Wednesday, 30 June 2010

The Self Made Chinese Billionaires - 30/06/10

The Chinese luxury consumer just keeps increasing, with a confirmation now of 79 Chinese billionaires. Forbes reported “China's rich are fuelling the country's 15% annual growth in luxury sales, which have reached $9 billion a year, making the country the world's second largest market for top-end products.”

It cannot be argued that the Chinese consumer market is growing rapidly. Earlier this year we brought the news that the Chinese luxury market is now the second biggest in the world. Last year, we took a peak into the billionaire world of Beijing.

Image credit: fashionphile.com

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Valuation Estimates For Prada - 30/06/10

Bankers have estimated a 1 billion dollar range on the valuation of Prada SpA, stating the label to be worth between $3-4 billion. We would imagine that the estimates should be a lot closer than a 25% difference, in our books.

It was not long ago that we brought you the news of a rumoured IPO for Prada, yet the label were quick to correct the claims, noting that an IPO was not discarded, but simply put on hold. WWD reported yesterday however, that an IPO could come into fruition for the company in 2012.

Image credit: prada.com


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Tuesday, 29 June 2010

Fendi- Crazy About Their New Watch - 29/06/10

It’s a nice face but not sure about the name. Fendi, the Italian Roman born company created in 1925 with a wonderful injection of key IT handbags over the years (remember the Baguette bag mania circa 1997 and the Spy Bag 2005), has now released the Crazy Carat watch- the first fine jewellery timepiece to be designed by the brand. I suppose if you had asked us about naming a handbag Baguette we may have said 'je ne comprend pas' or 'non capisco' in 1997 but it is now an accepted name that runs off the lips, and perhaps Crazy Carat will have the same effect. Yet, we just can’t help thinking of Crazy Horse!

The timepiece really is unique and innovative, especially with LVMH group being the sole majority shareholder of Fendi, coupled with the creative drive of Fendi creative director, Silvia Venturini Fendi. Retailing from US $2,400 to $15,000, with the option of personalising your timepiece with custom made carats, you can expect to be waiting six months or more for your design.
Image credit: wwd.com

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Monday, 28 June 2010

Coach Look To The Male Market - 28/06/10


Coach have announced ambitious plans to increase their market share from 3% to 14% in a few years. The company are aiming to capture share of the men’s luxury accessories market. Although men’s collections in general sell far less than women’s in brands that offer both, it is important that the product offer is adapted to their needs with both accessories and clothing.

Men tend to shop sporadically, and when purchasing they will buy several things at once so it is important for brands to know their male customers well, and recognise that male shoppers are generally low fuss and practical. To be successful, brands need to be effective in these areas whilst always offering exceptional service. The key? Make it easy, professional and efficient and they will be back.

Image credit: coach.com

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Cartier Branch Their Support To Student Designers - 28/06/10


Cartier are investing in the future of student craftsmen, which we are delighted to see. The luxury jewellery brand are boosting their support of Europe’s largest jewellery school- the School of Jewellery in Birmingham. The agreement was confirmed after a visit to the school by two Cartier officials. This new support network is increasing amongst luxury brands, as we saw earlier this year with LVMH support of student artisans.

Image credit: schoolofjewellery.co.uk

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Salvatore Ferregamo Launches An Eco-friendly Shoe Line - 28/06/10


The seasonal men’s ready to wear collections are moving onto Paris now after a reasonably successful showing in Milan, meaning it is an opportune time for Salvatore Ferragamo to launch a new men’s shoe line. The collection is an eco-friendly line, which will see a percentage of profits donated to charity. Ferragamo has designed six causal styles for men, ranging from moccasins to boots, which will appeal to their eco-friendly frame of mind and style stakes.

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Friday, 25 June 2010

Cartier Launch New Men's Watch In Sydney - 25/06/10


The anticipated Calibre de Cartier, Cartier’s newest watch for men, was unveiled in Australia on Wednesday. The launch was held at the Blue Hotel in Sydney’s Woolloomooloo, and involved an impressive short film to truly capture the essence of this new timepiece.

