The Luxe Chronicles

Luxury: Escada Lives to Fight Another Day

2009-11-06T12:14:06+00:00

It has to be a bitter-sweet moment (or perhaps simply bitter) for the family of Wolfgang Ley, founders of fashion brand Escada. On the one hand, the Escada name and brand is saved from bankruptcy and will live to fight another day. On the other, it will do so under new control - that of India's Mittal family.

Megha Mittal, the 33-year old daughter-in-law of ArcelorMittal Chief Executive Lakshmi Mittal won a bidding war with Sven Ley, son of Escada founder Wolfgang Ley who had teamed up with Italian investment group Borletti (owners of la Rinascente department store in Milan and Le Printemps department store in Paris) to save the insolvent brand from bankruptcy. Escada will now be owned by a Mittal family trust.

The least we can say is that the credit crisis and ensuing recession has not been kind to independently-owned luxury labels. The near-demise of Christian Lacroix and the current turbulence at Versace suggest that the luxury landscape will look decidedly different when this recession ends. If nothing else, we live in interesting times.

Sincerely,

The Luxe Chronicles

Fashion as Political Defiance?

2009-11-05T09:54:02+00:00

Yesterday marked the first day of Pakistan's first ever fashion week. The four-day event which is taking place under heavy security in Karachi was postponed for several weeks because of the intense campaign of bombings and assassinations by Taliban militants throughout October. In a country where the mere sight of a woman's uncovered head or other acts of "immodesty" often carry potentially severe consequences, the very act of sending models down a runway is an act of political defiance. It also deserves our respect.

In western countries, views on fashion are as diverse as the fashions themselves. To some of us, fashion is an industry and a form of self-expression. To others, it is merely a form of entertainment or a frivolous pursuit. It is rarely if ever a political statement let alone one with potentially life-threatening consequences. Even the hippie movement of the early 1970's or the punk rock movement of the early 1980's (the closest modern western fashion has come in recent times to being politicized) never carried with it the risk of stoning. It makes me want to run out and buy a garment by Sonya Battla or Samar Mehdi to show my support and respect. If any of you reading this post happen to know where I can purchase their garments, please let me know.

Sincerely,

The Luxe Chronicles

TheOutnet.com: A New Way of Looking At Last Season's Fashion

2009-11-04T05:00:00+00:00

As a former New Yorker, I can tell you that there are few experiences more disheartening than the average New York designer sample sale: the long lines, the communal dressing room, the anti-social behavior and the general presentation of the merchandise is enough to put off even the most dedicated follower of fashion. It would be difficult not to come away from the experience with a diminished view of the brand in question and fashion generally. Under these circumstances, even the most beautiful garments tend to lose their appeal.

Luckily for the industry, the Internet is proving fertile ground for creative and innovative businesses specialized in the sale of discounted fashion. In fact, these businesses are currently all the rage: Gilt Group, Rue La La, Vente Privee and of course, theOutnet.com launched last Spring by the team behind Net-A-Porter. Stephanie Phair, theOutnet.com's director graciously agreed to sit down with me and discuss the business of discount fashion and how the Internet is helping to forge new attitudes towards last season's fashion.

1. Is theOutnet.com an outlet exclusively for Net-A-Porter over stock or do you also accept over stock directly from the brands themselves?

Even before theOutnet.com was launched, Net-A-Porter had always had a "Sale" section where customers could browse through items that had been marked down. Once theOutnet.com was launched, we took over that aspect of the business. However, we anticipate that over the next few years, the percentage of merchandise will surpass the outlet aspect of the business.

We've already made quite a bit of progress in that direction. For instance, theOutnet.com now offers beautiful Azzedine Alaia shoes and handbags and we've recently introduced archival pieces from 10 Corso Como, the influential Milan-based multi-brand boutique founded by Carla Sozzani. This includes truly beautiful pieces from Alaia, Balenciaga, Bottega Veneta, Bruno Frisoni, Charles Anastase, Christopher Kane, MM6 by Maison Martin Margiela, Marni and Prada all available at discounts of up to 50% off.

