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  1. Wealth
November 2, 2010

Luxe Redux

By Spear's

Diffusion lines, online offerings, fresh creative talent, even good old-fashioned value for money luxury brands will give anything a go in these tentative post-crunch times, says John Arlidge

Diffusion lines, online offerings, fresh creative talent, even good old-fashioned value for money — luxury brands will give anything a go in these tentative post-crunch times, says John Arlidge
THE KINGS OF luxury are dead! Long live the kings of luxury! Ever since luxury-goods spending collapsed after the credit crunch, the lords of luxe have been asking themselves two questions: when will consumers start spending again, and when they do, what will they spend their money on? At last, some answers.

First, the good news. Spending is back. The world’s two biggest luxury-goods conglomerates, LVMH and PPR, and the largest US retailers, notably Saks, have announced rising sales for the first time since the collapse of Lehman Bros. Louis Vuitton’s monogrammed bags are selling so fast at its ‘maison’ in Paris that its eleven workshops are struggling to keep up with demand. In an attempt to avoid a shortage at Christmas, the company has decided to shut its Parisian stores an hour earlier than usual until the end of November. Overall, analysts Bain & Company estimate global luxury-goods sales will grow by 4 per cent in 2010 to £150 billion after a painful 8 per cent decline in 2009.

The other news — which is good or bad, depending on which brand you are — is that the territory of luxury is broader and flatter. It wasn’t long ago that luxury meant the obsessive accumulation of designer clothes, expensive jewellery and whizzy cars. For some, it still does. But for many consumers, luxury has expanded to include new sectors, including some that were once so deeply unfashionable they were the preserve of nerds.

Take technology. It is rapidly becoming a luxury category of its own. Sales of upscale Vertu mobile phones have never been higher and more mainstream electronics brands are edging up into the luxury sector. A recent study by the marketing specialist Affluence Collaborative found that the four brands most admired by Americans with six-digit incomes were Apple, Microsoft, Best Buy and Sony. We all know the iPad and the iPhone 4 are luxury sell-outs.

But consider this: sales of upscale Sony 3D TVs have risen so sharply in the US that executives at Sony have concocted a new term for the brand: ‘functional luxury’. Stuart Redsun, marketing chief at Sony Electronics, predicts the next big hit will be Sony’s Google-enabled TVs that allows viewers to go online as they watch.

Attitudes to price have changed for good, too. Value for money, not overpaying, is now a luxury bragging right, prompting many brands to introduce cut-price collections. Coach, whose handbags used to start at about £180, launched a new line last year, Poppy, which starts at £130, and consumers have responded: Coach sales are up 8 per cent for first nine months of the financial year.
IT’S ALL CHANGE on the catwalk, too. This season confirms that the era of the super-designer is over. Gone are the Karl Lagerfelds, the John Gallianos and the Tom Fords — men who dedicated themselves to the overall look of one or more brands, taking a splashy bow on the catwalk every season. Jean-Paul Gaultier has left Hermès and been replaced by the relatively-unknown Christophe Lemaire. Low-key Sarah Burton is in charge at Alexander McQueen.

The chastened times, product diversity, the rise of inter-season sales and of new collections such as Cruise mean that these days brands need a multitasking designer/manager. Christopher Bailey at Burberry has recently been given the title of ‘chief creative officer’ to reflect his expanded role as merchandiser, brand manager, information technology innovator, advertising inspiration and e-commerce controller — all in addition to his day job as design director.

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As the fashion guard changes, so retailers are pushing into new areas, notably the web. Until the credit crunch, brands themselves largely eschewed e-tailing, leaving the floor clear for cocky start-ups, such as the London-based Net-a-Porter and Milan’s Luxury firms had long felt that the open-to-all web was no place for merchandising exclusive products. Moreover, there was a gentlemen’s agreement with department stores not to siphon sales by reaching out directly to wealthy customers.

The recession has swept away such niceties. When department stores slashed prices on handbags, luxury lines were outraged. They would lose their cachet and prices would never recover, they wailed. But they soon stopped getting mad and started getting even — online. In recent months Ralph Lauren, Jimmy Choo, Hugo Boss, Donna Karan and La Perla have started selling their products through their websites.

The big brands have found to their delight that consumers are happy to spend as much, if not more, in cyberspace. In 2009, as the worldwide luxury-goods industry fell, luxury sales online grew 20 per cent, according to Bain & Co. Better yet, profits are much higher on clothes sold directly to consumers, since no middle man takes a cut, and the brands can control pricing and styling. Hyper-stylish, with its range of mini-games and widgets, has created amazing loyalty to the French brand.

The online market has attracted new start-up retailers such as, which creates a virtual world where consumers can examine products and buy them. Most fun of all is, where shoppers have a restricted amount of time to order luxury goods before someone else beats them to the limited number of items. In two years, Gilt has amassed more than two million members.
IN THE SEARCH to make an honest buck, some brands are even abandoning cherished principles: they are dumping the one-size-and-style-fits-all credo. Burberry’s Black and Blue Labels are sold exclusively in Japan and Hong Kong, while Christopher Bailey is experimenting with opening stand-alone stores under the Brit and London labels. Chanel and Prada recently launched special products in connection with Shanghai’s World Expo, including a Chanel handbag shaped like a Chinese food takeaway carton. Levi Strauss is planning on launching a Chinese brand this year. Hermès has gone one better, creating an entire new brand for the Chinese market called Shang Xia, which means ‘up and down’.

Some analysts believe that Shang Xia, created by Jiang Qionger, a 33-year-old designer, will dilute the Hermès brand. But Patrick Thomas, the firm’s chief executive, says Shang Xia is no second-tier line but a bespoke label for China’s new rich. ‘This is completely different and will remain completely separate from the main Hermès line to avoid customer confusion,’ he says. Jiang’s designs — raw silk jackets, transparent eggshell porcelain bowls — show a commitment to ancient craftsmanship that appeals to consumers nostalgic for their cultural roots. ‘These are very low-key,’ she says. ‘They are not bling-bling.’

Not all brands have found that every response to the slump has worked, however. Louis Vuitton decided to reinforce its heritage and craftsmanship by running a series of advertisements resembling Dutch Old Master paintings of seamstresses and cobblers sewing wallets and shoes by hand. ‘What secret little gestures do our craftsmen discreetly pass on?’ one of the ads asked. ‘Let’s allow these mysteries to hang in the air. Time will provide the answers.’ However, the British Advertising Standards Authority ruled that the French maison’s images, were ‘misleading’ since, in fact, the bags are almost entirely factory-made. Nul points

Images are screenshots from the shopping experience on

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