THE BULLETIN: Monthly analysis of the luxury headlines, Nov. 2009

Robb Young analyses the latest luxury headlines, asking whether “wearability” is no longer a dirty word; if Mecca can really be an appropriate luxury mecca; and how Japanese and Korean carmakers are muscling in on Ferraris and BMWs.

Fashion Retailers Open In Competitors’ Space

Not since the visionary era that spawned Colette in Paris, Corso Como 10 in Milan and dozens of copycat concept stores around the world has high-fashion retail seen such a metamorphosis as it has in the last few years. Besides the veritable revolution that ecommerce has triggered in conventional retail, we’ve witnessed co-branded stores, pop-up boutiques and global franchising of niche select shops. The latest trend sees department stores getting into bed with their smaller multi-brand rivals to spruce up their image or refresh their brand mix. Paris’ venerated buyer Maria Luisa has opened a branch of her namesake boutique inside Printemps and New York’s Opening Ceremony has done the same in Tokyo’s Seibu department store. Instead of standalone outposts like Maria Luisa’s branch in Qatar or Corso Como’s in Seoul, the merchandising and décor of the shop-in-shop format has been completely overhauled to assimilate the smaller boutique’s identity into that of the sprawling emporium. Both sides are betting that the brave move will bring in more from cross-traffic than revenue cannibalisation caused by clients who may swap loyalties altogether.

Sources:
International Herald Tribune – 2 Oct 09
WWD – 5 Oct 09
Conde Nast Traveler / Concierge.com – 12 Oct 09

“It’s Just So Wonderfully ‘Wearable’”

“Wearable” used to be a dirty word reserved for retailers defending their purchase of a lacklustre “filler” brand — or grudgingly deployed by the fashion press when profiling an advertising brand not shown on the catwalks. Oh, how quickly the dictionary is rewritten after a global recession. The tables have turned fully and critics are now lauding designers simply for being “wearable”, not in spite of it. Many female designers in particular are enjoying the spotlight. Stella McCartney, Hannah MacGibbon for Chloé, Phoebe Philo for Celine and even Isabel Marant are considered the commercial visionaries of our day with headlines like WWD proclaiming, “MacGibbon Steers Chloé With Firm Hand.” While the dark and severe look championed by men like Christophe Descarnin at Balmain, Rick Owens, Riccardo Tisci at Givenchy and Gareth Pugh may still be inspiring magazine editorials and high street trends, watch out for these women who clearly have more than one eye on the bottom line.

Sources:
New York Times – 6 Oct 09
WWD – 5 Oct 09
The Guardian – 5 Oct 09
Reuters – 5 Oct 09
WWD – 13 Oct 09

Fashion Brands Keep Pumping the Perfume

Jimmy Choo and Elie Saab, two brands that have attained global recognition in the past decade, are about to launch their debut fragrances through respective twelve- and ten-year licenses with Inter Parfums and Shiseido Group’s Beauté Prestige International division. The crisis has yielded mixed results for premium perfumes, according to an August report by Euromonitor International, but it hasn’t seemed to dampen the mood for brands with a particularly strong cache like Choo or Saab. In the long run, brand extension into the market’s most popular entry-level product is still de rigueur. Other firms, like Brioni, are choosing the limited edition route. To celebrate its 65th anniversary, the Italian label will produce just 7000 bottles of its first scent in fifty years. It seems that whatever analysts may predict, the perfume category remains one of the fashion industry’s most attractive cash cows and virtually nothing can slow the tide of its forthcoming launches.

Sources:
PR Inside – 5 Oct 09
WWD – 7 Oct 09
Base Notes – 1 Oct 09

Urban Property Markets Up, Thanks to Overseas Buyers

There are more signs that prices for luxury homes and prime commercial properties in London, New York and Hong Kong are recovering. Following positive reports from top-end UK estate agents Knight Frank and Savills, luxury apartment developer Minerva, which caters to cash-flush international buyers, said that demand is rising and a recovery is on its way, noting an uptick after a 4% rise in the April-June quarter — due in part to the feeble pound. A rebound in New York’s commercial property market is also likely as Israeli, Korean and other foreign firms snap up hot addresses in the city and as real estate advisors like Cushman & Wakefield suggest the bottom in the market is either here or around the corner. And luxury home sales in Hong Kong worth over HK$10 million ($1.3 million) tripled in September from the previous month thanks mostly to eager buyers from mainland China, according to the Land Registry.