2. Many online discount sites have opted for a private membership or "upon invitation only" model whereas theOutnet.com is open to all. What is the reasoning behind this?

The underlying philosophy of Net-A-Porter is one of global distribution and access to all the best fashion. The Internet is by its nature a very democratic place so the "no-invite", twenty-four hour access model just made more sense to us than the private membership model which mirrors the bricks and mortar approach to discount selling.

3. Luxury brands are usually very reluctant to offer discounted prices hence the tradition of liquidating excess stock via discreet sample sales (and probably the reason why some of your competitors adopted an "upon invitation only" model). What was the response of designer brands when you first approached them about theOutnet.com?

Brands have confidence in Net-A-Porter and so I think there was a sense that if any online e-tailer could pull this venture off it was Net-A-Porter. So certainly, there have been benefits to having Net-A-Porter as a parent. However, the discount world is an ultra-competitive one and theOutnet.com has to forge its own path.

4. Are there still designers holding out? If so, which ones and why?

Not any designer brands we're pursuing at the moment. In fact, theOutnet.com has received tremendous support from the brands generally. They trust that we will edit the selection and present the merchandise in a way that respects the image of the brand. Also, at a time when any customer is a paying customer, brands understand that the time is right. They understand that they need to look at their image throughout the entire sales cycle.

5. The current success of discounted luxury sites is generally attributed to two factors:

- The sudden and sharp decline left retailers with a great deal of high-quality excess stock and so the selection of merchandise on these sites is very appealing;

- The downturn has left many consumers with less discretionary income than they normally might have making discounted fashion more attractive than it once might have been.

Are there possibly other factors that might account for the popularity of such sites?

Nathalie and the team at Net-A-Porter had conceived of the idea for theOutnet.com before the recession. As mentioned previously, Net-A-Porter had had a "Sale" section on its site for almost 9 years and Nathalie felt that the time had come to separate the two.

We see discount fashion as part of a natural progression: vintage, mixing high/low pieces, etc. No one wants to be slaves to trends. Our customers for instance are very fashion-savvy and aren't afraid to mix and match but they're looking for value for money.

6. Do you think that online discount sites will still thrive once the economy starts growing again and consumers have more discretionary income to spend?

If any business was well-positioned to launch during a recession, it was ours. But, we're here to stay well beyond the recession. Once we come out of this difficult period, we can only grow because we have the best brands and the best products. We'll be a stronger business for it.

7. Is the customer shopping on theOutnet.com the same customer that's shopping on Net-A-Porter.com or is it a different customer altogether? Is there overlap in customer base?

I would say that it's a mix: 60% of our customers are new customers and the overlap with Net-A-Porter's customer base is very small. We've essentially found a different customer. Whereas the Net-A-Porter customer is very fashion-forward and eager to buy pieces straight off the runway, theOutnet.com customer is searching for good value. Our customers are quite fashion-savvy as well but tend to mix and match more.

8. You operate a New York-based site which serves North America and Latin America and a London-based international site that serves the rest of the world. Are there patterns of consumption emerging that are specific to each market? Are discount sites more popular in some cultures or markets than others?

The world of discount fashion is more developed in the United States. Discounts need to be higher there because expectations are different. In terms of trends, our European customers are slightly more experimental in their purchases whereas our U.S. customers tend to buy into classics. Of course, we've only been around for a little more than six months so it's still quite early.

9. One of the hallmarks of Net-A-Porter is its exceptional customer service. Is is possible to extend the same quality of service on a discount site given that your margins are smaller?

When the idea for theOutnet.com was conceived, the thinking around it began with the notion of service. How do we turn discount on its head? How do we change all the received wisdom about discount shopping? These are some of the questions we asked ourselves and which drive our decisions.

We currently offer two methods of shipping, ground and express and we have recyclable packaging but everything we offer is outlet appropriate. Amidst what we offer, it's at the highest standards of quality within the discount context.

10. Do you sense that sites such as the Outnet.com have the potential to shape consumers' attitudes towards fashion by perhaps placing the emphasis on quality and longevity rather than trends or seasonality?

