Can Richemont Save Hermes From LVMH Takeover? 16/11/10

There has been a lot of controversy and speculation surrounding LVMH’s recent acquisition of Hermes shares. We have stumbled across a very interesting article by Bloomberg here at the MO Down. If Hermes needs a white knight to ride to its defence, to fend off any prospective (and potentially hostile) majority buyout by Monsieur LVMH Bernard Arnault, they may find it in Richemont. The Swiss luxury goods company, and third largest luxury conglomerate in the world, might just have room in their wallet for a hint of orange.

Bloomberg hypothesises that Richemont may not have enough money, however in the financial overview from the Richemont press release, sales have increased by 37 per cent, or 27 per cent at constant exchange rate, or 22 percent excluding the impact of Net-A-Porter with an increase in operating profit of 95 per cent. It’s a great result that could compound even more positively over the next 6 months (boosted by Christmas and Chinese New Year trading). It’s nice to know Hermes has another option should it require.

Still, we hope Hermes has enough Euro in its Birkins to canter ahead confidently without support. The family shareholders, who collectively own 73 per cent of Hermes are fighting hard to keep the company independent. We are following all happenings closely and will report as soon as we hear.

Image credit:travel.webshots.com

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Study Determines Most Popular Luxury Brands in China 15/11/10

China is the world’s fastest growing luxury market. Here at the MO Down, we have certainly noticed that Chinese consumers are increasingly gravitating towards luxury brands, and luxury brands are in turn clambering to stand out and make themselves known. The habits of wealthy individuals in the Chinese market are still largely unbiased, brands are new and unfamiliar, and customer loyalty has not had time to develop. Something of a blank canvass, it's every marketer’s dream, right?

We were very interested to learn which brands seem to be getting it right. According to a survey conducted by luxury goods consultancy FDKG and Dr Lu Xiao of Fudan University, Louis Vuitton, Dunhill and Gucci are the three most popular luxury brands in China. The study canvassed the opinion of 800 wealthy Chinese, based on their spending habits. The survey claims to give the “most comprehensive understanding of the spending behaviour and aspirations of China’s ever-growing super-rich’, and is of serious relevance to the luxury brands seeking to engage with this highly lucrative market.

In a sense, many brands are starting from scratch when entering China, especially if they are unable to rest on the laurels of reputation. Marketing that works in Europe or America, could very likely be totally irrelevant in China. Common characteristics among respondents have endless marketing potential. One statistic we found of interest indicated that 90.9% of wealthy Chinese regularly give money to charity– see our article on social responsibility and how brands might use this as part of a marketing strategy. We are interested to see how brands approach this new market, and how strategies are adapted and replaced.

Image credit:about-sichuan-china.com

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Westfield Sydney Loves Shoes 12/11/10

Sydney is in the midst of a shoe revolution. Salvatore Ferragamo and Stuart Weitzman for Hermanns are amongst those being unveiled at Westfield Syndey this month. Christian Louboutin is about to move in. Miu Miu is coming in June, and Prada in July 2011. Yet another Jimmy Choo stores opens in Sydney, this time at Bondi Junction, setting a new precedent in luxury shoe shopping. According to retailers, shoes are an area of enormous confidence– one of the fastest growing retail categories. And its not only luxury brands, Steve Madden and ALDO are establishing themselves in Westfield Sydney. The MO Down has visited the new Westfield and loves the luxury and premium cluster that is represented so strongly. The centre is very impressive thus far, and we look forward to further shoe developments!

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Hermes 3rd Quarter Results See Sales Up 31%... 11/11/10

We’ve said it before, and we’ll say it again: things are looking up for the luxury industry. All Hermes business sectors have indicated growth this quarter, and according to media representatives at Hermes, all major world markets have indicated growth also– excluding Japan, where sales dipped 1 per cent.

In Europe, sales rose 19 per cent during the third quarter, in the USA, by 23 per cent (the opening of the first Hermes store dedicated to men on Madison Avenue in NYC is perhaps largely responsible for this). Non-Japanese Asia demonstrated an astronomical 41 per cent increase in sales, to be expected given the company’s increased concentration in investment in the region– three new stores have opened in China since the beginning of the year. Other exciting initiatives have included the new Shang Xia brand.