Sources:
London Evening Standard – 5 Oct 09
Crains New York Business – 11 Oct 09
Bloomberg – 6 Oct 09

Pushing Extravagant Hospitality Even Further

The Ritz-Carlton is set to open the world’s tallest hotel in Hong Kong’s ICC building next year, with rooms floating 118 floors above Victoria Harbour boasting views 150 metres higher than those in Dubai’s 321-metre Burj Al Arab Hotel. Off the Croatian island of Solta, guests will never get the same view twice in what’s being dubbed the world’s first revolving hotel. London-based architects Studio RHE is designing the three-story 360 turntable structure that will be surrounded by a swimming lake off the island. For ski buffs, the Tschuggen Grand Hotel in Arosa will open its first room with a dedicated ski funicular departing directly from the guests’ room at the touch of a button to carry a party of twelve to the slopes of the Swiss Alps in just two and a half minutes. And in Abu Dhabi, visitors to the Qasr Al Sarab Arabian desert retreat in the Rub Al Khali (empty quarter) will see the uninterrupted expanse of sand dunes from the air on their way into the private landing strip.

Sources:
Ski Rebel – 18 Oct 09
Telegraph – 21 Oct 09
Hotels Mag – 28 Oct 09
Arabian Business – 25 Oct 09

Unusual Luxury Destinations Open for Business

Luxury firms are getting bolder and bolder these days. Come April, the holy city of Mecca will be able to cater to the wealthiest among the four million pilgrims who pass through the city annually to perform the hajj or umrah. Raffles will open a massive five-star complex just three minutes from the Grand Mosque, pampering guests with luxury comforts and perks like a 24-hour butler service, a coffee sommelier and a chocolate room where chefs prepare bespoke truffle-filled desserts. The announcement has sparked some controversy with conservatives condemning the Saudi regime’s “Dubaisation” of the city and its “mockery” of what began as a rigorous and humbling journey. On the other side of the world, Louis Vuitton just planted a flagship in Ulaanbaatar, Mongolia, where a growing business elite navigate a mostly impoverished city riddled with crumbling infrastructure. The Four Seasons will open in Beirut next month (with Louis Vuitton to follow shortly thereafter) despite the seemingly persistent threat of civil war. And the spectre of climate change’s rising tides doesn’t appear to faze investors from firms like Amanresorts who plan on transforming the low-lying Pacific islands of Palau into a luxury tourist destination in the coming years.

Sources:
The Daily Telegraph – 16 Oct 09
WWD – 22 Oct 09
Hospitality Design – 16 Oct
Sydney Morning Herald – 5 Oct 09

Asian Carmakers Edging in on Traditional Luxury Competitors

At about $96,000, Hyundai’s new Equus limousine saloon will be the largest and most expensive vehicle in its portfolio, entering territory claimed by market leaders like BMW’s 7-Series or Mercedes-Benz’s S-Class. The Korean firm more famous for SUVs and family sedans has delivered three bulletproof versions of the Equus to the Korean President and plans to market aggressively its new luxury model in Korea before global distribution. Japanese carmaker Lexus has also recently joined the supercar club under the banner of its new model, the Lexus LF-A, which is being touted as “rarer than a Rolls-Royce and faster than a Ferrari”. Only 500 of the 4.8-litre V10 sleek beasts with 412kW of power will be put on the market to compete with the likes of Lamborghini and Porsche. Hyundai and Toyota’s Lexus division are just two of many Asian brands working hard to move upmarket into the luxury and high-performance tiers. China’s automakers are also moving in the same direction with force as they expect domestic consumers to trade up rapidly in the years ahead. It seems the era of European dominance in the luxury car sector is well and truly coming to a close.

