Prada to Establish Russian Presence 29/10/10

Luxury brands eyeing foreign markets have their focus set on the up and coming Chinese market at the moment as we have discussed several times previously here at The MO Down. It’s interesting to see that Prada has its eye on the Russian market. Another emerging market that was very strong five to six years ago yet has gone off the 'priority' list for brand expansion over the recent global economic crisis. Prada rented retail space in key locations this week, analysts are suggesting they are going to invest quite a bit establishing the brand here. The grand opening of the first Russian Prada boutique is rumoured to be planned for autumn 2011, in Moscow’s luxury shopping precinct at the intersection of Bolshaya Dmittovka and Stoleshnikov Pereylok. Try saying that after a few glasses of vodka!

Prada has been available in Russia since 2002, managed by retailer Mercury. However, with the increasing popularity of luxury brands, the market is becoming more and more competitive and names like Prada are having to develop their identities in the local context in order to stand out and remain competitive. Particularly given the exorbitant cost of renting retail space in prestigious areas in Moscow, brands have to assert themselves as one of the big guns in order to succeed. It seems that Prada are keen to own their image in Russia, and will soon be able to provide luxury shoppers with a shopping experience that is uniquely Prada. It’s certain that opening their own boutiques is a step in the right direction to bringing the popularity of the brand in Russia up to par with other parts of Europe.

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Coach Reports Excellent First Quarter Figures 28/10/10

Coach has reported impressive figures for its first-quarter net income. Rising 34 per cent, revenue has risen 20 per cent to $911.7 million, smashing expectations. Shares are at their highest since 2007, rising over 10 per cent. Coach’s results reaffirm reports that consumer spending is on its way back up.

Exciting things happening at Coach it seems, in perfect preparation for the holiday season. Having varied its strategy slightly, Coach is reportedly on the cusp of releasing new ranges, with a wider variety of sizes and prices. Though times are looking up for the luxury and premium industry, it seems that they are trying to reach a broader target market.

We have mixed feelings about this sort of thing here at the MO Down. Not because we don’t want Coach products to be more affordable (which largely they are) – we do. Our concern is twofold. One, we worry that with these sorts of initiatives brands might start to spread themselves too thin. Who are they marketing for? What happens if brand identity starts to slip below the sights of the premium market, but remain above mainstream taste? In other words, they could be placing themselves in brand limbo.

Second, as we have seen with collaborations, if premium labels appear suddenly able to produce products under the same name at a cheaper price, they create a dilemma for themselves. How do they maintain the quality image of their pricier ranges without causing consumers to question whether these products deserve their price tags? Identity is so crucial in the premium arena, we get cautious when it is toyed with.

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LVMH Acquisition of Hermes Shares to Be Examined By Regulators 27/10/10

There’s been an interesting development over the past couple of days. It seems that LVMH is set be investigated by French regulators over their recent surprise acquisition of Hermes stock. On Monday, we reported that the luxury conglomerate LVMH had increased its stake in Hermes to over 17 per cent. We speculated that this might be indicative of plans to increase interest in the future, and it seems the authorities saw it the same way. A spokesperson from LVMH stated that it did not plan a takeover, but wanted to be a long-term investor.

An issue has arisen over when the shares were purchased, since they were bought at an average price of 80.5 euro, 50.4 per cent cheaper than Friday’s price of 176.2 euro. It has been asserted that LVMH had breached rules by secretly building up a stake in the French leather goods company. Investors are supposed to declare their intentions for the future when their share reaches 10 per cent. It is likely that the small stake previously owned by LVMH was purchased with options to build up stake later down the track. Nonetheless, hedge fund managers are eager to learn the details of this transaction, and so are we at the MO Down. French regulator AMF will handle the investigation. We will keep you posted. Till then, Reuters has more info.