It’s exciting to see Hermes doing so well, and we wonder if these reports of success will up the anti re: the recent controversy surrounding LVMH’s acquisition of Hermes shares. LVMH is still insisting it has no plans for a takeover, but regardless, has clearly made a solid investment. Hermes plans to maintain control of its operations and has motions in place to increase its distribution network. Its plan for sustaining its current growth, you ask? The answer lies in its creative designs and the vitality of its craftsmanship. Of course, as one of the world’s most iconic luxury fashion names, we are hardly surprised.

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Tamara Mellon Part of New British Trade Envoy 10/11/10

Tamara Mellon has been appointed as a global trade envoy for Britain by David Cameron. The founder of Jimmy Choo will join handbag designer Anya Hindmarch to promote the country's booming fashion industry overseas. Interestingly, Mellon is not the first Choo representative to take on ambassadorial duties. In August last year, founder Mr. Jimmy Choo himself, was enlisted to help promote Malaysia- see the MO Down's coverage here. This is an honour not afforded to many, and we are excited to see Jimmy Choo chosen to espouse all things British.

While Mellon is the epitome of femininity and style, she is also something of an economic powerhouse- she is the 64^th wealthiest woman in Britain, and arguably, the best dressed. She was awarded an OBE in June this year. She’s responsible for building the Jimmy Choo empire to what it is today, and has demonstrated entrepreneurial flair, inventing the £5 million ‘I’m not a plastic bag’ shopping bag craze. Mellon embodies all that Britain strives to be- an unrivalled balance of refined elegance and business prowess. Cameron is proud to put her, as their best foot, in Britain’s best shoes, forward.

Tamara Mellon will represent Britain as part of an official trade delegation, to speak and meet foreign ministers whilst overseas. What a wonderful acknowledgment of the fashion industry’s significance to society, we are thrilled to see two worlds collide in this way.

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Christie's Announces Gucci Collector Initiative 10/11/10

Gucci Collector, an exciting initiative by Christie’s auction house, has reportedly received over 600 submissions from over 25 countries in its first nine months. The idea is to round up some of the spectacular Gucci pieces that have been treasured and passed down through families, or hunted down by vintage connoisseurs, over the past 90 years.

Owners have submitted photos of their pieces online at Gucci.com and christies.com, in order to receive auction estimates. Christie’s experts have been working tirelessly to appraise regular uploads from Gucci collectors all over the world, assessing pieces against Gucci’s own private archives to determine their value.

We think this is a wonderful opportunity to celebrate one of the most innovative and elegant brands in the luxury industry. In addition, the Gucci Collector initiative coincides with Gucci’s plan to open a museum in Florence, the birthplace of the Italian house, in celebration of its 90th anniversary. The museum plans to include rare pieces, acquired through the Christie’s collector service.

Over 30 of the most precious and unique items, including handbags and jewellery, will be featured in Christie’s upcoming annual Fashion Through the Ages sale on December 2, 2010. We can’t wait to see how they showcase Gucci’s evolution.

Image credit: Christie's Images Ltd. 2010

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Is Japan Losing its Taste For Luxury? 09/11/10

With all the luxury industry’s hype about the up and coming Chinese market, India’s growing appetite, and Russia’s billionaires, there is one market that just ain’t what it used to be: Japan. Awfully quiet in the recent revival, it’s bizarre to see the Japanese are slowing down their consumption. As the undisputed leading market for luxury goods in the 80s, 90s and early 2000s, what can possibly change so abruptly? Deflation. Many luxury brands had their Faberge eggs in the Japanese basket and until very recently, had good reason to do so. It was standard practice in Tokyo to spend (equivalent) $2000 AUD on a handbag, or $200 on a tie. But times are changing, and a lack of consumer confidence has made ‘affordable’ all the rage. If in doubt regarding this statement, note the popularity of the first Japanese Hooters.

For the last few years, even prior to the GFC, luxury brands reported global growth across all markets with the exception of Japan. For the last two years, the US and the UK have been alongside Japan in regards to negative growth. Today, most key luxury brands seem to be reporting that the US, UK and European markets are picking up– and they are leaving Japan in their wake. Thankfully for luxury brands, Chinese neighbours can’t seem to get enough.

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