Sources:
Sydney Morning Herald – 21 Oct 09
Channel 4 – 2 Oct 09
Motor Authority – 21 Oct 09

Media Slightly More Upbeat on Luxury

Green shoots, rebound, recovery — whatever you want to call it, the media has been doing its bit to help us turn the corner by highlighting some of the more optimistic numbers and headlines across the luxury industry. The FT reported on several “Signs that the Tide May Be Turning,” including optimism from the Genoa International Boat Show. The Israeli Diamond Industry trade publication picked up on reports that De Beers’ diamond mines in Botswana, the world’s biggest producer of high-value rough diamonds, “are operating at about 80% of capacity, signalling a marked improvement in the international diamond market less than a year after demand for the gems collapsed.” The New York Times highlighted brands like Tommy Hilfiger, Dolce & Gabbana’s D&G line and Tory Burch as examples where “Affordable Luxury Bucks the Crisis.” Reuters quoted Louis Vuitton spokesperson saying, “We are very optimistic on the Christmas season,” while Bloomberg dissected a Unity Marketing report, which concluded that spending by Americans on luxury goods and services grew 29% in the third quarter from the previous three months. Keep the good news coming strong and perhaps column inches could fulfill their own prophecy.

Sources:
Financial Times – 9 Oct 09,Authorised=false.html?i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fe6d66ee6-b4f3-11de-8b17-00144feab49a.html&i_referer
Israeli Diamond Industry – 21 Oct 09
New York Times – 21 Oct 09
blank" title=“http://www.reuters.com/article/rbssConsumerGoodsAndRetailNews/idUSWEA411220091007”>Reuters – 7 Oct 09
blank" title=“http://www.bloomberg.com/apps/news?pid=20601103&sid=aGepXwA.3ehM”>Bloomberg – 16 Oct 09

Iconic Fashion Brands Getting Saved

When legendary brands like Christian Lacroix, Escada and Yohji Yamamoto crash and burn, the fashion industry tends to let its love of drama get the better of it. While the degree of failure that bankruptcy signals can’t be overstated, the chances that such powerful names would be left to fade out are far slimmer than the hyperbolic headlines suggest. During last month’s Paris fashion week, it was revealed that Escada had attracted ten potential suitors, one of whom should emerge as a white knight before the German company is said to run out of money in December. An Emirati from Ajman, Sheikh Hassan Ben Ali al-Naimi, has made a formal offer to rescue Christian Lacroix, joining other bidders Bernard Krief Consulting and La Financière Saint-Germain. In the rumour mill, Usha Mittal, wife of Lakshmi Mittal, is said to be persuading the Indian billionaire to acquire Gianfranco Ferre from troubled IT Holding, while The Business of Fashion reports that Integral Capital has stepped in to rescue Yohji Yamamoto. Meanwhile, Permira, the private equity firm that owns Valentino Fashion Group, said that it will stick around for the longer haul in order to see that company through these rocky waters.

Sources:
Reuters – 8 Oct 09
AFP / Google – 8 Oct 09
New York Times – 9 Oct 09
CPP Luxury – 3 Oct 09
Business of Fashion – 16 Oct 09
New York Times – 1 Oct 09

Designer Collaborations Keep on Coming

The high-low, cheap-chic collaboration trend has outlasted even the most optimistic analysts’ expectations. H&M is marching ahead with lingerie, knits and accessories by Sonia Rykiel just weeks after pairing with Jimmy Choo for shoes. Target recently announced that Jean-Paul Gaultier has agreed to be the next in its roster of Designer Collaborations, following Alexander McQueen who kicked off the project in March (which is separate from its Go International collaboration project). And Stella McCartney is co-branding a “mini-me” Gap childrenswear range for GapKids and babyGap. Certainly, what was thought of as a flash in the pan upon its first appearance has kept consumers interested and buying. But will they tire of the concept once the recovery is in full swing? Or is the enticement of cheap clothes touched by high-end designers an invention too irresistible to relinquish?

Sources:
W Magazine – Nov 09
Vogue – 28 Sep 09
WWD – 20 Oct 09