Targeted firmly at the male market, the Calibre de Cartier is strong and confident, reinterpreting the round form in watchmaking. What is most important about this new timepiece is that it honours Cartier’s first in-house automatic movement. This is certainly no mean feat when it comes to timepieces and the manufacturing of the total product.

Image credit: worldtempus.com

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Executive Changes Across Prada, Gucci and YSL - 25/06/10


Prada has announced news this week that Randy Kabat, executive vice president for marketing and advertising, will be leaving in July after 13 years. As the business counterpart to Miuccia Prada’s creativity, Kabat noted of her time as having been “truly rewarding”. Kabat now seeks a different professional challenge, taking her priceless experience at Prada with her.

For Gucci and YSL, presidential changes have come into fruition this week, with YSL America president Laura Lendrum, taking on the title of Gucci America president. In her place at YSL will be Brant Cryder (formally of Prada). Both changes will be official as of August 1st.

Image credit: gucci.com

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Thursday, 24 June 2010

Balenciaga Exhibition: A Celebration Of The Brand's Legacy - 24/06/10


Lovers of Balenciaga will be flocking to the upcoming exhibition “Balenciaga: Spanish Master” which is set to open on November 19th in New York’s Upper East Side. The exhibition, curated by Vogue’s Hamish Bowles, will cover everything from vintage to wedding dresses with a focus on Cristobel Balenciaga’s achievements, influences and designs.

With current designer Nicholas Ghesquiere leading the brand to amazing strengths after he began with the company in 2007, the exhibition will poignantly reveal how Ghesquiere has ensured the companies legacy with archival designs, whilst adding his own touch to the Balenciaga aesthetic of today.

Image credit: nymag.com

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The Hidden Life of Yves Saint Laurent Is Revealed - 24/06/10

Controversy has arisen at the release of Pierre Berge’s book “Lettres a Yves”. Berge, more commonly known as Yves Saint Laurent’s invaluable lover, chaperone and all round assistant, has constructed his novel around the hot and cold relationship between himself and Saint Laurent, focusing largely on the fact that Saint Laurent could not have had a career without Berge by his side.

“Lettres a Yves” covers the good, the bad and the ugly of their famous relationship, which ultimately shines light on the hidden life of Saint Laurent- drinking, drugs and eating disorders included.

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Wednesday, 23 June 2010

The Ritz Paris Catering For A New Luxury Consumer - 23/06/10

The Ritz are creating a luxury heaven for an increasing flood of Chinese tourists, heading to stay at the famous Paris hotel. Omer Acar, general manager of the hotel has spent time researching the Chinese tourism sector to deliver their exclusive customers the ultimate hotel experience; and it seems they have gone above and beyond expectations.

Visitors to the hotel have the chance to sleep where Mademoiselle Coco Chanel once slept, as they indulge in the highest luxury shopping and fine dining. This new consumer, is after luxury and European heritage with a creature comforts from home, it’s all about the mix really, and the Ritz Paris are more than willing to provide.

Image credit: ritzparis.com

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Luxury Good Shares Rise Across Europe - 23/06/10

The China effect continues- after China has made it clear it will relax the yuan’s fixed rate to the dollar, stocks have rallied. The effect has hit across the luxury board, with the owner of Gucci group PPR SA, increasing 1.1 percent to 107.8 euros.

In the other corner LVMH Moet Hennessy Louis Vuitton SA reached 3.4 percent to 96.58 euros. Whilst shares rose across Europe, analyst at Kepler Capital Markets in Zurich, Jon Cox, stated “China is the fastest-growing part of the luxury goods market…A higher currency boosts sales and profitability.”


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Tuesday, 22 June 2010

The Slow Erosion Of Haute Couture: Givenchy Say Farewell To The Runway, Effective Immediately - 22/06/10


Givenchy are playing with the reality of the viability of haute couture, and the excessive expenses needed to put on runway shows. The luxury brand have turned instead to exclusive and intimate showings of their collections, quitting the world of runway going forward.

Although Givenchy’s new approach takes a clever approach to satisfying haute couture customers in a professional, personalised manner, this new turn is costing the company more than previous runway shows. We question why, in light of this, Givenchy claim it isn’t about the money, but really, shouldn’t it be?

