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.

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...

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.”

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.

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.’

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.

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).

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.

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.

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.

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?

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…

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.

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.

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 - www.armaninatale.com – 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.

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…

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.