Luxury Institute News

September 19, 2016

The Big Business Of Red Carpet Bling

www.fastmagazine.com
By: Rina Raphael
September 18, 2016

Jewelry companies of all sizes compete to get their baubles on the right celebrities at the right time—including the Emmys.

Actress Cate Blanchett is celebrated for her unconventional, avant-garde awards-show fashion. But at the 2015 Oscars, it was her jewelry that stole the red carpet show: She paired a long, simple black Maison Margiela gown with a Tiffany & Co. turquoise and diamond necklace. It dominated fashion headlines and soon thereafter, inspired knock-offs and Etsy reimaginings. Us Weeklypromoted a $75 Blanchett-inspired jewelry giveaway.

“We didn’t plan on it,” says Blanchett’s stylist, Elizabeth Stewart. “But it worked.”

When it comes to Hollywood baubles, the motto is generally, “Go big or go home.” To compete with couture gowns and Cinderella moments, top jewelers such as Bulgari, Chopard, and Forevermark go all out to secure their celebrity endorsements. It’s a lengthy, complicated loaning process, and a chance at worldwide brand recognition.

Sometimes celebrities or stylists are paid to wear the accessories, with compensation potentially hovering in the hundreds of thousands. Sometimes the jeweler will “thank” the star by “gifting” them jewelry. Sometimes the generous one-night loan is the sum total. It varies, and those involved are historically mum on the transaction specifics.

[Photo: Flickr user Kyle Garrity]

[Photo: Flickr user Kyle Garrity]

A PRICEY PROCESS

It starts with the stylist, the unsung maestro of all Hollywood red carpets. Stewart, whose clients also include Julia Roberts, Sandra Bullock, and January Jones, starts with the dress, then moves her way to accessories. “Often, the jewelry comes last,” she says, but stresses that it is “very important” to create a full look.

The next step is the insurance companies. Jewelers might provide the insurance, but most commonly, stars already have existing relationships with insurance agents and a policy that seamlessly weaves in additional loans.

“Individuals of some level of wealth normally have some kind of jewelry coverage in place,” explains Janece White, vice president, North American underwriting and jewelry specialist of Chubb Personal Risk Services, which counts high-profile celebrities as clients. Even if it’s just for what she calls “the basics”—their engagement rings or earrings—deep-pocketed celebrities often get covered.

If the client is a “good customer” who has had a relationship with the agent for years, Chubb will offer the additional coverage, but they need the specifics of the loaned pieces and how they will be stored, transported, and secured. “It’s usually not just one piece of jewelry,” White says. “The stylist brings back a number of pieces—sometimes a couple million dollars worth.”

White and her associates are available throughout the days leading up to awards shows, waiting on frantic last-minute calls from clients who might need to insure a $5 million diamond choker. It’s a frenzy. They also act as consultants, offering recommendations on services such as security firms that can provide armored trucks and guards, which could run well over $20,000.

“Would it be acceptable to throw [the jewelry] in the back of a cab? No,” White says. “Would it be acceptable to have [the client] come with someone very secure to take the items back by personal car? Yes.” Most clients, says White, take good care of their loans, because “they want to borrow something again the next award season.”

With all that prep work, there is still no guarantee the star will wear a specific item. A stylist has multiple looks on hold in the dressing room hours prior to an event, and sometimes last-minute decisions occur.

“I can’t tell you how many times the backup dress becomes the dress,” said Stewart. “You really don’t know until it’s all put together.” And if the gown changes, so too will the accessories. Stewart cites a number of reasons why one or both might not make the final cut: hair, makeup, and even just one’s mood.

THE BRAND NAME GAME

For many companies, the goal is to tie themselves to the right star whose name signifies aspirational wealth and glamour.

“There’s a lot that goes on behind the scenes in terms of determining who that million-dollar actor is going to be walking down the red carpet,” says style expert Anna De Souza. “It’s not about selling that particular piece—it’s about brand recognition.” Celebrities are repeatedly asked, “Who are you wearing?” with designer names appearing in celebrity and fashion magazines for weeks thereafter.

For stars, borrowing baubles is a mark of success. And consumers understand that the bigger the star, the bigger the bauble.

“Beyond the event itself, media will cover different celebrity looks—i.e., who wore what, not to mention a huge social media audience weighing in on each celebrity look, garnering mentions for brands,” says Crosby Noricks, a fashion brand strategist and founder of PR Couture. “When a company like Tiffany’s or Bulgari does a product-placement deal with a celebrity, if they get the right star, it can certainly add a valuable spotlight to their product, image, and brand.” It can also bolster a certain campaign. Cate Blanchett’s turquoise homerun served to promote Tiffany & Co.’s Blue Book collection.

Snagging an international star is paramount. This is especially true for smaller jewelry companies trying to secure placement in bigger retailers or to enter a new market, like Dubai. Being able to approach new opportunities with the claim that “Jennifer Lopez wears our jewelry” can be the ticket in.

Labels have their own specific needs and who they want to reach. For publicly traded companies like Tiffany & Co., which boasts over 300 stores and sells high and more modestly priced collections, it makes sense for them to place their products on a wide range of stars, ranging from Oscar winners to TV actresses, at various industry events. Chopard wants to master the red carpet, so you might see their products at movie premieres, in addition to awards shows.

Anna Hu Haute Joaillerie sells colorful jewelry with whimsical, intricate imagery like flowers and butterflies. Price points range from $100,000 to $7 million. The brand was relatively unknown until Madonna wore an Anna Hu Haute Joaillerie diamond cross pendant necklace to the 2009 Met Gala. “That put Anna on the global map,” says Carineh Martin, the company’s chief marketing officer.

Today, Hu’s styles adorn A-listers such as Gwyneth Paltrow and Emily Blunt—but only at the three high-profile events: the Oscars, the Met Gala, and the Cannes Film Festival. The designer takes the rare approach of relying on a select few celebrities to foster an image of exclusivity.

“It has to be the top event, the top actress, with the top jewels, otherwise it’s just not interesting for us,” Martin says. “If that means only one or two a year, that’s all we’re interested in.”

It makes sense, considering the brand has only one store, and most sales are private custom orders. That’s precisely what a certain clientele wants—the sense that they’re wearing something rare and special. “How can you be exclusive when you have 600 stores worldwide?” Martin says.

“We are about being private jewelers to a very small echelon of clientele, so everything we do is with that in mind, including our red carpet approach,” she says. “We could dress a lot more people and have a lot more awareness, but when you’re not readily available all over the world, what’s all that awareness going to do for you? We’d rather be known by fewer people, but the type of people who respond to our jewels.”

screen-shot-2016-09-19-at-11-47-21

AS SEEN ON . . .

There are those who want exactly what the stars are wearing. Fine jewelry designer Irene Neuwirth has been contacted while celebrities were still modeling her designs on the red carpet. She sold two emerald cuffs, each at $150,000, while they were still on Julianne Moore’s wrist at the 2013 Met Gala.

Iconic moments can immediately help sell a style. Gwyneth Paltrow went down in fashion history following her 1999 Oscar win, when she clutched her gold statue in a pink Ralph Lauren gown and a 40-carat Harry Winston diamond necklace. The jewelry house immediately sold a few necklaces in the same style, reportedly at over $100,000 each. One buyer was Paltrow’s own father, who gave his daughter the jewels as a gift.

As for how this visibility affects companies’ bottom lines, that’s a complicated equation. According to Milton Pedraza, CEO of the Luxury Institute, a consulting firm serving more than 1,000 luxury and premium goods, what consumers consider the most prestigious and what consumers actually buy don’t always align. In a recent study, the Luxury Institute found that households earning over $200,000 were most familiar with the following brands, in descending order: Tiffany & Co., Cartier, Bulgari, Gucci, Chanel, Harry Winston, De Beers, Van Cleef & Arpels, Mikimoto, and David Yurman.

And here’s where they spent their money: Tiffany & Co., Cartier, Alexis Bittar, David Yurman, Gucci, Bulgari, Chanel, Boucheron, Mikimoto, and Judith Ripka. The two categories diverge, since consumers can’t always afford what they’re familiar with, but they still want designer.