Image credit: givenchy.com

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David Jones- Is It The Man Or The Brand? - 22/06/10


We were not going to cover the swift departure on Friday of David Jones' CEO Mark McInnes, given we knew that the story was out of the stratosphere in Australia by 5pm Friday. Then by midday yesterday there wasn't much more to tell. Nonetheless we have relented given that Bloomberg Business Week picked up the story with particular focus on the share price shuffle in the lead up to the resignation announcement and post announcement whilst also forecasting where the shares will trade in the short term.

It is true Mark McInnes resided over David Jones, Australia's premium department store, over a period of positive growth and general good news stories. The company experienced strong media heavy seasonal fashion launches, top model 'face-of-the-brand' sign ups and McInnes navigated the brand through a very tough past 20 or so months, which as any retailer will tell you, has been the most challenging in recent history.

Yes, he made some strong cost cutting decisions to return profit to shareholders and was a confident and clever business man. Nonetheless he also had an incredible team with strong and competent players. Yes, there may be a small short term facial tick to the share price however, we believe it is much more about the brand than the man. The David Jones brand has a strong heritage, established in 1838, that says a lot about the evolution and sustainability of the brand. May the show go on... successfully.

Image credit: zimbio.com

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Monday, 21 June 2010

Mark Browne Named General Manager, Christian DIOR Oceania & Micronesia - 21/6/10

In exciting news close to home, Mark Browne, current General Manager for Louis Vuitton in New Zealand has been announced as the new General Manager for Christian DIOR, Oceania and Micronesia, effective 1st July 2010.

Browne will relocate to Sydney to begin building this brilliant brand further. A wonderful opportunity and naturally we look forward to seeing more DIOR on the Australian and New Zealand market in particular.

We congratulate Mark on his appointment and wish him success.

Image credit: wwd.com


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Luxury News In Brief - 21/06/10


More luxury brands are becoming social media savvy to reach a wider audience. Both Giorgio Armani and Emporio Armani have become involved with the latest social media trend for runway shows- live video streaming. Both Armani men’s wear shows are being live streamed across the internet this week from Spring/Summer 2011 collections in Milan, with the next show due to be revealed on Tuesday 22nd June.

Burberry also brought the front row into homes around the world, with their live streaming of Burberry Prorsum Spring Summer 2011 over the weekend. Burberry introduced their latest campaign Burberry Acoustic, which sees selected British bands play across multiple 'Burberry experiences.'

In keeping with their support of emerging talent, Burberry also launched an online showcase of British musicians, all hand plucked by creative director Christopher Bailey and driven by Angela Arhendts. The brand continues to be innovative and relevant to its ever growing and evolving audience, and we are definitely impressed!

Image credit: burberry.com

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Tiffany & Co Expansion Plans: Fancy A New Handbag? - 21/06/10

Tiffany & Co are branching out from their egg-shell blue boxes with expansion plans set to introduce a new range of handbags and accessories. Whilst planning for capital outlays of 6% to 7% of sales this year, this new expansion looks to have a positive impact on the companies share price.

The lucrative handbag market is not necessarily an easy road for luxury jewellery brands to extend to. The world’s largest jewellery brand Cartier has included handbags in their range for some time, yet it is unusual to see such products featured in fashion editorials. In addition, we can’t remember a time when Cartier or Bulgari handbags were labelled as the ‘it’ bags du jour.

Although the introduction of handbags into jewellery brands seems to leave the former as a mere after thought to the companies core pieces, nonetheless we imagine Tiffany & Co. will prosper from this expansion as the wider product breadth will attract new customers, and maintain loyal clients.

Image credit: tiffany.com

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Friday, 18 June 2010

Luxury News In Brief - 18/06/10


As investors struggle to find solid direction after economic turmoil in Europe, retail stocks have slipped 0.8 percent this week. The effect has resulted in Polo Ralph Lauren Corp pricing CEO Ralph Lauren’s offering of 9 million shares at $81 a share. Whilst J.P. Morgan, Goldman Sachs & Co., Deutsche Bank Securities and UBS Investment Bank have a further 30 days to purchase $1.4 million shares in addition of Lauren’s personal holdings, it seems regardless, the king of luxury lifestyle will be coming out with a nice raise, in addition to his control of the company.

