By Romy Ribitzky
Portfolio
April 14, 2011
As retailers and analysts fret over what rising gas prices will do to consumers’ wallets, luxury brands are quietly boosting inventories, ramping up hiring, and doing away with secondary brands in favor of more expensive goods.
Italian provocateur brand Dolce & Gabanna became the most recent to announce it will do away with its lower-priced D&G line, following in the footsteps of Brunello Cucinelli axing his Gunex and Rivamonti collections, columnist Christina Binkley writes in today’s Wall Street Journal.
And while moving away from lines with entry-level pricing may seem like a counterintuitive move during uncertain global economic conditions, Binkley argues that for some luxury brands, it’s a tactic that makes sense. “Luxury brands can seem cluttered with different lines when what consumers really care about is the designers who stand behind them,” she writes.
Jim Taylor, a luxury-consumption consultant adds that “nothing upsets affluent consumers more than finding there are multibrand models for multiple levels of quality.”
In fact, high-net-worth shoppers are drawn to certain brands because of their exclusivity, industry experts explain. A designer’s power to enhance status, imbue lasting quality, and extend a special experience is what those who earn at least $150,000 expect from a luxury label, the Luxury Institute, based in New York, says in its March Wealth Report, also out today.
Hermes, Prada, and Louis Vuitton all ranked as the top women’s fashion brands, while Brioni, Ferragamo, and Ermenegildo Zegna topped men’s fashion choices for households who earn between $271,000 and $2.4 million annually.
So maybe Dolce & Gabanna are onto something. By choosing to stop diluting their brand’s appeal and choosing instead to focus on what makes a $395 corset top a must-have versus what makes it a good value.
The proliferation of flash-sale sites is also complicating luxury brands’ value proposition. For those fashionable men and women who want to look like a million bucks but don’t quite have the budget, waiting sometimes as little as a couple of months can make an unaffordable article of clothing or accessory less of a splurge. Still, for those designers who cater to all levels of consumers, having to discount their wares-not only in stores and online, but also to feed the constant daily deal beast-marketing and branding their different collections in a way that resonates with consumers can be a challenge.
What’s the solution? “Companies must choose between two strategies. Either they must go the way of Michael Kors and Ralph Lauren and “paint the earth” with multiple brand levels, or they must ‘simply be sublime’ and cater to the roughly 20 percent of luxury consumers who shop without regard to price,” Taylor tells Binkley.