Consumers with household incomes under $75,000 tend to own items from Tiffany (76%), Bulgari (32%), and David Yurman (21%).

“Millennials are very aspirational,” Pedraza says, noting their constant media intake of celebrity fashion and culture. They’re attuned to researching a product or a celebrity they want to emulate. “They are now in the know.” They might only buy a pendant necklace or bracelet, but they’re still buying.

The majority of Americans don’t have the means to even consider buying a pricey piece of jewelry that was seen on the red carpet, but there are other opportunities to partake in the luxury sector.

“The average TV viewer isn’t going to go out and purchase [the exact item], but they might pick up a pair of sunglasses, perfume, or wallet in order to align themselves with an aspirational brand worn by their favorite celebrity,” Noricks says.

Buying the jewelry isn’t necessarily the point of these celebrity endorsements. It’s to get the brand on your mind—for future purchases. They’re in this for the long haul.

As style expert Anna De Souza says, “It goes way beyond the 10-minute walk down the red carpet for these brands.”

Source: https://www.fastcompany.com/3063093/fashion-forward/the-big-business-of-red-carpet-bling

High-End Shopping In The Sharing Economy: Now We Can All Have Couture

www.fastcompany.com
By: Rina Raphael
September 15, 2016

Between consignment e-tailers and luxury-label rental sites, consumers are approaching designer fashion with a whole new mentality.

The Kardashians don’t exemplify thriftiness, so it was surprising when Khloé, Kendall, and Kylie partnered with the luxury consignment site The RealReal in August. The sisters listed 200 pieces from their personal closets, ranging from Chanel purses to Christian Louboutin heels, at nearly 80% off retail value. “Now you can own pieces from my closet!” Khloé Kardashian proudly tweeted to her 21 million followers.

The entire collection sold out within 24 hours, a rep for The RealReal confirmed.

The reality TV stars’ participation confirmed the site as a destination for all incomes and demographics, including celebrities. Today, luxury rental e-retailers, consignment shops, and loan services are destigmatizing what was once considered the domain of aspirational shoppers. More than that, it’s democratizing high fashion and shifting how we buy (and keep) designer clothing.

screen-shot-2016-09-19-at-11-38-27

EVEN DISNEY STARS WEAR DESIGNER

The constant influx of celebrity news, celebrity stylists, and brand participation on social media means we know everyone’s fashion tastes. Whereas previous generations may have only been familiar with a few design houses—Chanel, Oscar de la Renta, Yves Saint Laurent, for instance—today’s woman is familiar with dozens more, ranging from big (Balmain, thanks to Kim Kardashian) to emerging (Jason Wu, thanks to the Michelle Obama).

Many women once dreamed of emulating Elizabeth Taylor’s wardrobe—and it remained just that: a dream. But today, a savvy shopper could potentially wear whatever Julia Roberts donned for the Oscars. The shopper might only rent the gown for a night, but the Cinderella moment is no longer a fairy-tale fantasy.

“Luxury is changing—and changing for the more value-centric consumers who are much greater in number than pure luxury [products],” says Marshal Cohen, chief industry analyst of the market research company The NPD Group.

“Something that used to be attainable purely for the elite is now becoming more accessible to those who are willing to splurge,” says style expert Jacqui Stafford. “It’s still a splurge, there’s no question about it. You’re still going to be spending at least $500 [to rent] a gown that you might have to pay $5,000 to buy.”

It’s not just Oscar winners who inspire the masses. Teen stars also employ celebrity stylists who deck them in Preen and Vetements. “These labels are definitely more accessible now, and we have social media to thank for that,” Stafford says. “Even Disney stars are sitting front row at Paris Fashion Week shows. You’re seeing the younger demographic really embrace couture, bringing it to a new audience.”

That means a growing percentage of teens and millennials now look way beyond what’s available at the neighborhood mall. They want Gucci, Cartier, and Chanel and they’re getting savvier when it comes to acquiring those marquee designer brands. They are not a demographic to ignore: According to a recent study, millennials spend $200 billion annually and are set to outspend baby boomers by 2017.

The Kardashians don’t exemplify thriftiness, so it was surprising when Khloé, Kendall, and Kylie partnered with the luxury consignment site The RealReal in August. The sisters listed 200 pieces from their personal closets, ranging from Chanel purses to Christian Louboutin heels, at nearly 80% off retail value. “Now you can own pieces from my closet!” Khloé Kardashian proudly tweeted to her 21 million followers.

The entire collection sold out within 24 hours, a rep for The RealReal confirmed.

The reality TV stars’ participation confirmed the site as a destination for all incomes and demographics, including celebrities. Today, luxury rental e-retailers, consignment shops, and loan services are destigmatizing what was once considered the domain of aspirational shoppers. More than that, it’s democratizing high fashion and shifting how we buy (and keep) designer clothing.

Many of The RealReal’s customers are millennials with strong brand loyalty. And they tend to adhere to a specific strategy. They start as first-time buyers, enjoying their discounted designer item until they eventually tire of it and resell it. They then take the money earned to the primary market—to, say, Neiman Marcus, where they buy a new high-end item. Once it’s been seen enough times by their social group, they sell it in the consignment space. Then the process repeats itself. In a way, they’re learning about investment, depreciation, and retaining value, but in the context of designer fashion.

“They’re saving their money for that special Celine bag, and when they’re done with it, they’re consigning it,” says Rati Sahi, chief merchant for The RealReal. “You see them think differently about their purchases. They’re calculating [whether] they can get 60% back with the resale value.”

They’re willing to pay, up to a point. “Millennials are interested in high fashion but not willing to pay those high prices,” Cohen says. “So discount sites, secondhand sites, and stores, as well as auction sites, do well for the luxe millennial.”

If Selena Gomez’s fans are wearing Chanel in greater numbers, how does that affect the label’s mystique? “Ease of access to luxe helps, but also hurts,” Cohen says. “The luxe market is also so accessible it loses some of the panache.”

Former interior designer Sallie Giordano was surrounded by professional women in New York City who complained of the increasing cost of maintaining their wardrobes. They had full social calendars: speaking engagements, conferences, galas. With designer retailer sales so frequent, consumers “felt stupid” if they purchased full price, Giordano says.

In April 2015, Giordano launched Couture Collective, a luxury clothing rental membership club. It’s like a “timeshare” of seasonal designer apparel. Members pay an annual fee of $250, then each season, they can borrow up to five dresses from, say, Valentino and Christian Dior, after they’ve purchased a one-fifth share in an item, at 20% of the retail price. “If you look at the statistics, people will wear a dress three or four times and then they consider it an old dress,” says Giordano, who says she sees lots of women who will only wear current season styles.

Couture Collective’s clientele ranges from wealthy women to upper-middle-class aspirational shoppers, all looking to showcase a well-kept designer closet.

“I think the average person is interested in wearing these [designer] styles because honestly, they’re better styles,” Giordano says, noting how high-end garments are well made with quality fabrics and flattering cuts. “When you wear these dresses, there’s a huge difference. You just feel special and confident.”

For Couture Collective’s clientele, there’s an appealing ease to the idea of renting: No need to store or care for items they intend to wear once. “It’s not about ownership anymore,” Giordano says. “It’s about being able to do something without all the responsibilities of ownership … This allows them to wear the trends of the designers and not feel ridiculous then they’re sitting unworn in their closet the next season.”

Social media has certainly changed the amount of times we wear an article of clothing. Couture Collective’s clients don’t want to repeat an outfit, especially if their event is photographed for publication on Instagram or Facebook.

The Instagramming of outfits was a consideration for Armarium, an on-demand luxury rental site that launched in November 2015. It is a true high-fashion lover’s dream, featuring selections from the top design houses as well as emerging international labels. While the options on Rent the Runway can feel a bit sartorially safe, Armarium caters to those looking to get noticed in fashion-forward garments. Some offerings are exclusive to Armarium, which directly negotiates with fashion houses.