Whilst the stilettos gain height, so too is Jimmy Choo’s expansion over the world. The luxury shoe label has announced plans to open a further four directly operated stores within Milan, France and Zurich. Tallying their store network to 110 across the globe, Jimmy Choo proves shoes really are a girls’ best friend.

Image credit: www.manolomen.com/images

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Thursday, 17 June 2010

Bidders Way In At The Upcoming Gianfranco Ferre Auction - 17/06/10


Anyone interested in the fashion house of Gianfranco Ferre has until the 6th of July to put up their hand and place a firm offer, in the upcoming auction of the famous designer.

Last year, The MO Down reported of Gianfranco Ferre suffering from the global financial crisis and ultimately becoming bankrupt. Despite this tragedy for the fashion house, the Italians seemed to believe it to be quite acceptable, given the magnitude of the crisis across Europe and the US.

It was only three years ago on Tuesday that Snr Ferre passed away, with Swedish designer Lars Nilsson taking over, in a short and sharp effort that came to an abrupt holt. It’s a trial and error situation for some brands who struggle to survive after the creator passes. Some thrive and flourish, yet others tend to lay low and then spark back with a reinvention. Despite the ultimate outcome, Ferre’s legacy is sure to live on through retrospectives and ‘inspired by’ collections.

Interest in the upcoming auction is travelling in from South Korean conglomerate Samsung Group as well as close to home from the Italian private equity firm Palladio Finanziara- we shall wait and see who is victorious.

Image credit: vogue.com

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Wednesday, 16 June 2010

Burberry's Six Million Pound Woman - 16/06/10


Say hello to the six million pound woman, Angela Ahrendts of Burberry. Since taking over as boss in 2006, Ahrendt has continued to grow the luxury label from strength to strength (impressive to say the least with the dire situation of the industry over the past 20 months).

Heading up 23% on last year, company profits were reported in May 2010 to be at 215 million pound, while sales reached 1.28 billion pounds, pushing a 7% increase. And it only gets better from here, as Burberry look to expand in Brazil, Mexico and India, but for now, a job well done!

Image credit: burberry.com

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Bulgari And Dior Valuations Reduced - 16/06/10


A less than ideal situation for Bulgari and LVMH’s Christian Dior this week, as both companies valuations were reduced from a ‘buy’ recommendation to ‘neutral.’

As the luxury market is being closely scrutinised for further signs of positive performance, Bank of America Merrill Lynch has warned that first half results for late July, may end up as a ‘reality check’ for LVMH investors.

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Designers Bid Farewell To The Carrousel Du Louvre - 16/06/10


Many fashion designers are saying goodbye to the famous Carrousel du Louvre, which has been host to countless Haute Couture and Pret-a-porter shows in the past. The Carrousel, constructed specifically 16 years ago for the presentation of fashion shows, will no longer be used as designers look to more unique and innovative venues to stage their shows.

This result has been gradual, but was really hit on the head as the magical Grand Palais reopened its doors in 2005, stealing the hearts of many luxury couture maisons for their seasonal launches. More and more designers are also looking for contemporary ‘surprise’ venues each fashion season, moving away from the traditional home of the Carrousel du Louvre and bidding Au Revoir!

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Tuesday, 15 June 2010

Luxury Brands And Social Media- The Perfect Match? - 15/06/10


What does the Queen’s birthday and social media have in common? A buzz of conversation surrounding luxury brands and social media has been the hottest topic this long weekend. Just as brands like Lacoste and Mauboussin have realised, the platforms of social media and the online world are powerful marketing tools, particularly in boosting sales.

MO Luxury’s recent online research with high net worth and aspirational consumers has brought attention to the fact that luxury brands need to embrace their consumer feedback, through efficient product information. Whilst some consumers choose to research online before purchasing in-store, a growing number are opting to shop via e-commerce platforms, meaning luxury brands would be ignorant to overlook their online communities.

