CONSUMERS

Revisiting the BRICs

by

Imran Amed

|

This is the featured image caption
Credit: This is the featured image credit

Following the market upheaval that began one year ago, each of the BRIC countries needs to be considered one by one.

Over the last decade, collaborations between luxury brands and contemporary artists have gone beyond mere artistic partnerships towards a new kind of luxury branding.

PARIS – Art and fashion have always developed side by side, for fashion, like art, often gives visual expression to the cultural zeitgeist. During the 1920s, Salvador Dalí created dresses for Coco Chanel and Elsa Schiapparelli. In the 1930s, Ferragamo’s shoes commissioned designs for advertisements from Futurist painter Lucio Venna, while Gianni Versace commissioned works from artists such as Alighiero Boetti and Roy Lichtenstein for the launch of his collections. Yves Saint Laurent’s vast art collection, recently auctioned at Christie’s in Paris, testified to his great love of art and revealed the influence of a variety of artists on his own designs.

In the 1980s, relationships between luxury brands and artists were advanced when Alain Dominique Perrin created the Fondation Cartier. In the Fondation Cartier pour l’Art Contemporain, a book marking the foundation’s 20th anniversary, Perrin says he makes “a connection between all the different sorts of arts, and luxury goods are a kind of art. Luxury goods are handicrafts of art, applied art.”

The Fondation Cartier pour l’Art Contemparain building in Paris

Following the market upheaval that began one year ago, each of the BRIC countries needs to be considered one by one.

Following the market upheaval that began one year ago, each of the BRIC countries needs to be considered one by one.

LONDON – It’s been nearly a decade since Goldman Sachs first anointed the so-called BRIC countries — Brazil, Russia, India and China — promising uninterrupted growth and development for the global economy, based largely on the huge populations, vast resource base and sheer geographic scale of these new powerhouse economies. With a surge in wealth and growing consumerism, the BRIC markets were at once the greatest opportunity and greatest challenge facing the luxury industry at large.

Fast-forward to October 2008 and the onset of the greatest economic crisis in a generation. Some economists were espousing the theory of “decoupling”, which asserted that emerging economies would continue to plough ahead unabated (albeit, at a slower pace), while those of the industrialised countries, mired in a financial crisis that killed consumer confidence and credit markets alike, stagnated or, even shrank.

In fact, things did not play out that way. Stock markets and consumer confidence in the BRIC countries plummeted as they did elsewhere, and decoupling was very much in doubt. The global economy, it seemed, was much more interconnected than had previously been thought, and the US banking crisis quickly became an economic pandemic to which no nation was immune.

Then, something unexpected happened. In early 2009, some emerging economies, in particular China and Brazil, continued to grow, partially boosted by economic stimulus packages concocted by national governments intent on maintaining sky-high GDP growth and economic development. Russia, on the other hand, suffered a dramatic decrease in wealth, while India, previously touted as “the next China”, turned out to be the farthest thing from it, with ongoing cultural, infrastructure and regulatory issues holding the country’s luxury industry back.

It soon became clear that the BRIC markets, which may have nattily been grouped together by Goldman Sachs, actually had their own responses to the market upheaval and needed to be considered one by one. This issue of Luxury Society Intelligence, Revisiting the BRICs, gives us the latest thinking and market intelligence to do exactly that.

This month, we welcome some new contributors to Luxury Society, beginning with Angela Rumsey, who reports on Brazil, the BRIC economy that received perhaps the least attention from luxury brands in the pre-crisis world. No more. Today, Brazil is in laser-focus as the global luxury industry has taken notice of its relative market buoyancy in contrast to the other BRICs.

In India, however, the mood is decidedly less jubilant for international luxury brands — at least in the short term. As Kabeer Sharma reports, some brands are still smarting from ill-advised partnerships and retail expansion, while others are concocting new strategies and approaches for India, a country with its own tradition of luxury and great cultural pride.

As Helene Le Blanc concludes, a long-term approach is also appropriate for Russia, where a massive contraction of wealth has left some local luxury groups in economic distress and their international partners, like Alexander McQueen and Stella McCartney, in rapid retreat.

As for China, the one great short-term hope for luxury in the emerging markets, things are a bit more complex than they seem on the surface, according to W. David Marx. And finally, Robb Young looks beyond the BRICs to investigate the other emerging markets that may hold promise for the luxury industry as the Noughties come to a close.

To sum it all up, I spoke to Luxury Society member Patrice Müller of strategy and M&A; advisory firm Ipolitus & Hubertus, to provide a forward look at how firms, families and brands in these countries are reversing the logic of emerging market luxury by expanding into Western luxury markets themselves.

And with that, I bid you happy reading! Our community in Luxury Society, now more than 5,000 members strong, continues to grow thanks to your ongoing support. Please let us know what you think as your feedback and engagement are always welcome.

Imran Amed
Editor-in-Chief

Imran Amed
Imran Amed

Founder and Editor-in-Chief

Imran Amed is a professional advisor, writer and entrepreneur operating at the intersection of business and fashion. He is the founder and editor in chief of The Business of Fashion and the former editor-in-chief of Luxury Society. Imran’s writing and point of view reflect the day-to-day insights of his work with international luxury brands and high potential fashion start-ups, where he acts as a bridge between the industry’s most gifted creative and business talent. Imran also advises private equity firms, investors and international corporations interested in the luxury market. Imran has contributed his expertise to the BBC’s British Style Genius and The New York Times and has published articles in The Financial Times, Vogue (India) and Style.com. Imran is an Associate Lecturer at London’s Central St Martin’s College of Art & Design.