“Social media has drastically changed the game of how we access products, particularly with statement pieces,” Armarium cofounder and CEO Trisha Gregory says. Her business works in tandem with retail and e-commerce, with the goal of serving as a complement to full-price investment staples like black pants or a white shirt. Armarium partnered with Net-a-Porter to assist customers in putting together an ensemble that’s part rented, part purchased. For example, you can rent a statement Sonia Rykiel tunic from Armarium, then link out to Net-a-Porter to finish the look with a splurge trouser or investment stiletto.

“This is a smart way to complement [a customer's] existing wardrobe and the pieces she will buy for the season,” says Gregory, whose clientele is made up primarily of women aged 28-34. Helping customers discover new items is a big aspect of the service; the full range of offerings are visible on the site and there are also showrooms with experienced stylists on hand. “We want to give them access to shopping in an innovative way,” Gregory says.

Armarium sees two types of renters. The first is the busy, high-net-worth individual who values convenience. She’s on the move, attending multiple conferences or vacationing in St. Barts. “We’re packing her bags and getting her out the door, easing her schedule,” Gregory says. “We’re seeing the stigma [around renting] debunked with what the high-net-worth individual thought about the concept of renting…. For them, this is about access to statement pieces that aren’t in the market most times.”

Then there’s what they call the “HENRY,” the high-earner-but-not-rich-yet aspirational shopper. She’s social media-savvy and cares about brand identity. In Gregory’s words, it’s “very hard” for her to re-wear pieces. Both types are return customers, on average 28% of the time. Business is booming: Sales have tripled since Armarium launched its mobile app in April, with a 40% month-over-month growth of app downloads and site visits.

“Women are starting to shop in a different way,” Gregory says. “People want an experience, and that’s what we strive to give them. This is basically a celebrity offering.”

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LESS IS NOW MORE

One thing celebrities have easy access to that the average woman does not: bling.

Flont is a jewelry loan service set to launch this fall. It plans to do for bling what Couture Collective does for fashion. Flont lets customers borrow a certain amount of designer jewelry at different membership rates. For $199 a month, you get $60,000 worth of jewelry a year. Up your monthly fee to $1,999 and you’re entitled to $100,000 worth of jewelry over 12 months. Designers include red carpet favorites like Irene Neuwirth and Paige Novick.

But why would the well-to-do woman rent when she could buy? Flont’s founder Cormac Kinney points to the private-jet industry as a comparison.

“Certainly, if you can afford a NetJets membership, you can afford a jet—but that’s not the point. The point is convenience,” he says. “It’s much more convenient to let someone maintain it and you just use it when you need it.”

The company commissioned a survey sampling U.S. women with a minimum household income of $65,000 who had purchased $2,000 or more in fine 18K gold jewelry in the last 12 months. They found that 88% said they would buy a piece they loved even if it was worn by someone else before, and 75% were interested in jewelry sharing.

Many don’t want the complications that come with owning burglar-bait. Jewelry insurance, for example, adds an extra layer of cost, which can run over $10,000 a year. With Flont, insurance is included.

Then there are those who, inspired by the cult decluttering bible The Life-Changing Magic of Tidying Up, simply want less stuff. Excess is no longer chic.

“A lot of young women out there think, ‘I want to have a great dress and great piece of jewelry and I’m willing to spend a few hundred dollars but I don’t want to own it,’” says Milton Pedraza, CEO of the consulting firm Luxury Institute. On the other end, baby boomers now see an alternative to constant consumption: “Many older women want to declutter their closets. They don’t want to be wasteful.”

This mentality inspired VillageLuxe, a community-based fashion borrowing site that connects women’s closets. It extends the age-old “can I borrow that?” philosophy across entire neighborhoods, like an Airbnb for fashion.

“There’s this sense of wastefulness and this big gap between my ability to wear more than three pieces at a time out of my 300 pieces,” says Julia Gudish Krieger, founder and CEO of VillageLuxe. “The [designer rental market] is focused on that aspirational consumer, but I think you polarize and leave out a whole big part of the market of people who don’t need the money—it’s just the sense of wastefulness.”

Krieger launched the site in July 2015 after asking herself, Which of my assets that I don’t use every single day would people want to rent? “After my house and my car, it’s my closet,” she says. (Though, in New York, one’s closet might actually top that list.)

“I’m such a believer in the sharing economy,” says Krieger, a former VC. “I think it’s where the world is heading in general, and it’s not just that people are becoming more efficient with how they monetize things when they’re not using them. The more interesting element is the social barriers between what’s mine and what’s yours have blended so much more in the last five years.”

Village Luxe is currently invite only, with a heavy emphasis on influencers and fashionistas who lend as well as borrow. As of August, more than 10,000 women were on the wait list. Current members are quite active, having already listed over 7,000 pieces. (VillageLuxe intends to open the list once they’ve scaled the company.) For the moment, members include Upper East Side wives with extensive jewelry collections and edgy fashion bloggers like Leandra Medine, i.e.,The Man Repeller.

The startup emphasizes vintage styles as well as current collections. Many of their clothes are garments you can’t find anywhere else, like an Alaïa cocktail dress from the ’90s. “We actually had Vogue start borrowing from us for editorials,” Krieger says.

INVESTING 101

Like The RealReal, Village Luxe is watching customer habits shift in real time.

“Once [our members] find out that VillageLuxe exists, they buy fewer but much more expensive pieces—statement pieces—because you know you can pull value out of them between wears,” Krieger says. “Then you won’t feel bad about that McQueen blazer that you really had your eye on, which you can physically only wear once a month with different groups of people.” This buy-and-share mentality, Krieger hopes, will motivate shoppers to make smarter decisions.

These sites can also alter the calculus of hemming and hawing over a pricey outfit. A customer is more likely to swipe their credit card if they know they can make some of their money back. “Women list things as soon as they buy them—they’ll list the items sometimes before it’s even arrived.”

Krieger says that aspirational shoppers especially are changing their strategies. They’re more likely to go for a few select designer items than whatever is on the shelf at H&M or Zara. They see it will actually pay for itself and even create a revenue stream. “They can justify going higher market,” she said.

A high overlap exists between the renters and the lenders, with over 40% who lend using their earnings as credit to borrow. “There’s circuitry in the market,” Krieger says. Women now think one step ahead when it comes to their wardrobe, debating what’s worth what and where to put their next dollar.

It’s a whole new way of shopping—and experts don’t see the trend waning. As Giordano says, “Once you start wearing designer, it’s really hard to go back.”

Source: https://www.fastcompany.com/3063255/fashion-forward/high-end-shopping-in-the-sharing-economy-now-we-can-all-have-couture 

September 6, 2016

The Hunt for Asia Watch Sales

NYTimes.com
By: Victoria Gomelsky 
September 6, 2016

Even as Swiss watch exports continue to decline, watchmakers are sharply focused on trying to find just the right combination of marketing and retail strategies in Hong Kong and mainland China, the industry’s No.1 and No.4 sales markets.

For the first six months of this year, exports totaled $9.9 billion worldwide, a 10.6 percent slide from the same period in 2015. The steepest drop came in Hong Kong, which underwent a 26.7 percent decrease, with June the region’s 17th consecutive month of decline. Analysts attribute the slump in the city, long a favorite tax-free shopping spot for mainland Chinese and Western tourists alike, to numerous issues, including Beijing’s four-year-old anticorruption crackdown on gifts, changing consumer preferences and global currency challenges, chiefly a soaring Swiss franc and a strong dollar.

“The near term doesn’t look optimistic,” said Milton Pedraza, chief executive of the New York-based Luxury Institute. “No one is willing to bet that in the next 24 months there will be a turnaround.”

What makes this crisis considerably more daunting for the watch industry than the global recession of 2008 is that the Swiss brands now have thoroughly assessed the mainland Chinese market and no longer expect that its demand, which peaked in 2012, will propel a spectacular recovery.

Clockwise, from top left, the Roger Dubuis Excalibur Quatuor featuring the FFF team logo; Hu Ge with a Piaget Polo S; and Li Bingbing with Sascha Moeri, chief executive of the brand Carl F. Bucherer.