Whilst there is obvious struggle in balancing the unique, often inaccessible world of ‘luxury’ with that of the widely available arena of social media, brands such as Boucheron and Faberge have fully embraced the possibilities of selling online, and have seen great results.

Whilst labels are aware of the dangers of counterfeiting and the concern of the degradation of the luxury in-store experience through involvement with e-commerce, it’s quite obvious that this is an area that needs to be addressed efficiently and effectively as the popularity of social media grows.

The challenge now for luxury brands is to find the balance between generating an online buzz and increased awareness of their brand through social media, without defiling their status in the luxury market.

Image credit: boucheron.com


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Monday, 14 June 2010

Fakes Really Are For Frauds - 14/6/10


In what the US "Justice Department on Friday called one of the biggest counterfeit cases in US history", two intellectual property thieves have finally been bagged.

Responsible for importing 300,000 handbags and wallets from China at a value of US$100million sporting brand names such as Chanel, Gucci, Coach and Louis Vuitton to name a few, the two fraudsters are looking at 30 years in prison and over US$4.75million in fines between them when they face sentencing in 15th September. Their very serious manufacturing and distribution operation was finally outed.

Many say counterfeiting is the 'highest form of flattery', well not on this watch we don't. It also warms our cockles to see action continues to be taken with on-line sites selling luxury 'replica' handbags being successfully targeted by the luxury brands and their silks.

Remember say NO to fakes, Fakes Are For Frauds.

Image Credit: www.allthebesthandbags.com/

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Officer Of The Order, Tamara Mellon Please Stand Up 14/6/10


No Knighthood for the founder but an OBE is bestowed on the co-founder Tamara Mellon in the Queen Elizabeth II honors list this recent Saturday, 12th June.

Jimmy Choo, the eponymous man behind the shoe last, started his business in a London workshop in 1986. Soon after his shoe magic spread he was creating for the rich and famous and receiving wonderful editorial exposure for his creations, across many magazines including British Vogue. Then in 1996 he co-founded Jimmy Choo Ltd with the then British Vogue accessories editor Tamara Mellon. In early 2001 it was time to move on so he sold his 50% stake for 10million pounds. Fast forward six years to 2007 and Mellon sells to private equity for 185million pounds...

What six years can do for your bank balance and what a further three can do for your title. Clearly baring all in the name of art...(see previous article in The MO Down) didn't seem to offend Her Majesty.

Image Credit: www.jimmychoo.com

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Friday, 11 June 2010

Fashionable Football? - 11/6/10


With the World Cup nipping at our 6 inch heels, Louis Vuitton says that its current heritage campaign, featuring legends Zinedine Zidane, PelĂ© and Diego Maradona playing table football in a Madrid bar, was chosen because of the "universality" of soccer’s appeal. Is this a smart move for the brand? In short, we think it is. The campaign is interesting because in true LV style, the current global mood is captured. By including legends of the sport, the brand is sure to harness the interest and focus of a broader demographic by successfully tapping in to the aspirational consumer’s touch points.

Of course, such a campaign demands a huge investment, and the return may not be received as quickly compared to brands like Nike and Adidas, that collectively sponsor 19 World Cup teams. The key question comes down to whether the exposure on this global platform is relevant to a core strategy – forging and strengthening consumer/brand association at the least if not motivating an immediate purchase.

Thinking back to the World Cup in Paris in 1998, the late Yves Saint Laurent staged a magnificent 12 minute haute couture show prior to the final. At this time, YSL was arguably France’s most famous brand and was considered a fashion institution making the level of investment and exposure (80,000 live spectators and 1.7 billion television viewers) more justified. Let’s hope for Louis Vuitton’s ‘suit’case, this campaign will capture the imagination of spectators by blurring the line between sport and fashion and deepening the association between universality and longevity.

Image Credit: www.ilvoelv.com

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Thursday, 10 June 2010

Gucci Cuts The Fat And Goes Green - 10/6/10


With another green initiative, Gucci just announced that its packaging has been redesigned with FSC Certified paper and is 100% recyclable. This evolution has been motivated by The "Don’t Bag Indonesian Rainforests" campaign supported by 20 leading fashion brands including Valentino, Versace and Prada to protest against deforestation of Indonesian Rainforests. Gucci shoes will now be packaged in one piece of flannel instead of two and gift boxes will only be provided when requested. Gucci reported that it will also replace all of its mannequins with more eco-friendly options.