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Diamond-Clad Canturi Barbie Sold At Auction 26/10/10

Canturi is one of our favourite fine jewellery designers, here at the MO Down. We have commented time and time again on the rise of brand-collaboration. We are happy to see this name involved in such a unique style of partnership. Mattel are an empire of mass-production, but they certainly own their share of luxury. Limited edition Barbies are hardly dime-a-dozen. Barbie is one of the world’s most beloved celebrities. So famous, she lives in the league of Madonna, sans last name. Italian designer Stefano Canturi custom-designed a Barbie doll, including a specially designed necklace featuring a one-carat Fancy Vivid pink diamond and three carats of white diamonds (shoes to match, of course).

The Canturi-designed doll was finally sold at a Christies auction, after the completion of her world tour. According to a press release from the auction house, ‘The World’s Most Expensive Barbie’ was sold at auction for an incredible $302, 500– all of which went to charity. Whether her destiny lies as world’s tiniest trophy wife, or some very extravagant plaything, we think she looks a million dollars. It is certainly a further sign of the times and economic recovery. We wonder what Ken would get if he was bejewelled? The other day, Bulgari set a Christie’s record with the sale of its blue diamond… the coloured diamonds are getting a serious workout this week.

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LVMH Increases Its Undercover Stake In Hermes 25/10/10

Global luxury conglomerate LVMH SA has increased its stake in the quintessentially French maison, Hermes, to over 17 per cent. Until this recent acquisition of 14.2 per cent, it was not public knowledge that LVMH owned shares at all. In France, owners holding under 5 per cent can remain anonymous.

We wonder if this will turn out to be another classic ‘ghost muncher’ situation that will see LVMH incrementally increase their shares to ownership. Stranger things have happened, and we are sure Hermes is a name worth acquiring. Nonetheless, ‘not so’ says LVMH right now. ‘The objective of LVMH is to be a long-term shareholder of Hermes’ said an unidentified spokesperson. Apparently they like what Hermes is doing, and are simply interested in investing in this company because of what they do and how they do it. Hermes is certainly an industry leader, commanding a level of respect not afforded to many. Added bonus, when Hermes shares are doing so well.

Call us cynical, but when the likes of LVMH bid a fine bonjour and pay for it, you can be sure that there is a future strategy in place. We won’t be surprised if they raise the holding soon enough. Time, of course, will tell. Follow this link for more info.

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Julianne Moore As The Latest Face of Bulgari 22/10/10

One thing that really fascinates us here at the MO Down, is the way luxury brands use celebrities in their campaigns. Powerhouses like Chanel and Louis Vuitton, resting on carefully constructed reputations for excellence and innovation, time and time again turn to celebrities for a certain something they can’t manufacture. There are too many great celebrity campaigns to count. Nicole Kidman’s Chanel no. 5 ad with Baz Luhrmann, Sean Connery for Louis Vuitton. These campaigns capture everything that makes that person so amazing, and tie it so naturally and so seamlessly to their brand that it’s hard to distinguish whether it’s advertising or art.

The latest campaign to catch our attention is Julianne Moore’s for Bulgari. Approaching 50 and looking not a day over 35, it is wonderful to see her as the brand’s spokeswoman. Swimsuit-clad, she looks fresh from the fountain of youth as she effortlessly epitomises ‘fabulous at fifty.’ As the face and body of the ‘racy’ campaign, she poses nude– a bold move at her age, though one that has already earned her kudos. In her latest film “Chloe” Moore kisses a woman. Glamorous and intriguing as Moore is, it is interesting to us that this sort of potentially controversial activity makes someone so desirable to a brand like Bulgari. Essentially, that’s exactly it. She is glamorous and intriguing and gets away with boldness, and allows Bulgari to be the same without taking any risks. Genius.

All natural and all amazing, Bulgari have broken off a piece for themselves. Definitely worth taking a peek at the campaign.