Clockwise, from top left, the Roger Dubuis Excalibur Quatuor featuring the FFF team logo; Hu Ge with a Piaget Polo S; and Li Bingbing with Sascha Moeri, chief executive of the brand Carl F. Bucherer.

  • In July, Swiss watch exports to Britain increased 13.4 percent compared with the previous year.
  • Watchmakers attributed the increase to the pound’s decline since the June 23 vote. “We kept our prices unchanged while the GBP went down compared to other major currencies,” said Fabien Dutriaux, vice president of sales for Arnold & Son, a watch company based in La Chaux-de-Fonds, Switzerland. “We believe that this gap attracted some customers and generated this uptick.”
  • One month, however, doesn’t tell the whole story, cautioned Jean-Daniel Pasche, president of the Federation of the Swiss Watch Industry. “The growth of July follows a substantial fall in the previous month and is explained in part by a favorable base effect,” he said. “But we cannot exclude that it is also due to the weakening of the pound and the consequent increase of sales. We will see next month if this growth is confirmed.”

Some watchmakers, however, continue to hope. “The state of the market in China is not as bad as what you read about,” said Philippe Léopold-Metzger, chief executive of Piaget.

He acknowledged that a glut in wholesale inventories had pushed many brands to buy back stock from authorized dealers in Hong Kong — an unusual occurrence in the watch world — but, he added, “retail is doing pretty well.”

In its report for the fiscal year that ended March 31, Piaget’s parent company, the Geneva-based luxury group Compagnie Financière Richemont — owner of such high-end brands as Cartier, Panerai and Jaeger-LeCoultre — indicated that its watchmakers’ sales had increased 3 percent year over year but that its operating contribution had declined 29 percent, in part because of “a difficult environment in Hong Kong, Macau and the Americas.”

Mr. Léopold-Metzger said that, with the change in focus from gifts to personal purchases, price had become more important, and the brand had responded by introducing its first collection entirely in steel. The Polo S, a casual men’s watch Piaget unveiled in July, gave it a new entry price of $9,350. “Consumers are young, and they’re going to love the look of the watch,” Mr. Léopold-Metzger said.

Of utmost importance, he added, is that the brand expands its business locally. To that end, Piaget has teamed with Hu Ge, the Chinese actor, singer and social media darling, to appear in Beijing last month for the Polo S collection. Mr. Léopold-Metzger described Mr. Hu as a “game changer” and said that his ambassadorial role would be publicized primarily through digital media.

Piaget isn’t alone in trying to connect with new consumers in new ways.

Swiss watch executives are gradually embracing the idea that to entice young buyers, a “combination of a strong social media strategy with smart celebrity endorsements becomes really powerful,” said David Sadigh, founder and chief executive of the Digital Luxury Group, a Geneva-based digital marketing agency.

The watchmaker Carl F. Bucherer is a believer. With Digital Luxury Group’s help, the brand introduced a repositioning campaign at the Baselworld fair in March featuring a new logo, “Lucerne 1888,” to highlight the brand’s Swiss hometown and its founding year. (That the logo incorporates — and repeats — the number 8, considered a sign of wealth and good fortune in China, is serendipitous, said Sascha Moeri, the brand’s chief executive.)

It also announced Li Bingbing as its ambassador. Western audiences may know her only for recent additions to the “Resident Evil” and “Transformer” franchises, but she is a star in China. “Li Bingbing had 37 million followers on China’s Weibo at the time the partnership was signed,” Mr. Sadigh said.

Alliances also are being sought beyond film and television. In May, the Geneva-based watchmaker Roger Dubuis announced its sponsorship of FFF Racing, a new GT championship automotive racing team founded by Fu Songyang, the 31-year-old Chinese tycoon. And to mark its new role at 15 races across Europe and Asia, the brand created an eight-piece limited edition of its Excalibur Quatuor model in black DLC titanium featuring the FFF logo at 12 o’clock.

Jean-Marc Pontroue, Dubuis’ chief executive, said the FFF partnership was intended to support the brand’s retail strategy in mainland China. A year ago, Roger Dubuis opened a second boutique in Beijing, in the luxury SKP mall, “and that has given visibility, credibility and access to many new customers,” he said. He also noted that moving the company’s Shanghai boutique to a busier retail location in April had “created 10 times more traffic.”

Several watchmakers say the global answer to growth lies in reducing distribution costs while maintaining sales.

“Three to four years ago we were at 500 points of sale globally, and now we’re at 300 and we continue to go down,” said Tim Saylor, chief marketing officer for the Audemars Piguet brand. “Currently we have less than 10 doors in all of China, with only two boutiques. We’re not sitting on a huge number of stores with huge stock and collapsing demand.”

August 30, 2016

Parisian Luggage Maker for the Truly Rich Seduces Luxury Giants

Bloomberg.com
By: Angeline Benoit
August 29, 2016

Only the really wealthy know Goyard.

Unlike Gucci or Louis Vuitton, the more than 200-year-old Parisian maker of luxury luggage and bags — with one of its 19th-century-style trunks going for 52,380 euros ($59,315) — maintains a studied silence. It doesn’t advertise in glossy magazines, and is among the last of its kind not swallowed up by a larger peer. So far, that is.

Photropher: Edward Berthelot/Getty Images

Photropher: Edward Berthelot/Getty Images

Kering Chief Executive Officer Francois-Henri Pinault wouldn’t be averse to adding it to his company’s stable of brands, a person familiar with the matter said. While neither Kering nor its larger rival LVMH Moet Hennessy Louis Vuitton will officially comment on whether they’re interested in Goyard, industry observers say it’s unlikely they would pass up a chance to consider buying it.

“In the event that Goyard is for sale, LVMH and Kering will surely take a look,” said Mario Ortelli, London-based head of luxury at Sanford C. Bernstein. “The Goyard brand would be compatible with Kering’s portfolio, for example, or LVMH could seek to increase its market share in leather goods rather than let another company build up a competitor to its brands like Louis Vuitton, Fendi and Celine.”

Businessman Jean-Michel Signoles, who bought Goyard in 1998 from its founding family, won’t say if he wants to sell the company he turned around by expanding sales to the new, burgeoning wave of the world’s wealthy.

Aristocrats’ Bags

Luggage maker of aristocrats in the 19th and 20th centuries, Goyard counted the Maharaja of Kapurthala, the Rockefellers, the Romanovs, the Duke and Duchess of Windsor and Karl Lagerfeld among its customers, it says on its website. The company, which boasts a “complete disregard for marketing or mass-production,” also says it doesn’t engage “in any form of e-commerce.” It declined to respond to Bloomberg’s questions.

A visit to Goyard’s flagship Paris store on rue Saint-Honore, across Louis Vuitton and Moynard outlets, is a journey into the past, with trunks hearkening back to a bygone era. The shop also features an array of cases and duffle bags ranging from less than 3,000 euros to close to 6,000 euros, as well as tote bags from 1,560 euros and a red crocodile-skin number for 37,000 euros. Beach bags, towels, pouches, wallets, hangers, belts, dog collars, slippers, umbrellas, pens and pen cases complete the collection.

On a recent day, customers had to wait outside the shop because it could only accommodate a limited number of clients. Assistants in white gloves attended to the shoppers fortunate enough to have entered.

“Goyard has evolved from a very functional brand, and while it remains very classic, it’s technically and aesthetically appealing to people, with its hand-painted initials, seals and images,” said Dana Telsey, founder of Telsey Advisory Group in New York.

Burgundy Touch

The company traces its history back to 1792 when it was founded in Paris by Pierre-Francois Martin as a maker of cases and boxes to transport fragile objects. Childless, Martin passed his company on to one of his workers, Louis-Henri Morel, who hired 17-year-old Francois Goyard in 1845. Goyard took over the company after Morel’s death.

In 1885, the business was taken over by Francois’s son Edmond, who came up with the company’s emblematic Goyardine canvass, a soft and waterproof mixture of linen and cotton inspired by the clothes worn by the family’s water log drivers and their community in the village of Clamecy in Burgundy. The business was then handed down from father to son until it was bought by Signoles, who brought his own sons Alex and Remi on board.