The Gucci group, along with YSL, Alexander McQueen, Stella McCartney and Balenciaga, have vowed by December 2010 to reduce the quantity of paper used for luxury packaging, eradicate their use of fiber from rainforests, and limit their purchasing to only recycled products, or those certified by the Forest Stewardship Council. According to Gucci’s Creative Director Frida Giannini, “this project proves that you sacrifice nothing creatively when working with environmentally friendly materials”.

Making another strategic move, Gucci have also decided to relocate their offices from London to Switzerland ‘to be closer to key markets in Paris, Milan and Florence, which is a loss for London in the high hitting luxury stacks.

Image Credit: www.gucci.com/

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Lacroix's Generosity In Keeping His Legacy Alive – 10/6/10


Some of Christian Lacroix’s spectacular creations will live again as part of France's national heritage. Lacroix tragically lost his label last year after enduring drastic cutbacks causing staff losses and subsequent licensing deals for only a few of his product lines including men's clothes, wedding dresses and perfumes. The current owners have confirmed a generous donation of 11 outfits for France’s Decorative Arts Museum.

The ministry said that an additional 3000 haute couture designs from collections dating from the inception of the label in 1987 to its end in 2009 would be lent by the company to national museums when required. Along with the Culture Minister, Frederic Mitterrand, we are thrilled that Christian Lacroix’s contribution to French haute couture will be preserved and exhibited to enhance national collections.

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Wednesday, 9 June 2010

Versace Sees The Bright Light In 2011 - 9/6/10


Versace's future is looking a brighter colour of gold in 2011 after sluggish demand for Luxury goods pulled down its 2009 revenue to 268 million Euros from 336.3 million in 2008. Versace made an operating loss of 49.6 million Euros in 2009 compared with 400,000 Euros in 2008. Retail sales and orders increased in the first quarter of 2010, supporting that Versace’s recent restructuring efforts have paid off. On the design side, Versace has concurrently steered away from its ‘trademark glitz’ to create some designs with wider reach and appeal.

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www.google.com.au/

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Italian Police Adopt Anti-Counterfeiting Operation To Clean Up Beaches - 9/6/10


Remember: Fakes are for Frauds. Whatever you do, don't go down to the beach today.... and try to buy a fake anything. If you are planning a holiday in Italy there is a very serious police squad in a covert operation not only fining the sellers but also the purchasers of counterfeit goods. Some police officers are using quad bikes to chase beach vendors! This is an excellent strategy as like every business practice, it is a case of demand and supply. This is no ordinary patrol, it's Bag Watch!

Image Credit: http://www.guardian.co.uk/


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AUTORE Pearls Honoured At Couture Design Awards - 9/6/10


AUTORE takes top honours for best in pearls in design at the Couture Design Awards celebration held at the Wynn Hotel last Saturday night in Las Vegas. AUTORE has been nominated as a finalist for the 2010 UK Retail Jewellery Awards for the category for Italian Jewellery Designer of the Year. The winner will be announced on the 15th of July.

So one of Australia's successful luxury fine jewellery brands is garnering well earned international credit. Founded in 1991, The AUTORE Group is one of the largest South Sea pearl companies in the world. A wholly vertically integrated operation, AUTORE provides quality-assured luxury jewellery and South Sea pearls right from the source and distributes the gems through ten offices around the globe.

Image Credit:http://www.pearlautore.com.au/

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Tuesday, 8 June 2010

U.S. Luxury Brands Take A Pregnant Pause When Looking At European Expansion - 8/6/10


U.S. Luxury brands are thinking twice about expanding into Europe in the foreseeable future due to the threat of the European debt crisis and the uncertainty in global financial markets. Many American brands looked to the rest of the world during the height of the U.S. recession as brand recognition and a weak U.S. dollar made their goods more desirable. Currently, luxury brands are stepping carefully as they face a deep fear that Greece will poison its neighbours and contribute to lower demand for luxury goods.