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Coco Chanel... Very Much Alive 21/10/10

Justine Picardie’s new biography of Lady Chanel has just been released, and we are joining the rush to get our hands on a copy. While she was indisputably a remarkable woman, we are fascinated by the frenzy that seems to occur every time her name is mentioned. With what seems to be a constant and steady flow of books, films, mini-series, magazine articles, Coco’s legacy is a timeless one. She is in many ways, larger than life– certainly transcending the bounds her own lifespan. It is extraordinary that in three years, with three different films, a new book is still able to generate such enthusiasm.

This all works out very well for the House of Chanel, and the identity of the modern brand. The publicity something like this generates is not only enormous, it is the kind of exposure money can’t buy. Sure, Coco wasn’t perfect and it is certain that such intense scrutiny will reveal some skeletons. It is rumoured that the grandsons of the man who financed the original launch of Chanel No. 5 hold some dark secrets. We are all human after all. If you truly believe there’s no such thing as bad publicity, all this does is add fuel to the ever-growing fire of interest in her story.

Charles-Roux’s biography of Coco Chanel shines as the most accurate to date, at least according to the House of Chanel. We can’t wait to see how Picardie’s stands up, and indulge in another insight into the life of one of the most remarkable women to have ever graced the fashion world. Visit the Wall Street Journal for more info.

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Diamonds... An Investor's Best Friend? 20/10/10

As previously reported by the MO Down, recent auctions of rare fine diamonds, gemstone and jewels have brought in unprecedented sales. It seems that diamonds are the new currency an affluent few are hedging their bets on. More than 450 pieces of jewellery drew at least $40 million in a Christie’s auction this week from buyers seeking to hedge against financial risk. Diamond prices have risen 20 per cent since last year, perhaps reflective of uncertain times for stocks and currencies. No doubt the price of diamonds is set to increase.

On October 20, the “Jewels: The New York Sale” will feature the Bulgari Blue Diamond for auction, likely to sell for $12 million (USD of course). Purchased in 1972 for $1 million this is the largest blue diamond to ever be offered at auction. The auction will also feature diamonds from Cartier, Van Cleef & Arpels and Boucheron. According to Christie’s, sales of jewellery has risen 75 per cent since this time last year!

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A New Level of Luxury? 19/10/10

Like we keep saying, the luxury industry is experiencing solid recovery in light of recent economic turmoil. With the constant and voracious appetite consumers are showing for certain luxury brands, many brands are answering demand with supply, as well as simultaneously adopting a push strategy into new and emerging markets. Luxury brands sales have increased dramatically in China this year, up to 30 per cent so far. The US, still recovering from the GFC saw its luxury industry grow 12 per cent. Shares in the biggest luxury goods companies, think LVMH and Richemont, have risen sharply this year.

It’s a dilemma the luxury industry has always faced: you want to be popular, but you want to be exclusive and sought after. How do you maximise sales without loosing your cachet? We believe an opportunity exists for a select few ‘ultra-luxe’ brands that currently operate in the most exclusive of niches. These brands are bespoke and artisanal in their entire approach to business, and may prove to appeal to tastes a tier higher than the broader luxury market. There is perhaps soon to be a new ‘ultra-luxe’ consumer group that will be seeking something rarer than other brands can give. This will be a golden age for the Goyard’s and Delvaux’s of the world.

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Luxury News in Brief 18/10/10

Just bringing you some quick news updates from over the weekend. Many instances of positive figure-reporting coming from the luxury industry recently, and we’re happy to hear it. Looks like the good times are returning.

Louis Vuitton’s figures are great for their first nine months of 2010, LVMH total sales climbing 23.6 per cent. It goes to show that its core products provide security to the brand, and also customers. Customers want something that signifies a good investment and for this, say the figures, there is nothing better than a Damier or Monogram piece from the collection.

Likewise for Burberry, the brand has experienced a 21 per cent rise in first-half revenue, largely attributed to the Chinese market, and increased coat sales in Europe. Despite a drop of over 4.1 per cent last week, Burberry shares have risen dramatically this year. Many experts have attributed this to its skilful use of digital media to increase awareness. Burberry has still to take China by storm, and looks to do so in July 2011. For more info, check out Bloomberg’s full report.