Raking in Profits

For all its claims to “timeless elegance, craftsmanship and exclusivity,” Goyard was accumulating losses when it was taken over by Signoles, the founder of children’s clothes brand Chipie. Signoles pumped in capital, refurbished the Saint-Honore store and opened outlets in Asia and North America as well as a couple in Europe and one in Sao Paulo.

“The fact that it’s no longer family-owned, that it’s gained a better-known name, expanded its leather goods assortment and opened new stores, like the one on Madison Avenue in New York, that already says that the brand is aiming for greater reach,” said Telsey.

The strategy has paid off, regulatory filings with Paris’s Commercial Court show. Revenue surged to 41.1 million euros in 2013, the latest available data on the company, from 1.14 million euros in 2000. Profit rose to 12.8 million euros from 18,000 euros as exports accounted for a third of sales from less than 4 percent.

Brilliant Job

“Signoles has done a brilliant job of maintaining the brand heritage while growing it slowly,” said Milton Pedraza, CEO of the Luxury Institute, in New York.

Still, to be all that it can be, Goyard may need some help, he said.

“To reach a critical mass where it can survive and thrive on a larger scale, while remaining unique and exclusive, it will need the larger capital and know-how that larger groups can provide, as happened for Bottega Veneta with Kering, or Vuitton with LVMH,” Pedraza said.

Source: http://www.bloomberg.com/news/articles/2016-08-30/parisian-luggage-maker-for-the-truly-rich-seduces-luxury-giants

August 29, 2016

Bijan property on Rodeo Drive sells for $19,000 a square foot

Los Angeles Times
August 26, 2016
By: Andrew Khouri

The demand for $5,000 handbags and $25,000 suits is slipping amid global turmoil.

But enthusiasm for real estate on Rodeo Drive, where such high-end goods are sold, isn’t hurting. Instead it’s setting records.

The parent company of Louis Vuitton recently paid $122 million, or $19,405 a square foot, for the yellow House of Bijan building at 420 N. Rodeo, long home to a boutique known as “the most expensive store in the world.” The deal, revealed in public records, was the second time in seven months that a record fell on Rodeo.

Late last year, Chanel paid $13,217 a square foot for a store it was leasing nearby at 400 N. Rodeo, the high-water mark for California retail until last month’s Bijan sale.

The eye-popping amounts reflect how few properties there are on the Beverly Hills street, as well as how infrequently they go on sale. And in a struggling market for luxury goods, the deals underscore that high-profile streets such as Rodeo or Manhattan’s upper Fifth Avenue are far more than a place to sell a $10,000 timepiece.

“They are billboards in some places for the brand,” said Milton Pedraza, chief executive of consulting firm Luxury Institute. “The companies can demonstrate power, and their staying power, by buying up these properties.”

Indeed, Marc Schillinger, a director with commercial real estate company HFF who represented the seller Bijan Properties, said “everyone came out of the woodwork when we announced the opportunity to buy this asset.”

“There are only 2½ blocks on Rodeo Drive,” said Schillinger, who declined to confirm the price or buyer. uEvery luxury retailer wants to anchor their brand on Rodeo.”

That’s proving true even as the luxury retail market takes a breather. Sales of luxury goods in the U.S. have fallen around 10% on average over the last year, while traffic in luxury stores is down 20%, Pedraza said.

The downbeat numbers are due to several reasons — similar to ones that have softened ultra-high-end residential real estate markets in places such as Los Angeles, New York and London.

Slowing global economies and a strong U.S. dollar have sapped the buying power of foreigners and dampened tourism. Meanwhile, uncertainty over the economy in the U.S., along with the upcoming presidential election, has caused some wealthy Americans to hit pause on big purchases.

On Friday, Italian retailer Prada said its retail sales in the Americas fell 15% in the first half of the year, explaining that the U.S. market “remains tough.”

“So many factors have converged — unfortunately in a negative way,” Pedraza said.

LVMH Moët Hennessy Louis Vuitton has done better than many retailers though. The Paris-based luxury goods conglomerate reported that U.S. sales climbed 7% during the first half of the year.

A high-profile store, however, isn’t just about selling goods. Even in the age of e-commerce, high-end digs have worth as a place to hold flashy events and market a brand’s cachet across the globe.

Fashion houses are willing to pay a premium to buy such an opportunity. They’d rather do so than rent and risk losing the location if their lease is not renewed, said Robert Cohen, vice chairman of real estate firm RKF.

That’s especially true as fast-fashion companies with far lower prices increasingly compete for such locations, including an H&M that opened on a pricey stretch of Fifth Avenue in Manhattan in 2014.

The highest price per square foot for a U.S. retail space came two years ago when Chanel purchased a shop it was leasing in New York on Madison Avenue for $31,329 a square foot, according to Real Capital Analytics.

“They are protecting their position on the street and in the market,” Cohen said of such purchases.

It’s unclear what LVMH’s plans are for the Bijan building, where the iconic store has operated for 40 years.

The Paris retailer with 70 brands already has multiple stores on Rodeo including Louis Vuitton and Dior locations that it leases and a Celine store that it owns.

A spokesperson for LVMH declined to comment, as did a manager at Bijan.

Iranian American designer Bijan Pakzad opened his appointment-only boutique on Rodeo Drive in 1976. It became known for its ultra luxury goods such as $6,000 suits and $19,000 ostrich vests.

Through the years, House of Bijan counted many high-profile names among his clients, including Michael Eisner, King Juan Carlos of Spain and Presidents Carter, George H.W. Bush, Clinton, George W. Bush and Obama. Pakzad had success to match, with homes across the world he flew to on his own jet.

Pakzad died in 2011 but left a lasting imprint on Rodeo Drive, helping to make it a world-class destination. The store’s manager, who declined to give his name, said the store is now owned by Pakzad’s family.

“Long before Tom Ford and Karl Lagerfeld, Bijan had a keen understanding of the cult of personality in fashion, starring in his own ads and billboards, name-checking countless celebrities and parking exotic cars outside his store, all to stoke his fame,” former Times fashion critic Booth Moore said following Pakzad’s death.

But throughout the decades, as rents soared along with the cachet, Rodeo has lost many of its local boutiques, including Fred Hayman’s famed Giorgio Beverly Hills, with its distinctive white-and-yellow striped awning, which closed in 1998.

The Bijan store is operating under a lease; its expiration has not been disclosed.

Given the sky-high sale to LVMH, the pricey but small House of Bijan is likely to go as well, real estate broker Cohen said.

The French firm may want to bring in a deep-pocketed tenant who would pay more in rent, or give yet another of its brands a foothold on Rodeo.

“It’s one of the greatest luxury streets in the world,” he said. “It’s global branding and global domination.”

Source: http://www.latimes.com/business/la-fi-bijan-sale-20160825-snap-story.html

August 4, 2016

Kate Spade stock plunges 18% after lower outlook

USA Today
By: Nathan Bomey
August 3, 2016

Kate Spade’s stock (KATE) plunged Wednesday after the retailer lowered its financial outlook for the year amid a deteriorating environment for luxury goods.

Shares of the New York-based handbag, clothing and jewelry chain closed down 18.2% to $16.47 after the company warned that it would post lower revenue and profit than it expected this year.

Among the reasons CEO Craig Leavitt blamed for the poor performance were “the retail landscape and continuing tourist headwinds.”

That squares with a broader downturn that’s rattling international shoppers, such as terrorism concerns, the United Kingdom’s vote to leave the European Union and China’s economic slowdown.

The S&P Global Luxury Index, which tracks 80 publicly traded companies in luxury goods or services, has fallen nearly 15% over the last 12 months.

Kate Spade projected 2016 net sales of $1.37 billion to $1.4 billion, down from $1.385 billion to $1.41 billion. It projected adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $242 million to $260 million, down from $257 million to $282 million.

It predicted sales growth at stores open at least a year of “high single-digit to low double-digit,” down from “low to mid-teen.”

The company recorded second-quarter net sales of $320 million, up 13.7% from a year earlier, and net income of $26.8 million, more than triple the year-earlier quarter’s $8.5 million profit.