It is true that a weaker Euro will make the entry of U.S. retailers into Europe more favourable from a cost viewpoint, however a weaker Euro has a negative effect on sales. Chief Executive, Alex Bolen from Oscar de la Renta said that “Rich Europeans are cutting back on splurges. There are some places in international markets where business, not just for Oscar de la Renta, but for luxury brands has really come to a halt.” The Luxury Institute’s Milton Pedraza supports that “(growth) has been cut off. So I think Europe is a problem.”

Some brands are using the stronger Dollar to their best advantage by reconstituting their price strategies. Coach recently reported that it would expand into Spain, Portugal and the Britain. Planning to get more “bang for their buck”, Coach’s Chief Executive Lew Frankfort said that "the timing could not be better than when the economies are weak." Following a similar strategy, Oscar de la Renta is looking to expand into London sometime soon, taking advantage of the weaker Pound.

Bolen reported that “for a firm like ours that is principally a Dollar-denominated firm, things have become more affordable in London." Bolen explained that the luxury house was considering Paris, the capital of luxury, but high rents “are still really tough”. We think that the strong and persistent inbound tourist traffic into Paris exceeding 45 million per year (compared to 15 million into London) and the concentration of luxury houses make the cost premium easier to digest. If the debt crisis in Greece spreads to Western Europe, Bolen admits that his comments “probably won’t be proven true”. As always, we will watch in anticipation to see which (if any) U.S. brands will brave the conditions and take a ‘big risk’ that may possibly yield a ‘big return’.

Image Credit:
http://uk.reuters.com/

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Monday, 7 June 2010

Luxury Houses Face Barriers When Setting Up Shop in China - 7/6/10


With a case of "can't live with them but can't live without them", luxury brands need to be in China as part of their next stage of growth but it is not easy - don't 'they' also say "no pain no gain", the thrill of the chase and all that! The Chief Executive Officer of Taittinger Champagne says “China is the new United States". "It's why we have to promote champagne in China - to make them happy and peaceful. They are going to lead the world for the next 200 years."

With the scope and the complexity of this market in mind, many luxury brands have tackled the Chinese market successfully but it's not a template approach. Who and what you know will expedite and make the entry into China, a country of several important provinces, both efficient (if you can work well with the complex bureaucracy) and ultimately effective. Market features such as China’s excessive luxury goods taxes need to be taken into consideration by luxury houses that plan to enter into China. For example, the price of a Lamborghini sports car in China is twice what it is in Italy. You have to be very wealthy in China to afford luxury products given the exorbitant tax rates... so the weaker Euro for the time being will help satisfy the voracious appetite of some of China's wealthiest consumers.

Image Credit: http://www.knowledgeatwharton.com.cn/

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The Weakening Euro Set To Boost Global Luxury Industry – 7/6/10


Great news for luxury brands in Europe as the weakening Euro is attracting inbound tourists (i) to European destinations and (ii) into luxury stores. The down side (apart from the issue with the Swiss watch exports which is suffering) is beared by the countries where the tourists heading to Europe to buy up luxury reside.

Are these other markets potentially losing some of their luxury client revenue as they are now seen as too expensive versus Europe? It doesn't appear so as "Deutsche Bank estimates the weaker Euro against the Dollar and the Yen would add 2 to 4 percent to its sales forecast for the global luxury goods industry". In line with this, Bulgari, Valentino and Longchamp believe they will benefit from the weaker Euro which “makes their sales abroad more lucrative and chips away at their cost base”.

An Analyst at Bernstein commented that "the Euro weakness is a great thing for luxury goods companies. In fact, their costs are typically in Euros, and their revenues are split between U.S. dollars, Yen and Euros." We find this interesting as it doesn't appear to be a case of "robbing Peter to pay Paul". From this article we must believe that luxury consumers will spend more overall in Europe. It will be tough come budget time for some of the markets that have reduced sales due to Europe being a more attractive destination. We will wait and see if proof is in the torte!

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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, www.moluxury.com.au