CONSUMERS

Revisiting the BRICs

by

Imran Amed

|

This is the featured image caption
Credit : This is the featured image credit

Following the market upheaval that began one year ago, each of the BRIC countries needs to be considered one by one.

Over the last decade, collaborations between luxury brands and contemporary artists have gone beyond mere artistic partnerships towards a new kind of luxury branding.

PARIS – Art and fashion have always developed side by side, for fashion, like art, often gives visual expression to the cultural zeitgeist. During the 1920s, Salvador Dalí created dresses for Coco Chanel and Elsa Schiapparelli. In the 1930s, Ferragamo’s shoes commissioned designs for advertisements from Futurist painter Lucio Venna, while Gianni Versace commissioned works from artists such as Alighiero Boetti and Roy Lichtenstein for the launch of his collections. Yves Saint Laurent’s vast art collection, recently auctioned at Christie’s in Paris, testified to his great love of art and revealed the influence of a variety of artists on his own designs.

In the 1980s, relationships between luxury brands and artists were advanced when Alain Dominique Perrin created the Fondation Cartier. In the Fondation Cartier pour l’Art Contemporain, a book marking the foundation’s 20th anniversary, Perrin says he makes “a connection between all the different sorts of arts, and luxury goods are a kind of art. Luxury goods are handicrafts of art, applied art.”

The Fondation Cartier pour l’Art Contemparain building in Paris

Following the market upheaval that began one year ago, each of the BRIC countries needs to be considered one by one.

Following the market upheaval that began one year ago, each of the BRIC countries needs to be considered one by one.

LONDON – It’s been nearly a decade since Goldman Sachs first anointed the so-called BRIC countries — Brazil, Russia, India and China — promising uninterrupted growth and development for the global economy, based largely on the huge populations, vast resource base and sheer geographic scale of these new powerhouse economies. With a surge in wealth and growing consumerism, the BRIC markets were at once the greatest opportunity and greatest challenge facing the luxury industry at large.

Fast-forward to October 2008 and the onset of the greatest economic crisis in a generation. Some economists were espousing the theory of “decoupling”, which asserted that emerging economies would continue to plough ahead unabated (albeit, at a slower pace), while those of the industrialised countries, mired in a financial crisis that killed consumer confidence and credit markets alike, stagnated or, even shrank.

In fact, things did not play out that way. Stock markets and consumer confidence in the BRIC countries plummeted as they did elsewhere, and decoupling was very much in doubt. The global economy, it seemed, was much more interconnected than had previously been thought, and the US banking crisis quickly became an economic pandemic to which no nation was immune.

Then, something unexpected happened. In early 2009, some emerging economies, in particular China and Brazil, continued to grow, partially boosted by economic stimulus packages concocted by national governments intent on maintaining sky-high GDP growth and economic development. Russia, on the other hand, suffered a dramatic decrease in wealth, while India, previously touted as “the next China”, turned out to be the farthest thing from it, with ongoing cultural, infrastructure and regulatory issues holding the country’s luxury industry back.

It soon became clear that the BRIC markets, which may have nattily been grouped together by Goldman Sachs, actually had their own responses to the market upheaval and needed to be considered one by one. This issue of Luxury Society Intelligence, Revisiting the BRICs, gives us the latest thinking and market intelligence to do exactly that.

This month, we welcome some new contributors to Luxury Society, beginning with Angela Rumsey, who reports on Brazil, the BRIC economy that received perhaps the least attention from luxury brands in the pre-crisis world. No more. Today, Brazil is in laser-focus as the global luxury industry has taken notice of its relative market buoyancy in contrast to the other BRICs.

In India, however, the mood is decidedly less jubilant for international luxury brands — at least in the short term. As Kabeer Sharma reports, some brands are still smarting from ill-advised partnerships and retail expansion, while others are concocting new strategies and approaches for India, a country with its own tradition of luxury and great cultural pride.

As Helene Le Blanc concludes, a long-term approach is also appropriate for Russia, where a massive contraction of wealth has left some local luxury groups in economic distress and their international partners, like Alexander McQueen and Stella McCartney, in rapid retreat.

As for China, the one great short-term hope for luxury in the emerging markets, things are a bit more complex than they seem on the surface, according to W. David Marx. And finally, Robb Young looks beyond the BRICs to investigate the other emerging markets that may hold promise for the luxury industry as the Noughties come to a close.

To sum it all up, I spoke to Luxury Society member Patrice Müller of strategy and M&A; advisory firm Ipolitus & Hubertus, to provide a forward look at how firms, families and brands in these countries are reversing the logic of emerging market luxury by expanding into Western luxury markets themselves.

And with that, I bid you happy reading! Our community in Luxury Society, now more than 5,000 members strong, continues to grow thanks to your ongoing support. Please let us know what you think as your feedback and engagement are always welcome.

Imran Amed
Editor-in-Chief

Imran Amed
Imran Amed

Founder and Editor-in-Chief

Imran Amed is a professional advisor, writer and entrepreneur operating at the intersection of business and fashion. He is the founder and editor in chief of The Business of Fashion and the former editor-in-chief of Luxury Society. Imran’s writing and point of view reflect the day-to-day insights of his work with international luxury brands and high potential fashion start-ups, where he acts as a bridge between the industry’s most gifted creative and business talent. Imran also advises private equity firms, investors and international corporations interested in the luxury market. Imran has contributed his expertise to the BBC’s British Style Genius and The New York Times and has published articles in The Financial Times, Vogue (India) and Style.com. Imran is an Associate Lecturer at London’s Central St Martin’s College of Art & Design.

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