But the retailer got help from the opening of 17 new stores during the quarter. It now has 426.

“As we navigate these broader industry trends, we remain very confident in our long-term growth initiatives and have a number of strategies in place to drive our business in the second half of 2016,” Leavitt said in a statement. “We continue to focus on the factors we can control, executing our long-term strategy and continuing to grow as a global, multi-channel lifestyle brand.”

Source: http://www.usatoday.com/story/money/2016/08/03/kate-spade-earnings/87992450/ 

Chanel most reputable brand despite low sentiment: report

Luxury Daily
By: Forrest Cardamenis
August 3, 2016

French fashion label Chanel has edged out Louis Vuitton as the most reputable brand, according to a global analysis performed by Brandwatch Analytics.

Chanel scored 396 points out of a possible 500, edging out Louis Vuitton by a mere four points and Dior by 15. The brand’s extraordinary visibility and engagement on multiple platforms and the corresponding growth of its online following helped give it the narrow victory.

“A brand’s reputation will undoubtedly have an effect on revenue and growth,” said James Lovejoy, content and research manager at Brandwatch. “Yet drawing statistically significant relationships between online conversations and revenue is notoriously challenging because there are so many various elements at play. 

“That said, our Brandwatch Social Index clearly places some of the highest grossing companies at the top: Chanel, Louis Vuitton and Dior,” he said. “Companies should consider what role they want to play online and how their social brand will affect sales, but hardline statements indicating a causal relationship between social media and overall revenue are not yet a reality.”

Looking at data from Q2 2016, “Luxury Fashion Social Index” scored 34 brands in the categories of social visibility, general visibility, net sentiment, reach growth and engagement/content, summing the scores to determine overall brand reputation.

Reputable source
In both general visibility and reach growth, Chanel scored a perfect 100, with Gucci following in general visibility at 93 and Burberry scoring an impressive 99 on reach growth. Chanel’s 91 in social visibility was good for third, behind Dior’s 97 and Louis Vuitton’s perfect score.

While social visibility measured a brand’s presence across social media channels, general visibility referred to conversation generated in news outlets, blogs and forums.

Chanel campaigns often appeal to consumers to engage or participate with the brand in more interactive ways.

Chanel Allure Homme Sport landing
Chanel Allure Homme Sport

For example, in June the atelier encouraged adventurous and active males to dive, glide and slide in a push for its Allure Homme Sport fragrances.

The fragrance campaign encourages men to “own the experience” through the use of 360-degree videos housed on its Web site as well as its branded YouTube channel. With limited product offerings for male consumers, Chanel must capture the spirit of its intended consumers in a relatable way, playing to interests rather than its brand infamy (see story).

Interestingly, Chanel scored only 31 points in net sentiment, which measured the ratio of positive to negative statements made online about the brand. Gucci also scored a 31, and only Rolex, with 30 points, was lower.

One possibility is that these brands’ historic standing and name recognition makes them a lightning rod for irate customers to air their grievances.

Gucci cruise campaign 465
Gucci cruise campaign

Gucci did come under criticism from Britain’s Advertising Standards Authority in April for an ad that was determined to depict and unhealthily thin model (see story) and also drew up controversy in Hong Kong for a misunderstanding related to local funeral rituals (see story).

On the other hand controversy from the first quarter related to animal cruelty (see story) did not appear to impact Prada and Hermès, who were in the middle of the pack.

Similarly, Rolex, Chanel and other low scorers such as Breitling, Givenchy and Burberry were not embroidered in major controversies but scored low.

On the flip side, Cartier’s 100 blew away second place Versace, which scored 70. It is further worth noting that 25 of the 34 brands had scores of 40 or lower, and only five scored more than 50, suggesting that the transparency the Internet provides also can create negative discourse around a brand.

Cartier Snakewood Amulette Instagram post

Additionally, a low score does not necessarily mean overwhelmingly negative response online.

Tying sentiment or mood to a single metric or numerical value is notoriously difficult,” Mr. Lovejoy said. “To really understand what’s happening, businesses will need to parse and measure individual topics that drive negative and positive conversations. 

“Ignoring neutral conversations, positive conversations surrounding Cartier outweighed negative ones 99.3 to 0.7 on Twitter,” he said. “Meanwhile, the Twitter conversation around Chanel was 93.2 percent positive and 6.8 percent negative. While this study looked at sentiment beyond Twitter, it’s clear that the difference isn’t actually that significant.”

“People who discuss these brands are generally positive, so when a handful of customers do have something negative to say the effect is greater. In a brief survey of Chanel, there are some complaints regarding customer service and price. While Chanel may be able to work on its customer service experience, its iconic name and exclusive price tag may always draw some level of criticism.”

Engagement and content was also a blowout, with Chanel’s second place score, a 74, trailing Ted Baker’s 100. Louis Vuitton and Dior followed with 68, and Rolex was fifth with a 65.

Rounding out the top 10 after Chanel, Louis Vuitton and Dior were Cartier, Tiffany & Co., Versace, Christian Louboutin, Prada and Michael Kors and Ted Baker. The lowest scorers – Lanvin, Dsquared2, Bottega Veneta, Kenzo and Salvatore Ferragamo – were sunk primarily by extremely low engagement scores.

Social engagement
While Brandwatch’s index helps to gauge overall market reputation, the popularity of a widely bought brand does not always sync with consumers’ perception of its value and luxury credentials, according to a survey by the Luxury Institute from earlier this year.

For its Luxury Brand Status Index series, Luxury Institute surveyed affluent women from seven of the world’s wealthiest nations to gain insights on which brands hold the most clout in terms of quality, exclusivity, social status and overall ownership. Consumer opinion is tied to whether one feels the asking price of a premium product is worth it, and it correlates directly to the brand’s perceived value among frequent and aspiring shoppers.

Despite the differences, Chanel, Louis Vuitton and Dior rank highly by either measure. Affluent women ranked Chanel and French leather goods maker Hermès as the two fashion houses most worth their premium asking prices, followed by Christian Dior, Louis Vuitton and Prada (see story).

louis vuitton.cruise 2016
Louis Vuitton Cruise 2016

By contrast, Hermès ranked 18th in Brandwatch’s index, owing to low social visibility and accompanying low engagement.

Online conversation around brands is driven almost entirely by consumers. Many brands, however, still keep a barrier between themselves and consumers, forgoing social media’s natural tendencies in favor of staying visible without compromising aspiration.

A Brandwatch report from last year shows that despite boasting immense followings, a large percentage of luxury fashion brands are surprisingly inactive on social media.

Brandwatch’s “Social Insights on the Luxury Fashion Industry” report has discovered that although a brand may place well by adopting social media, they are only scratching the surface of the opportunities available by mining social intelligence data. Luxury brands are often seen as latecomers in terms of embracing social and digital channels, but by fully taking into account the insights available from social media interactions, these labels can craft high-touch service in an online setting (see story).

Amongst the top five, Louis Vuitton overtook Dior for the number two spot largely by raising its visibility scores,” Mr. Lovejoy said. “Cartier jumped from 8th to 4th due to its improved net sentiment and reach growth scores. Tiffany & Co. jumped from 7th to 5th with an increase in reach growth and a slight development in its social visibility. 

“Prada had one of the strongest improvements, moving from 18th to 8th, in large part due to strong reach growth and modest growth in social visibility and engagement and content,” he said. “This is a competitive industry; reputation is a vital part of business for luxury fashion retailers.

“It may be difficult to take some of the leaders off their top positions, but at the same brands like Prada, which jumped up 10 spots, indicate that there is still room for movement and growth,” he said.

Source: https://www.luxurydaily.com/chanel-most-reputable-brand-despite-low-sentiment-report/

July 13, 2016

How will Burberry’s changing leadership impact the brand?

Luxury Daily
Sarah Jones
July 13, 2016

British fashion label Burberry’s terminated experiment of having Christopher Bailey serving as both chief creative and CEO holds lessons for others in the luxury sector.