Our view is that this is beautiful product and should be treated as such. We edit our selection very carefully and offer the best of previous seasons. We spend a considerable amount of time merchandising because it's very important for us to be able to put together complete looks from the various brands we offer.

11. What do you see as your 2 or 3 biggest challenges going forward?

Our first challenge is growing fast enough to do all the projects we want to do. It's all about resources. This is a very fast-paced environment - its less about keeping up than remaining ahead of the game. Another big challenge for us is access to product. To date we've gotten the best products and we want to continue to get the best products.

12. Thank you for taking the time to speak to me about theOutnet.com.

It was a pleasure. Thank you.

For more information about theOutnet.com and their policies or to view their beautiful products, please visit theOutnet.com

Sincerely,

The Luxe Chronicles

Shopping: Nurun-Ifop Barometer on the Influence of Media on Purchasing Decisions

2009-11-03T10:04:50+00:00

Yes, I know. The title of my post today is hardly catchy. This said, you would do well to look beyond the boring title and see what lurks behind it. The 1st edition of the "Nurun-Ifop Barometer on the Influence of Media on Purchasing Decisions", a recently-published study that examined the influence of various media (television, print, Internet and radio) on the purchasing decisions of French consumers, is nothing short of astounding.

The study conducted by Ifop, a French research firm, sought to determine exactly how much of an influence different types of media have in shaping customers’ purchasing decisions. The Internet came first for fourteen of the nineteen product categories examined ahead of television, print and radio. We knew from a previous study conducted by TNS Sofres involving women throughout Western Europe that women prefer the Internet to virtually every other source of information about a brand including television and print media. Most significantly, that study revealed that 87% of participants indicated that their interest in and knowledge of a brand was enhanced as a result of information they found online and 82% indicated that they became more selective about their purchases as a result of information they gathered online. The Nurun-Ifop study goes one step further however in that they correlate the information derived from various media sources to actual purchasing decisions. Currently, the Nurun-Ifop findings are available only in French (see the slideshow below).

While not specific to the luxury industry per se, the study went well beyond consumer goods to include automobiles, travel, real estate, financial products, jewelry and leather goods suggesting that its findings are relevant to a wide variety of sectors including luxury goods and services. As it turns out, the Revolution will not in fact be televised. It will be downloaded, linked to, webcast, tweeted and blogged.

Sincerely,

The Luxe Chronicles

Nurun - Ifop : Influence des médias sur les décisions d'achats

View more documents from Nurun.

Luxury: Handbags As Loan Collateral?

2009-11-02T09:06:55+00:00

Times are hard and more than one affluent consumer has had to downsize their lifestyle as a result of the financial crisis and ensuing recession. But pawn their designer handbags for quick cash infusions? Apparently so. Lady Finance, a short-term loan company in Hong Kong is offering 3-month loans for up to 70% of a handbag's value to their cash-strapped owners.

At the very least, this would suggest that there might be some truth to the "luxury as investment" claim I've heard so often over the years. Personally, I've always been suspicious of this argument when considering a fashion or luxury purchase. With few exceptions (say an Hermes "Birkin" bag or a Louis Vuitton "Keepall" neither of which has changed in design since their introduction), it always struck me as a convenient ploy to close a sale or keep buyer's remorse at bay. Also, I would be curious to know for instance the relative loan value of an Hermes "Kelly" bag or a Chanel "2:55" bag against a ubiquitous Marc Jacobs quilted "Stam" bag.

Tempting as it would be to let yourself be seduced by this tactic on your next shopping expedition, I would advise caution in resorting to it to justify a purchase. I highly doubt the "investment" argument applies across the handbag spectrum.

Sincerely,

The Luxe Chronicles

Happy Halloween!

2009-10-31T05:00:00+00:00

Happy Halloween!

Sincerely,

The Luxe Chronicles

Vivienne Westwood, Spring/Summer 2010. All photos courtesy of Style.com.

It's Been A Looooooooong Week!

2009-10-30T16:00:00+00:00

If an image is indeed worth a thousand words, then this one sums up my current state brilliantly! Let's just say that it's been a very long week filled to the brim with all manner of happenings - all very good but rather exhausting on the whole. So, I plan to kick back this weekend and do absolutely nothing. Rien du tout! Moreover, I plan to enjoy every minute of it. A lovely weekend to all!

