more competitive over the years with Miss Louise, Cosmopolitan and Jean Brown Gallery more recently to name just a few. What is interesting is that they have only recently upgraded all their Evelyn Miles stores to a new modern contemporary designer concept and relocated their Double Bay store.

A sign of the times and a sad moment for a great retail concept.

What to do in a crisis? Enter Patrizio Bertelli, Prada's CEO - 08/01/09

We just couldn't have put it better ourselves if we tried....

Prada's Chairman and CEO, Snr Patrizio Bertelli, told WWD "During a crisis of this scope, the winners are always those who are able to offer the market a surplus of creativity and new products,”... “This means that we need to focus even more on our brands’ most traditional values: innovation, originality and uncompromised quality.” Bingo to that we say.

Louis Vuitton continues to expand in Australia: 07/01/08

The ever pioneering French luxury brand, Louis Vuitton, continues to expand its already strong presence, on the Australian market. Currently with stores in Sydney, Melbourne, Perth, Brisbane, Surfers Paradise and Cairns (and if New Zealand is part of Australia, as we often like to believe), then count Auckland and Queenstown in the mix as well...

It is not necessarily a case of wherever Louis Vuitton goes, other luxury brands follow, however they have a history of entering new markets before they are even on the luxury radar or at minimum, in the very early stages of radar registration! They tend to pave the way or at least make competitive luxury brands more readily consider following on their extraordinarily high platformed heels.

Certainly this has been the case in Australia from their early foray in Sydney in the 80's and most recently with the announcement last year they were opening in Westfield at Bondi Junction in Sydney and the soon-to-be updated Chadstone Shopping Centre in Melbourne.

As we continue to write in The MO Down, luxury has longevity and every decision is considered with a long term view in mind. The decisions to expand in Australia have been part of a strategic growth plan that was put to bed, no doubt, a couple of years ago. So, despite the current 'wobbly economic boot' we find ourselves in, the expansion doesn't just stop. Plans continue, as they should, as the markets will recover and incumbency by luxury brands will be to their advantage, only further reinforcing their brand equity, increasing market share and ensuring a future of more sustained growth. Salut to Louis Vuitton, we say.

Fine Jewellery Brands' not as vulnerable: 06/01/09

It is ever confusing for any consumer of news over the past few months as to the status of the financial crisis. As it is changing day by day, everyone naturally has an opinion of how serious this economic crisis is and particularly the effects on retail and some of their own hypothesis. A lot of it is not hyperbole as many US retailers have slashed staff, prices and some have had to liquidate so it is reality and as we saw in the last week of December, the mighty Chanel, a bastion of luxury has announced they are cancelled further Mobile Art exhibitions and reducing at least 200 of their head office Paris staff. There are signs of weakness across both commercial and high end retail. The big question is for how long and what core elements are needed for survival.

In an article in today's WWD titled "The Coming Fallout: Who's Vulnerable", Ron Frasch, president and chief merchandising officer of Saks, recently explained to analysts: “We must make the hard decisions on a brand-by-brand basis. Those brands that are nice to have can’t exist in the new environment. Each brand must lend both financial and strategic [value] to the company.” Already Saks has revealed plans to shutter 16 of its 18 bridal salons — affecting bridal lines including Amsale, Carolina Herrera, Reem Acra, Monique Lhuillier and Oscar de la Renta — to make room for higher-growth categories.

In separate conversations, Frasch told WWD that brands with a strong consumer resonance, such as Cartier, Graff and Chopard, will weather the financial storm. Jim Gold, president and ceo of Bergdorf Goodman, pointed to collections such as Chanel, Bottega Veneta and Nancy Gonzalez. Brands at high price points lacking a connection with consumers are more vulnerable.

The economic downturn was needed according to Karl Lagerfeld - 03/01/09

In a fantastically blunt and matter of fact Karl Lagerfeld style of direct delivery to questions asked by a BBC journalist in an interview yesterday, Karl said he believed The economic downturn was needed, he says, it had gone too far. "I see it like a cleaning up - it was too rotten anyway - so it had to be cleaned up...I see it like a healthy thing - horrible but healthy, like some miracle treatment of the world." ... "People have different kinds of dreams. After all, people need a handbag, there are cheaper handbags. But if you can buy a beautiful one and if that's your dream to buy, why not?"

As luxury is often about exclusivity, uniqueness and rarity it is important for luxury brands to return to their original 'raison d'etre' and divest of some of the products that were a little removed from the core origins. In robust economic times a brand name can more easily diversify or introduce new products or line extensions as there are many more people with disposable income purchasing anything with a particular 'brand name' on it. However when the markets are squeezed it is important to ensure strong foundations exist, the core products representing the heritage and origins of the brand. After all luxury continues to be relevant when it is aspirational and if it has moved too far away it risks losing the security it once had.

Longevity for Luxury in the East - 1 January 2009

Welcoming the new year in with some good news, particularly from this part of the world....

Francois Henri-Pinault owner of the Pinault Printemps Redout (PPR) Group said he expected 2009 to be a tough year for the group, which owns luxury brands including YSL, Balenciaga and Alexander McQueen.. CEO of the PPR Group told Grazia Middle East as reported in the Arabian Business.com that he expects 2009 to be a tough year.. “We have a very important slowdown nut not in the same way all over the world. It’s tough in Europe and America but Asia is still growing.”

“We will be very selective in investment next year but always moving upwards, upwards towards luxury. The danger would be to go down and that would be the wrong strategy for us. It’s about dreams and there is no crisis for dreams,” he told the magazine.

Long may that live... We will revisit these comments in a six months time to see where it is trending.