On July 11, the house announced that Mr. Bailey would be stepping down as chief executive, taking on the role of president in 2017, when Marco Gobbetti will join the brand as its new CEO. With the luxury industry facing challenging times due to geopolitical and economic turbulence, Burberry is not likely to be the only brand to see changes in leadership.

“There’s no question that Christopher’s skills as it turns out lie in being a great creative as opposed to operational,” said Milton Pedraza, CEO of the Luxury Institute.

“Luxury has not had such a difficult moment with so many factors affecting it on the downside in a generation,” he said. “Even the 2008 recession, everybody knew that if real estate came back and the stock market came back, people would go back to their old buying habits.

“This is uncharted and unpredictable territory now, where there are so many factors working in such as chaotic way on the luxury industry…I think it’s not only Christopher not having the operational skills, not having what we call adaptive expertise, the ability to adapt in a complex environment.”

New era
Mr. Bailey took on the role of CEO in 2014 in addition to his creative duties when Angela Ahrendts left for Apple.

The luxury landscape in 2014 looked very different than it does today. Between China’s bubble, Brexit, the pound’s deflation, changing consumers habits and the shift toward digital and ecommerce, the industry is much more uncertain than it was just a few years ago.

This era of uncertainty requires more complex decision-making and leadership than was needed before, when strategy was more direct and obvious.

“It was unfortunate that he took on both jobs at a time when things are so complex, and where you need more operational expertise right now than perhaps creative expertise,” Mr. Pedraza said. “Maybe you need both, but clearly one person cannot do both. I think that’s what was proven out.

“Maybe in easier times, he might have been able to do it, but this is so complex,” he said. “I don’t even look at it as a demotion. I look at it as a change that was necessary and he graciously accepted.”

Burberry, as with a number of other brands, is being stretched.

Burberry SoHo, 131 Spring Street New York, New York - Main Entry
Burberry store in New York’s SoHo neighborhood

The company’s revenues dipped 1 percent for the 2016 fiscal year, leading the public company to unveil a three-year plan aimed at improving profitability.

Burberry’s 2.5 billion pounds, or $3.655 billion, in revenue for the year was slightly behind 2015’s figures, but the brand remains optimistic about the future. The label is establishing a three-year strategy that will cut costs by 100 million pounds, or about $146 million per year by 2019, enhance productivity and spur revenue growth (see story).

“Burberry’s challenges are more operational than creative,” said Chris Ramey, president of Affluent Insights, Miami. “They’ve made strategic mistakes in China and the United States that have to be fixed.

“Keeping Bailey was in their best interest,” he said. “There is value in continuity.”

Burberry is not alone, with Ralph Lauren designing a similar plan to restructure for growth (see story). Hugo Boss’ CEO also stepped down, ending his eight-year tenure amid the German fashion label’s dimmed profit outlook (see story).

“You can’t just cut your way into success,” Mr. Pedraza said. “Yes, you need to restructure, you need to cut costs, you need to slim down that organization, and then you need to get creative.

“You need a plan to innovate on product, and you need to dramatically shift your front line people from being transactors to expert relationship builders,” he said. “So they need to build true relationships with their clients, not transactions.

“And they need to make those two—the product and relationship building—into competitive advantages, which means that they need to sit way up on the bell curve because they are high performers. They need to be experts at learning and execution, and very few companies right now are prepared for that task.”

Mr. Pedraza predicts that other brands may be “casualties” of an inability to adapt, estimating that about half of CEOs are not prepared to deal with the complexities of today’s market. According to him, Burberry’s position is a sign of a larger trend in the industry that extends beyond hard luxury goods into other services and products that target the wealthy, such as yachts and real estate.

With Burberry’s revenues in decline, this leadership shift will enable Mr. Bailey to focus on where his talents lie most: in design. Taking over for him will be Mr. Gobbetti, an industry veteran with 20 years of experience, who is currently at Céline.

Burberry Christopher Bailey
Christopher Bailey

“The board firmly believes that these new leadership roles coupled with actions, identified in the recent business review, will significantly enhance our ability to deliver long-term sustainable growth and sector outperformance over time,” said Sir John Pearce, chairman of Burberry, in a brand statement.

“Since taking on the combined role of chief executive and chief creative officer, Christopher Bailey has done an excellent job set against a backdrop of challenging market conditions,” he said.

“The review that he has led into our ways of working is the blueprint for the next phase of Burberry’s evolution. To maximize our ability to successfully implement these plans, Mr. Bailey identified the need for a new chief executive for the business who could partner with him as we execute on the new strategies and I am excited to see what they will do together.”

Digital divide
For years, Burberry has been known for its digital prowess and as an early adopter of everything from Snapchat to Apple TV.

Burberry scored the highest in L2’s Digital IQ test for fashion brands. In addition to success on emerging platforms, updates to its mobile site have tripled while legacy investments such as “Art of the Trench” continue to find success with regional updates (see story).

On the other hand, Mr. Gobbetti’s employer since 2008, Céline, is almost the complete opposite, with no ecommerce, no social media accounts, a simple Web site and limited digital marketing.

Given that Burberry’s modern brand positioning partly hinges on its innovation, it is unlikely to regress within digital. However, this may be a case where Mr. Gobbetti’s experience driving a brand with mostly traditional channels will need to mix with digital expertise within the Burberry team.

“Looking at things through a digital lens, Burberry’s decision to name Gobbetti as CEO was an interesting one, considering that he comes from a brand with little digital prowess,” said Elizabeth Elder, L2 research associate.

“The managerial movements can be perceived as indicating a shift in priorities, from digital engagement to fiduciary responsibility,” she said. “It remains to be seen what will happen with Burberry’s place as an industry leader in digital, as it will depend upon Burberry’s ability to not only maintain—but continue to grow—it’s digital footprint. 

“In the luxury fashion space, Burberry has established itself as a trailblazer in the digital sphere. This has undeniably contributed to the brand’s success.

“We will have to wait and see how Gobbetti’s leadership unfolds with respect to digital, however the brand shouldn’t rest on their laurels. It will be necessary for Burberry to maintain their innovations in digital if they hope to increase profits moving forward.”

Leadership and strategy should not be limited to the CEO and creative director, but rather spread among a team of individuals with specific abilities and expertise. With the changing luxury industry, decades of experience does not always translate to preparedness for today’s market.

“Gobbetti will dissect every initiative including digital,” Mr. Ramey said. “Its existence doesn’t mean it is successful. Nor does Gobbetti’s lack of digital experience predict its demise.

“Each position requires a specific skill set,” he said. “It’s rare when one person possesses the necessary left and right brain processes for a billion dollar brand.”

Source: https://www.luxurydaily.com/how-will-burberrys-changing-leadership-impact-the-brand/

May 6, 2016

Stella McCartney celebrates individuality to woo next-generation

Luxury Daily
By: Sarah Jones
May 6, 2016

Kering-owned fashion label Stella McCartney is communicating its brand values through a handful of millennial spokesmodels.

To launch its latest scent, Pop, the brand has brought together a posse of personalities who have similar feelings about issues such as sustainability and the treatment of animals, asking them to share their views in a social media campaign. Through this “celebration of individuality, authenticity and adventure,” Stella McCartney opens up its brand to a younger audience whose ideologies may align.

“This campaign feels like it’s taking away the filtered, glossy effect of other social media campaigns on Facebook and Instagram and focusing on providing a real connection with this ‘girl gang,’” said Lauren Klostermann, director of digital marketing at Blue Moon Digital, Denver, CO.

“It targets a younger audience that is interested in issues they share with Stella, including animal rights and sustainability,” she said. “It also emphasizes individuality and acceptance.”

Ms. Klostermann is not affiliated with Stella McCartney, but agreed to comment as an industry expert.

Stella McCartney was unable to comment directly before press deadline.

Personal appeal
Stella McCartney’s #PopNow campaign stars Lourdes “Lola” Leon, the daughter of pop star Madonna and a performing arts student; musician, writer and director Grimes, reach name Claire Boucher; actress and campaigner Amandla Stenberg and animal activist Kenya Kinski-Jones.

