When Gucci announced it was parting ways with its creative director Alessandro Michele, after nearly eight years of stratospheric growth, it marked yet another move from a fashion brand under pressure to produce the kind of success that seemingly comes once in a blue moon. Under Michele’s creative leadership, the Italian brand experienced phenomenal growth that saw its revenue almost triple, from €3.9 billion in 2015 to €9.7 billion in 2021. But what it also highlighted is the troubles behind a short-term strategy adopted by some of the industry’s key leaders. That performance is the only thing that matters.
The trouble with being focused solely on performance is that ultimately, it’s not a long-term plan. While the fashion and luxury industry, like many others, remains under pressure to deliver double digital growth in spite of a recession, a pandemic, various wars, and the latest global meeting for the environmental crisis, this is not sustainable, nor ethical, nor responsible because the industry is being pushed to sell more volumes at higher prices, and the lowest production costs possible.
There are several reasons that performance brands are obliged to grow double-digits. Firstly, it's because they’re independent and listed on the stock exchange like Prada or Moncler. Or it’s because they’re a part of a luxury group listed on the stock exchange like Balenciaga or Bottega Veneta. Or thirdly, it’s because they form a main pillar of a group in terms of EBIT contribution like Gucci.
These brands face a sort of damnation, being forced to constantly perform over the average of the industry. They must frequently create new buzz in order to attract the attention of both customers and analysts. They are always searching for that hit of dopamine; always wanting, pursuing, and achieving, always in need of acknowledgement and appreciation because their life depends on this. They need to stimulate reactions in order to confirm their visibility and their appeal in a very saturated market, as well as the “buy” status given by the most prestigious analysts.
Take Prada, which recently launched another Prada x Adidas collection, introduced a second Creative Director, Raf Simons, alongside with its founder Miuccia Prada, revisited its iconic black nylon collection by turning it into a recycled nylon set of products, Re-nylon. It also announced its participation to the upcoming America’s Cup with its legendary Luna Rossa team and its 7th Time Capsule NFT collection made of 50 NFTs allowing the buyers to exclusively attend the brand events on the Web 3 such as the Prada Extends Miami under the fashion house Discord channel.
The need to keep the hype high for performance brands has become a necessary evil. But it can also cost the brand its reputation if the activities are not accurately planned and in-line with the very demanding markets and customers, like in the case of Bottega Veneta when, apparently, its then designer Daniel Lee was ousted because of a party he threw for the brand in Berlin while Europe was being affected by restricted measures and lockdowns as a result of the global COVID-19 pandemic and also due to a lack of professional management of the team that forced key, long term employees to leave.
Another example of how brand tenure is being stretched to its limit is Balenciaga. The brand, since the creative takeover of Demna, has constantly pushed very hard into provocation, hype, and scandal: from the DHL-like collection to the trash bags sold at several thousands of euros, the former haute couture Maison has been transformed into a desperate attention-seeker.
The launch of the destroyed sneaker, the mix of hot topics like the Ukraine war and celebrity Kim Kardashian bound in yellow tape, and the close collaboration with outcast Kanye West have certainly not helped the brand shine in terms of values and code of conduct. The latest episode linked to the campaign involving children carrying bondage-dressed teddy bears has exceeded the tolerance limits and, following a very severe backlash on social media, Balenciaga decided to withdraw it.
This search for attention to push sales and increase the appeal of the brand is unstoppable for these brands and, to come back to ethically acceptable limits, the ownership has always to pull the brakes violently, which means letting go of the creative director very often and/or the CEO who allowed or was unable to control the mess.
This kind of shock clearly doesn’t help the brand to set up strong foundations and a solid reputation, on the contrary, it weakens it so much that, to restart it on positive terms takes a long and an incredible amount of energy.
The highest risk is to be definitely overwhelmed and not to be able to recover as needed.
High dopamine-addicted brands need to be euphoric, energised, and with a high level of hectic activities. They are usually successful and appreciated but the cost of this is very high in terms of energy consumed to keep pace and the risk of derailing is very important. The recovery can be very difficult for these entertaining brands, if not almost impossible. When the brand equity doesn’t get stronger, even phenomenal sales growth is not enough to keep them in the long-term Olympus.
Excellence brands, on the opposite hand, are focused on long-term growth and have worked so well on their brand equity that they do not need to push for euphoric appreciation.
They might be listed on the stock exchange like Hermès or privately owned like Chanel or the driver of one of the most important luxury groups in the world like Louis Vuitton, but what they all aim for is smooth medium to long-term growth that leverages their emblematic codes to attract high-end customers.
They are very strong on leather goods but also very diversified for a long time with a strong and distinctive presence in categories like fragrances or recently opened brand extensions. They have excelled in other categories that are very technical like watches (the famous Hermès Cape cod designed by Margiela or the unique collaboration between Hermès and Apple for the Apple Watch). They sell products made to last, to be repaired, collected, and passed from one generation to another, exuding excellent craftsmanship and an almost impeccable and indisputable supply chain.