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Gian Ferraris Steers Versace to Financial Prosperity 15/10/10

We’ve noticed a new trend emerging. This trend, friends to the luxury industry, is increasing profits. This week, Gianni Versace SpA joins the league of luxury brands singing the ‘things are looking up’ tune, increasing its full-year revenue and profit forecasts after reporting higher nine-month sales. According to CEO Gian Giamarco Ferraris, revenue for 2010 will exceed 280 million euros ($395.2 million AUD), smashing targets (and January forecast) of 270 million euros ($381.1 million AUD).

Since joining the company in July last year, Ferraris has made some bold alterations to Versace’s business. Closing factories and reducing one’s workforce is rarely a recipe for popularity, but it seems to have delivered the company from the forces of financial evil. Versace has since discontinued involvement with designer cars and helicopters, repositioning the brand around clothing and accessories. By 2011, it plans to have acquired the strength to guarantee profitability and future growth. They are already well ahead of their target.

Great to see another brand find its feet in wake of the GFC, particularly one of significance to the fashion industry and that has experienced a fairly unsettled recent past. Versace currently operates 88 directly operated stores, and plans to unveil a new concept store in Shanghai in 2011, before rolling on to Milan and Paris. Right on the money with a launch in China, Versace has always been confident, if nothing else. True to style, Versace reports its growth potential to come from within. An exciting prospect for those of us who have always found this brand intriguing. We can’t wait to see what’s in store- so to speak.

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Coach, Louis Vuitton & Ralph Lauren have topped the Second Annual Digital IQ Index for Luxury… 14/10/10

We thought so. Recently, we’ve given a lot of thought to luxury brands and why they have been so slow to embrace the online revolution. For companies that base their business on innovation and cutting edge, luxury has been surprisingly sceptical. We’ve noticed that some brands are being left behind in the race to online, whilst others are surging ahead. This study has just provided hard evidence.

Developed by NYU Stern Professor Scott Galloway, a team of experts and industry partner iCrossing, the study measured and ranked a brand’s digital footprint across four dimensions: effectiveness of a brand’s site, digital marketing, social media and mobile.

Fashion icons including Prada, Christian Dior, Cartier and Rolex dropped significantly from last year, showing ignorance to the significance of the digital age. Industry leaders included Coach, Louis Vuitton & Ralph Lauren (tied), Gucci and Hugo Boss. We predict this study will start to accurately forecast sales figures, and look forward to seeing how these findings correlate. For a deeper understanding of these results, check out this link.

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Collaborations Are The New Black… How many is too many? 13/9/10

We’ve noticed a significant rise in luxury brands collaborating with mass-market retailers. Valentino with Gap, Lanvin with H&M, Jimmy Choo with H&M, Stella McCartney with Target. The list goes on. We wonder how many it will take before the novelty wears off? How many, before its too many? Is the collaboration from a high-end designer with a more commercial retailer nearing the end of its popularity? It doesn’t seem so. While we understand there is a certain strategy behind collaboration involving brand awareness and covering ground not usually covered with the limited luxury or high-end marketing strategy. Still, the question begs to be asked. If a designer like Valentino can really make a fabulous ‘capsule collection’ for one fifteenth of the price, doesn’t it raise some questions about mark ups? We have been in the luxury industry for long enough to know that of course there is more to the extravagant price tags of luxury goods than a name. Exotic fabrics, embellishments, different production methods separate the crème from the crop. However, giving the public access to too much of something that is meant to be rare and exclusive, we can’t help but wonder if it cheapens the brand. Both in terms of exclusivity and perceptions of having ‘sold out.’ The oh-so-important existing customers may begin to get a little miffed. Thoughts anyone?