When first revealing the campaign faces, the brand’s eponymous founder took to social media, sharing why each of the women inspire her personally. This adds a layer of genuineness to the choice of spokesmodels.

Still campaign imagery shared on Instagram and across other social media channels depicts the young women in natural settings, whether playing an electric guitar sitting on a bed or palling around with each other.

Photographer Glen Luchford, who has previously worked with the brand and worked with Ms. McCartney’s mother Linda Eastman, shot the still campaign.

While the brand began teasing the campaign around the time that the perfume became available in late March, additional video elements of the campaign did not roll out until a month later.

The campaign features the women in separate short social videos, as they talk about their beliefs.

Grimes shares that sustainability is very important to her, saying that an ecological focus is what draws her to Stella McCartney as a brand. She also speaks about her friends, who are not afraid to tell her when her music is not good.

These statements are spoken in voiceover to vintage-tinged footage of the pink-haired Grimes on the California desert.

A second film released May 5 takes a closer look at Ms. Kinski-Jones’ feelings on animals.

As she twirls with pink balloons or hangs with her fellow campaign faces, she talks about how Pop as a fragrance represents the idea of being in the moment and unapologetic.

The animal activist also talks about how people should be thinking of all creatures and not just themselves. This is paired with a picture of a polar bear with the words “Not tested on animals” superimposed.

As a sustainably-focused business that does not use leather, having spokesmodels that reflect not just the brand image but also the ethos will help to reinforce its position. This campaign gives Stella McCartney the opportunity to reach out to younger, cause-minded consumers.

A yet-to-be-released campaign film by Melina Matsoukas follows the foursome on a road trip, a representation of their drive in their own lives. The concept centered on friendship is meant as a departure from the typical fragrance film.

“Pop is a spirit,” said Stella McCartney in a statement. “It is about capturing and celebrating that very special and exciting time when you are finding yourself and coming into your own.

“It is about freedom, and starting your life away from judgments or labels,” she said. “Together as one, these strong young women are a force to be reckoned with.”

Ms. McCartney believes that beauty should enhance natural beauty rather than covering it.

Pop Eau de Parfum, developed under the brand’s licensing deal with Procter & Gamble Prestige, combines tuberose and sandalwood to create a vibrant, contemporary scent. The fragrance is produced using biomimicry technology, extracting oil from a blooming flower rather than processed ones, helping to save a sandalwood tree per every 2,500 bottles.

Taking the concept of flipping tradition, the bottle is an inverted version of the brand’s Stella fragrance bottle, topped with the Stella McCartney coin in metallic hot pink.

Continuing its commitment to the environment, Pop’s packaging was made using technology that limits its ecological impact. The boxes come from sustainably managed forests and the bottles are 100 percent recycled plastic, allowing consumers to support a brand they can trust.

Ms. McCartney approaches her business with an innate sustainability mindset, which she explained to the audience at the 2014 FT Business of Luxury Summit.

From using wind power for a store to foregoing leather and PVC, Ms. McCartney considers environmental friendliness so automatically that she forgets she is doing it. This has become part of her namesake label’s story, even if it is one that it does not overtly promote.

Accompanying the Pop perfume is an accessories collection that includes a Pop Falabella handbag in punchy colors and vegan leather, keychains, scarves and shoes.

“Stella McCartney is looking to connect with a younger, edgier audience with these spokesmodels,” Ms. Klostermann said. “These girls are a down-to-earth version of other Instagram stars like Kylie Jenner.

“The Stella girl cares about specific issues and wants to use her disposable income to support causes that matter to her.”

Next generation
As millennials gain disposable income, marketers are appealing to them with focused campaigns.

Beauty marketer Estée Lauder is appealing to the next generation of consumers with a collection designed specifically for a social media-savvy clientele.

The Estée Edit is retailing exclusively through Sephora in the United States and Canada on March 15, with a coinciding launch campaign featuring influencers and models Kendall Jenner and Irene Kim. When developing the line, Estée Lauder envisioned what its eponymous founder would do to disrupt the beauty market today, keeping heritage at the heart of this new brand extension.

Consumers are split on their willingness to download luxury brand applications, but when dispersed into generations, 72 percent of millennials are inclined to download a branded app, according to a report from The Luxury Institute.

Digitization of the luxury world is slowly evolving as younger generations grow into being affluent consumers. Luxury clients differ across more than just generations, but understanding the prime and upcoming consumer can prepare marketing teams for the future.

“By using video & bios in a magazine-type layout, this will engage the younger audience to hear from spokesmodels that they relate to,” Ms. Klosterman said. “Via the use of Facebook advertising, they will also hit a younger demographic that appreciates the individualistic message.

“Finally, via the use of the #PopNow hashtag, their audience can feel engaged in the mission of the campaign outside of the perfume itself, creating a greater affinity with the overall brand.”

Source: https://www.luxurydaily.com/stella-mccartney-celebrates-individuality-to-woo-next-generation/

April 25, 2016

Inside the Hermès Birkin Bag That Sold For Record $298,000

Forbes
By: Eustacia Huen
April 26, 2016

It has only been ten months since an Hermès fuchsia Birkin bag was sold at Christie’s handbag auction in Hong Kong for record-setting $221,846. But earlier this month, an extremely rare 35cm Hermès braise shiny porous crocodile Birkin bag with 18-karat white gold and diamond hardware became the most expensive resold Birkin bag at $298,000.

Aside from being one of the rare few handbags that has ever been produced in the world, what makes this particular Birkin bag so special is how it represents the pinnacle of luxury handbag craftsmanship, according to Dirk DeSouza, Spokesperson of Privé Porter. Featuring the “finest crocodile skin treated with the most decadent, deepest red color imaginable, it takes a craftsman (with at least two years of apprenticeship experience at Hermès) about 50 hours to singlehandedly assemble this bag, perhaps even more when considering the diamond inlays and gold hardware,” he said. As for the condition, this $298,000-handbag which Privé Porter acquired in 2015 was unused, in “store fresh” condition and in its original packaging.

But beyond all the labor, material cost and exclusivity, another factor that could explain this hefty price tag may boil down to preference, according to DeSouza. “Marked by the fact that one could only buy a Birkin after developing a long, verified financial relationship with the brand, showing loyalty through spending roughly around $10,000 or $20,000, some of the notable challenges of landing a Birkin bag include the multi-year long waiting list and stringent quota that only allocates even Saudi princesses only two Birkin bags per year,” he said. And “with stores being allocated only a very small number of bags discreetly held in the back,” DeSouza continued, “odds are slim for customers to get a particular color, material, and size upon first try.” Hence, this may be why the anonymous buyer was willing to splurge much more for the exact bag he or she coveted.

Unlike previous record-breaking sales, this particular bag was not auctioned off at Christie’s ($221,846 in 2015) or Heritage Auctions ($203,150 in 2011). It was sold by Privé Porter—the world’s largest curator of unused Hermès Birkin bags which exclusively posts their inventory on Instagram. Typically, most buyers would review the inventory, request for additional photos, details, and verification of original documentation before making the purchase with Privé Porter. But the anonymous buyer of this $298,000-handbag actually first took note of the luxury bag in the press coverage of the World’s First Pop-Up Yacht that contained $2 million in Birkin bags during the 56th Fort Lauderdale International Boat Show in November 2015.

While this deviation from previous record-breaking auctions by no means indicate a shift in the way people shop for luxury goods, it does highlight how shoppers are more readily able to access coveted luxury items beyond notable auction houses and vintage stores. Nevertheless, Milton Pedraza, Founder and CEO of the Luxury Institute believes the increasingly fierce market would still have room for auction houses such as Christie’s and Sotheby’s, as consumers could generally trust them more for authenticity. Ultimately, Pedraza noted, “So long as you could trust the seller, ensure that the transferal of funds is safe and sound, and verify the product’s authenticity, it almost doesn’t matter whether you first gain knowledge of the product from an auction, a boat show, Instagram or Snapchat.”

Source: http://www.forbes.com/sites/eustaciahuen/2016/04/25/inside-the-hermes-birkin-bag-that-sold-for-record-298000/2/#34e3347f74ba

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