In terms of communication, excellence brands focus on their strong appeal and long-term brand equity and don’t need to impress analysts or customers with hype and buzz.
When Hermès decided to launch the make-up as a brand extension, it didn’t invest a huge budget in celebrities or influencer campaigns, it didn’t create product presentations embracing provocation and controversy. The luxury brand decided to invest in the in-house production of this so successful category, they invested in know-how and high-quality raw materials, product, and packaging concepts instead.
Hermès, like Chanel, does not have any license and they create and make every product in-house or in collaboration with high-end suppliers like in the case of Moryioshi Nose, a marble print master based in Kyoto who preserved a unique know-how.
Costume jeweller Desrues, bootmaker Massaro, feather maker Lemariè, embroiderer Lesage, goldsmith Goossens, milliner Maison Michel, and several other incredibly talented artisans, are not only owned by Chanel, they are also part of the prestigious Chanel Métiers d’Art collection and show that highlights the best in class in terms of excellence, rarity, and style.
Excellence brands aim at beautiful and timeless products and are oxytocin-related; they create a strong, long-lasting emotional bond with their customers, because as Kevin Roberts highlighted in the famous book "Love Brands,” they nurture a community of loyal collectors who buy new and vintage pieces because of the great value they acknowledge in the brand.
Excellence brands do not need to push for short-term double-digit revenue growth as they have the vision to stay relevant in the decades. These brands very often are more relevant than the creative director working for them: today Chanel's creative director is Virginie Viard, the long-time right arm of the late Karl Lagerfeld, who stayed at the helm of the French Maison for 36 years; Pierre Alexis Dumas, member of the Hermès founding family, is the artistic director of the brand and Louis Vuitton has not still replaced Virgil Abloh after his death happened one year ago.
Excellence brands have very strong roots and their storytelling is about rarity, preciousness, exclusivity and artisanal values. Richemont through its Michelangelo Foundation for Creativity and Craftsmanship, an international non-profit organisation based in Geneva, Switzerland, which was created in 2016 by former Cartier mastermind Franco Cologni and Johann Rupert, has created an amazing annual event that takes place in Venice called “Homo Faber.”
Homo Faber is an event and an online platform dedicated to craftsmanship highlighting artisans and their masterpieces; museums, visit galleries, and shops offering unique objects.
They say that “The Michelangelo Foundation’s mission is to celebrate and preserve master craftsmanship, and for this reason, it has created a European map of the most significant representatives in this field, with the aim of connecting all its protagonists: artisans, designers, gallery owners, art curators, collectors and enthusiasts of high-quality handmade pieces.”
Luxury is slow and rich in deep experiences, it is made for connoisseurs and people who appreciate the savoir-faire and the know-how behind an object.
It is not by chance that, while the fashion group Kering is struggling to keep high the attention around its brands and, to keep momentum in sales, needs controversy and provocation (Balenciaga), severed heads in the shows (Gucci), meaningless women nudity ( Bottega Veneta – Gaetano Pesce's collaboration with Kate Moss for Miami Art Basel) and the sponsorship of the “new” release of the old (1992), hot “Sex” coffee table book by Madonna announced by Saint Laurent for Miami Art Basel. Brands like Hermès, Louis Vuitton, Chanel, and Cartier are very far from this hyper-sexualized, outrageous approach and prefer to stay away from the hot waters of disturbing messages.
While performance brands are forced by their high volatility to push for unstoppable growth, raising the bar higher and higher, and risking like a new Icarus to get too close to the Sun with wax wings, excellence brands can afford to keep a slower pace and nurture a deeper, more rooted growth, avoiding the risk of overwhelming their lovers, of saturating the market and of making regrettable mistakes that put at risk not only the revenues but also the brand reputation.
The case of Alessandro Michele divorce with Gucci is emblematic: he leaves the brand with a very strong yet volatile imprinting but with no long-term emblematic codes. The designer replacing him will just have to take the risk of erasing Michele’s vision as well as erasing Michele’s legacy, while starting from a white canvas.
When Margiela left Hermès after 6 years as its creative director, he left a very powerful legacy on which the brand capitalised its next steps: the Cape Cod watch, a timeless and deconstructed style in the clothes that we can still see today in some Hermès items, a love for tailoring, for the simplicity of an impeccable white shirt.
When Karl Lagerfeld passed away, his vision of Chanel was seamlessly developed by Virginie Viard, who is re-working constantly the symbols and codes of the brand that have been preserved so wisely, and the continuity of the brand image was never put under discussion.
The fashion and luxury industry today need to embrace fulfillment, serenity, energy, and strength and needs to take the distance from a toxic environment made by dirt, turpitude, and obscenity.
As Paulo Coelho (past ambassador of a Richemont brand) once said: “Elegance is usually confused with superficiality, fashion, lack of depth. This is a serious mistake: human beings need to have elegance in their actions and in their posture because this word is synonymous with good taste, amiability, equilibrium and harmony.”
In a world already full of horror and dullness, the fashion and luxury industry can thrive by contributing more style, good taste, and beauty.