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Mulberry Reports Roaring Trade 12/10/10

Mulberry has shown phenomenal growth recently, with sales increases as high as 80 per cent since summer! Due to open their first Australian freestanding store in the Westfield City development in Sydney later this month, Mulberry entered Australia in a wholesale business capacity over a decade ago. It was short lived at the time, disappointingly for loyal followers, however Mulberry’s mix of product and ability to spot a forward trend or two over the past number of years have put the brand firmly on the international map, Asia incredibly so. Godfrey Davis, the chief executive of Mulberry has reported that sales in Asia have outstripped the UK. Always great to see such a solid brand fight its way to the top, especially in light of tough economic conditions. Yet another sign that things are looking up for the luxury industry. It’s time for a reintroduction, Mulberry is back!

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All Eyes On India: An Up And Coming Luxury Market? 11/10/10

India’s luxury goods market is forecast to be worth close to $15 billlion by 2015. Hardly surprising really, Indian markets have been increasing their consumption across almost all industries in recent years. Australian export industries are scrambling to forge partnerships with Indian businesses, and it looks like European luxury brands have their eyes on the same prize. Some of the top ranking Italian luxury brands are planning to collectively invest 150 million euro in India- a handsome return on investment if the market grows as it is expected to. According to the executive director of the Italian trade group Fondazione Altagamma, 50-60 stores will appear, as more and more luxury brands begin to assert themselves in the Indian market. In light of what we have seen at the Delhi Commonwealth Games, India still shows an enormous disparity between rich and poor. The socio demography falls at extremes. Luxury brands investing in India is a risky strategy on many levels. We wonder whether their presence will be welcomed as it has been in China, or will it simply exacerbate social tensions?

For now, India’s luxury industry still lags behind Chinese and Brazilian peers. Despite an increasing number of millionaires in India, the lack of quality retail spaces, high import duties, bureaucratic red tape and counterfeits, have hindered the industries progress. We are interested to see how the Indian luxury market grows...

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Despite up and downs, we still trust David Jones… 11/10/10

It says a lot about brand legacy, especially in light of recent controversy. A recent survey has shown that Australia’s premium department store is ‘the most trusted department store.’ Myer, Target, Big W and Kmart followed.

David Jones have been consistent marketeers since they established their brand in 1838. They say it takes one hundred years to build a reputation and five minutes to destroy it. They have certainly had their fair share of scandal- this year alone. Are consumers more forgiving than we thought, or have they just been lucky and avoided the wrong kind of mishap?

Despite cutting costs, poor share performance and sexual harassment allegations, the David Jones name remains relatively untarnished in the eyes of their consumers. Why? David Jones is a strong and consistent brand that have been clear about their target market and strategy alignment. They give back to their customers (loyalty programs)- they have won the hearts and minds. The flower show in spring each year, the Christmas window treats. The music, the overall in-store animation, their willingness to exchange and not knowingly be under sold. So simple, yet so effective.

The survey asked participants to give their ‘gut feel’ on the brands they instinctively trust the most. As to why they have survived recent scandal, we turn to Ken Roberts, CEO Worldwide, Saatchi & Saatchi. ‘What builds brand loyalty beyond reason?’ The answer is love.

Love is the most powerful marketing strategy on the planet. And they have us. We can't help but wonder if we would be so forgiving of a company we had not forged an emotional attachment to? Something tells us that we would not. Love is blind and Australians love David Jones. At least for now, the houndstooth is here to stay.

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Prada contemplating a Hong Kong IPO? We Thought So... 8/9/10

Prada has been expected to make an IPO for a while now- On September 20 we commented on the brand’s strong performance recently, and suggested on top of more rumours that now is perhaps as good an opportunity as ever. It seems we were correct. Market conditions allowing, Prada is contemplating a Hong Kong flotation for 2011, in time to take advantage of the expansion of the Chinese market- already the fastest growing, and soon to be the world’s largest market for luxury brands. This is the most likely move, but Prada have not decided just yet.