Sincerely,

The Luxe Chronicles

cColbert: Luxury in 3-D Courtesy of France's Comité Colbert

2009-10-30T09:51:20+00:00

If you needed any further evidence that China is THE great hope to drive growth in the luxury sector for the foreseeable future, look no further than France's Comité Colbert, the prestigious trade association that represents seventy of France's most venerable luxury brands. The trade association recently launched an interactive 3-D website called "cColbert" intended primarily for Chinese consumers. There, browsers can learn more about the history and traditions of craftsmanship and creativity that make French luxury brands coveted the world over.

Currently, Chinese consumers account for up to 25 percent of total world market consumption of luxury goods recently overtaking the US to be the second-largest luxury market in the world. Moreover, Goldman Sachs expects sales revenue of China's luxury market to break $5 billion USD this year far outpacing growth throughout the rest of the world. (Source) The website therefore makes perfect sense given the importance of China to the luxury sector's prospects for growth.

The effort to educate Chinese consumers strikes me as an excellent strategy in the long term. Typically, brands who invest considerable resources in educating potential clients about the history and traditions that make their products special have less trouble getting customers to pay the eye-popping prices these products command. Hermes for instance which periodically engages in educational PR efforts is a perfect example of this. Moreover, the strategy may also help luxury brands combat the counterfeit trade - an ever present thorn in the side of the industry. Once a customer understands precisely what they're paying for, the appeal of the fake is likely to lessen.

Sincerely,

The Luxe Chronicles

Shopping: Christmas in October? Ugh!

2009-10-29T17:10:13+00:00

Earlier today, I popped into Selfridges on Oxford Street during lunch. The entire department store from top floor to basement is already decked out in Christmas decorations. I don't know about you but I've barely had time to enjoy the Fall foliage and the last thing I want to think about right now is Christmas. I suppose from a retailer's perspective, the hope is that people will shop early and often. Where I'm concerned, it's having the opposite effect - I'm actually turned off by the whole thing. Rather than be inspired to shop, I just felt compelled to leave the store as quickly as I could.

Sincerely,

The Luxe Chronicles

Blogs: Mrs. O Blog and the FTC's Double Standards

2009-10-27T05:00:00+00:00

Isn't it ironic that under the new FTC disclosure rules, the bloggers who receive a review copy of Mary Tomer's book Mrs. O: The Face of Fashion Democracy (Hachette) have to disclose it but Mary Tomer who received funding for her blog from her employer Bartle Bogle Hegarty has no such requirement? Shouldn't blogs with close ties to corporate interests be required to disclose this upfront?

While press reviews mention that the author Mary Tomer is employed by Bartle Bogle Hegarty, they stop short of disclosing that the Mrs.O blog is in fact funded by Bartle Bogle Hegarty. Not one press reference I've read about the book including WWD makes mention of this fact or that all the blog's contributors are in some way connected to Bartle Bogle Hegarty either as employees of the agency or free-lance writers. In fact, many readers believe that Mrs. O is merely another blog written by fashion-obsessed fan of the First Lady. In reality, it was set up for the purposes of illustrating to would-be clients the power of the blogosphere as a tool for brand building.

Since the revelation of their true purpose by the New York Times and the angry reaction of many throughout the blogging community, they have in fact updated their "About" page to include that tidbit of information. To my knowledge, while they did add a brief disclosure statement to their "about" page, they did so quietly and without fanfare. Unless regular readers are in the habit of checking the blog's "About" page from time to time, I doubt they know. In fact, I would be very curious to know just how many of their faithful readers actually know about their real purpose even now.

To be perfectly clear, given the increasing authority of blogs and other forms of social media on consumer buying behaviors, I think disclosure rules are indeed necessary. But surely if the FTC considers it important for bloggers to disclose receipt of perfume samples, they should feel just as strongly about bloggers who receive corporate funding for their activities. So, why the double standard?

Sincerely,

The Luxe Chronicles