Prada have flirted with the idea of making an IPO for years, but each attempt has been thwarted- they just haven’t seemed to have great luck with timing. If they do list, it will be fourth time lucky following three failed attempts in the past ten years. Perhaps fourth time very lucky, and well worth the wait. If they can time the offer in line with Chinese growth, as well as economic recovery in the US and Europe, Prada might also be able to shake off its debt (estimated at approx $1.4 billion AUD) and emerge positively laughing. All in all, Prada is expected to be valued between 4.5-6.7 billion euros ($6.4-9.6 billion AUD).

Still, nothing is set in concrete, and the move will involve significant changes to Prada’s executive and supervisory structure. Decision-making currently lies very much in the hands of Chief Executive Patrizio Bertelli, who, with the family of Muiccia Prada, controls 95 per cent of Prada Spa’s capital. The Italian bank Intesa Sanpaolo owns the remaining 5 per cent.

We can’t wait to see what is in store for one of the world’s most iconic fashion houses, and impatiently await further revelations.

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Luxury And Brand Behaviour: Proactive Or Reactive? 7/10/10

We recently commented on the relative reluctance of luxury brands to embrace the Internet. Online shopping and online marketing have been embraced with open arms by many other industries. Luxury has been sceptical. In a sense, this is incongruent with their usual position at the forefront of innovation. They are masters of reinvention and rejuvenation.

Underlying every marketing strategy employed by luxury brands is the maintenance of their legacy- the purity of their message and their communication with a specific audience. It may seem harsh, but luxury isn’t a commodity. It’s not for everyone. This said, everyone has their own interpretation of luxury, and this is beyond the control of marketers.

Some luxury brands are being left behind in the race to reinvent and remain relevant, whilst others have forged ahead. It is interesting to note that brands such as Chanel under Karl Lagerfeld, who have embraced technology and changes in social interaction (think online coverage of runway shows), seem to be managing their raison d’etre seamlessly. They say in fashion that everyone ‘has their moment’ but some have faded faster than others.

It is essential to survival that brands appreciate how their audiences change. It is important to consider future markets, and generations to come. Brands that remain static will be buried.

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Luxury News In Brief 6/10/10

Just a couple of interesting news items from over the long weekend. Louis Vuitton has raised the prices of some of its iconic monogrammed and other classic handbags– up to nine percent in some cases in the Euro zone. Certainly a sign of the times, specifically that the economic climate is looking up. Vuitton is making a confident statement about their own popularity, one we think could perhaps also be a strategy to increase overall sales? The luxury industry can read this as a sign of recovery, and look forward to a bright future.

In other news, Cognac legacy Kilian Hennessy has passed away- at the ripe old age of 103! Just goes to show that good cognac has its health benefits. With his cognac and early retirement combination, he may have been onto a good thing. Kilian Hennessy was CEO of the company in the 70s, steering it into a merger with Moet & Chandon to create Moet-Hennessy in 1971.

Last but not least, it is interesting that brands are pulling out of iPad’s iAds left right and centre. Due to repeated rejection of ads that must be approved by Apple’s California headquarters before being included in the plan, high profile names like Chanel have had enough and withdrawn their business. Unusual to see an unpopular Apple initiative, let’s see if they can turn things around…

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Luxury Brands To Mimic Fast Fashion? We Think Not… 5/10/10

We know that to keep ahead and be a true leader in the luxury industry, brands must constantly innovate, take risks and embrace change. We found a comment by Cavalli Group’s CEO particularly interesting. Musing that luxury brands may need to take a leaf out of the ‘fast fashion’ retailer success stories (think H&M and Zara), a six week life cycle from concept to retail, ‘it’s all about keeping stores looking fresh, customers excited and ‘needing’ to come back to see what’s new, and managing inventory.’ In fact, a lot of luxury brands manage at least six ready-to-wear collections per year– some up to eight (Spring Summer 1st Drop, Spring Summer 2nd Drop, usually Runway Collection, High Summer in some cases, pre-fall, Autumn/Winter 1st drop, Autumn/Winter 2nd drop, usually Runway Collection and Cruise). Having new stock every six to eight weeks is a tall order from luxury brands, particularly given the propensity of Chanel, Giorgio Armani, Louis Vuitton etc. to source exotic and unique raw materials, fabrics and embellishments from all over the world. Production is more artisanal in its approach with high standards and quality control. Good luck working these things into a fast fashion, Zara-like model!

Luxury isn’t about functionality in the way of fast fashion. It isn’t meant to be disposable. Wear fast and affordable fashion once, twice, and you feel good about your purchase. Luxury is an investment, and as far as we are concerned, worth the wait. Copying the model of fast fashion would be to squeeze a square peg into a round hole. By its very nature, luxury is not meant to be mass-market. Instead, innovate as Burberry is doing. Live streaming shows and having 'some' key products ready for sale when the creative director takes their bow... now that's a luxury and no one can complain about speed to market...

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Burberry Can Do No Wrong It Seems - 4/10/10

First of all there is the news that Burberry shares have increased 22 percent this month, why so you ask? Well it certainly doesn't hurt the share price when the Prorsum show, held on 21st September as part London Fashion Week, was quite fabulous and was received well (mostly) by the influential press. Add to that those persistent rumours that a private equity firm in the US is circling with some interest, target for landing, a checkered trench perhaps?

Secondly, the success of the quintessentially Brit Brand under its incumbent CEO, Angela Ahrendts who has pushed the brand strongly to its current success story, is so profound and clearly impressive that the British Prime Minister himself, Mr David Cameron has appointed her (along with a few other top executives from companies including Google and Sony) to a new economic advisory panel that will meet with the PM four times a year, all for the love of God, Queen and Country, and ultimately to provide input as to how to get Britain back on track.

We believe it's wonderful to finally see fashion being taken seriously at this pointy end of business, it seems to have been a long time coming for any senior executive from the fashion industry to be up so close and personal with the decision maker of a country. We know the reverse happened, we wrote earlier in The MO Down the LVMH Group invited the former Prime Minister, Mr Tony Blair to be an advisor/consultant for the group. Btw, we're not quite sure how that is going, or if it in fact did eventuate...

Burberry, a significant player on the global fashion stage, is certainly carrying more weight that fabric these days.

Image credit: Burberry CEO, Angela Ahrendts, image: frenchkande.com

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The Age Of Philanthropy- Luxury Brands and CSR 1/10/10

A few weeks ago, we talked about Corporate Social Responsibility in China. Personal philanthropy is all the rage among the Chinese ‘nouveau riche’ at the moment, and consumers are increasingly conscious of corporate generosity- or lack thereof. But its not just China, consumers all around the world are calling for greater transparency and it may be time for high-end labels to pick up their game. Luxury brands have been surprisingly slow to respond to this attention to their actions, with a few exceptions, see Bulgari.

This week, the World Jewellery Confederation released a ‘Responsible Luxury’ report, analysing the development of CSR in the jewellery industry. Contrasting Tiffany & Co’s proactive efforts with De Beers’ notoriety for buying ‘conflict diamonds’, it has created a stir and shone some light on important social issues.

Interestingly, the luxury industry usually escapes regulation. With the exception of labour standards within individual countries, it is tricky to police the sourcing of materials from all over the world. Often consumers don’t actually think about where the materials come from. All this is changing. With increased attention to what goes on behind the scenes, it seems that consumer demand will regulate just fine. Brands such as Cartier, Tiffany, Rolex and Chopard can use their ‘Forever mark’, which guarantees their product was produced with integrity, in their marketing, and everybody wins.

Consumers don’t want luxury that has been tainted. There’s nothing glamorous about a human rights violation.