Luxury Designers Go to Extremes in Today’s Fashion Biz

Discussion
Sep 17, 2009
George Anderson

By George Anderson

Norma Kamali designs a $500 jumper for upscale department
stores and specialty shops. She also has her name on a tank top selling
for $10 at Wal-Mart.

This approach, according to Ms. Kamali and others, is the
way for luxury designers to remain in business today when consumers are
unwilling to spend with the same reckless abandon as in the past.

“It’s
a new economy,” she told MarketWatch. “You
can buy something that’s got a great value at $1,000 and something that’s
got a great value at $10. And you can wear them together. People are
going to shop this way from now on.”

The
high end of the fashion market has been particularly hard hit in the
past couple of years. Luxury retailers have pared merchandise to keep
costs down and introduced less expensive items to try and appeal to shoppers
who may be more cost conscious.

Calvin
Klein has not gone the discount store route yet but it too is looking to
offer a range of fashions at more moderate price points.

“We
are putting out more lower-priced products,” Francisco Costa, creative
director of Calvin Klein Collection, told MarketWatch. “We
have a great line with very diverse prices so it meets a lot of needs.
Everybody is being cautious. You have to be price conscious.”

Pam
Danziger, president of Unity Marketing, recently wrote in a piece on Jimmy
Choo’s plans to expand into new luxury product categories, “Fashion luxury
marketers in this luxury drought are challenged by both fewer luxury consumers
willing to make upscale purchases and a decline in the average amount they
are willing to spend… The boom times are over
when business came easy; luxury marketers today have to be willing to change
direction and find new avenues to growth in the luxury drought that has
taken over.”

Discussion
Questions: Has the luxury fashion market been changed in fundamental
ways over the last several years? Have the less wealthy, aspirational
shoppers left the luxury fashion market for good? Will luxury consumers
revert to old habits once the economy has recovered?

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11 Comments on "Luxury Designers Go to Extremes in Today’s Fashion Biz"


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Dick Seesel
Guest
11 years 7 months ago

Today’s New York Times column about “Fashion Week” focuses on Tory Burch, who is succeeding not only on the strength of her design but also based on well-positioned price points…moderate by the standards of the runway industry. There is no doubt that the economic slowdown over the last year has had a devastating effect on the sales of high-end goods, and luxury retail is the toughest segment of the industry. The question is whether we are looking at a sea-change or merely a dip in the demand for high-end goods. My guess is the latter, and several luxury retailers are reacting accordingly.

At the same time, “design for the masses” continues to push aspirational goods down the distribution channel. Norma Kamali for Walmart is one example…Vera Wang at Kohl’s is another. Some of these (like the Ralph Lauren “American Living” initiative at JCPenney) preceded the recession but the timing was right: The volume base for most designers is shrinking too rapidly for them to depend only on the growth of high-end retail.

Doron Levy
Guest
Doron Levy
11 years 7 months ago

I’m seeing a lot of news that suggests frugality is the new black. If that’s the case, luxury retailers will have to adjust their mix and pricing to attract different buying groups. It’s not a bad thing. Margins are really juicy on upper tier goods so giving back a few points may mean you can recoup in volume. Some will say that dilutes the brand. So what? Stockrooms that are full of Gucci bags and Rolex watches would dilute my sanity if I was the owner of any of these brands.

Anne Howe
Guest
11 years 7 months ago

As a shopper, I love the choices available at all price ranges. High-end design, for most people I know, serves more as an inspiration than an attainable goal across apparel, furniture, even shoes. If designers agree to scale down and offer goods that help pay the bills so they can continue to explore the edges of creativity in their discipline, I am more likely to support them.

As a shopper marketer, I think it’s wise to be transparent about the goals you have as a designer, seeking an audience at many levels of the fashion spectrum is a noble goal and won’t dilute a major fashion brand as long as consumers have access to information that helps them “get it.” Retailers like Kohl’s have executed this vision very well. DSW has a missed opportunity in shoes, they could and should bring some design cultural experiences to their stores!

Anne Bieler
Guest
Anne Bieler
11 years 7 months ago

What we have learned about the shopper mindset suggests that, at a minimum, they are much more thoughtful about their spending. There is an interest in value–it’s about taste, fresh style, and more wearable pieces.

Interesting that stylists are suggesting one “knock out” item can make the look; more selection from different designers and stores to create a more personal look. Bringing more fashion to the mall has to work at some levels; well positioned and executed, it has to open doors for designers and aspirational shoppers.

Roger Saunders
Guest
11 years 7 months ago

There will always be a demand for luxury, whether it is in automobiles, fashion, or thread count in sheets. That demand is down in today’s U.S. economy, and is likely to remain there over the next 18 to 24 months (certainly for the upcoming Holiday Season).

Consumers of all stripes are:

– Feeling poorer
– Saving more
– Paying down debt
– Focused on “Needs” over “Wants”
– Earning less
– Taking a less ostentatious lifesyle approach

This is happening in the Luxury market as well. Is it permanent? Doubtful.

Consider the chap who stepped outside with Mark Twain as yet another summer rainstorm struck. The fellow traveler asked, “Do you think it will ever stop raining?”

Twain replied, “It always has in the past.”

Luxury Consumers will spend again. This, too, shall pass.

W. Frank Dell II
Guest
11 years 7 months ago

Selling in different formats with different target customers is highly risky for upscale manufacturers. If the two different target consumers never go into the other store then OK, but if the upscale consumer goes into a Wal-Mart and sees the brand, its days are over. It is no longer exclusive and does not demand the higher price. If the upscale consumer buys the product in a mass market format and the quality is not there, they will likely sour on the whole line.

Luxury sales are not dead. What has happened is the market has contacted in size. There are less want-to-be consumers today. Near luxury is the growth format.

Sandy Miller
Guest
Sandy Miller
11 years 7 months ago

There is a better way to handle it which does less harm to the brand. Create a new brand name–Jumpers By Norma Kamali….

Bill Emerson
Guest
Bill Emerson
11 years 7 months ago

Not so long ago, there was continuous discussion as to what “luxury” really meant. Luxury had always been defined as “exclusive,” reserved for the truly wealthy. Now it was everywhere, driven by an aspirational market, mostly baby boomers, with steadily growing portfolios and home equity. This market watched in horror as decades of accumulated wealth evaporated in a matter of months. These customers, particularly the boomers, will not soon forget. The boomers are entering their retirement years and, as a group, represent 36% of the adult population and are 50% larger than the Gen-Xers behind them. The days of conspicuous consumption, at least in the US, are over. China and India are another discussion.

Kamali and the others are smart to pursue a multi-tiered distribution strategy, ala Lauren in Penney’s. They became luxury designers because they were able to create style and panache. There’s a market for this at all price levels.

Linda Bennett
Guest
Linda Bennett
11 years 7 months ago

Like the saying goes, “I have champagne tastes and a beer pocketbook,” so I’m always looking for fashionable clothing in Wal-Mart, or Target first–and now, because of the economy, if those retailers don’t have something that doesn’t look like it was found in a ’60s warehouse, I wear what I have in my closet.

Ted Hurlbut
Guest
Ted Hurlbut
11 years 7 months ago
In the high-end branding business, you cannot have your cake and eat it too. At that level, the brand must stand for something exclusive and fashion-right, and it must not break faith with it’s customers. No brand can occupy the high-end and the low-end at the same time. The high-end customer will not have it. The problem for these brands is a business problem. The luxury market on which they depended has largely collapsed. They recognize that it’s not coming back soon, and cannot even be counted on in 3-5 year or 5-10 year time frames. Where to go to generate the previous volume? It’s a Catch 22. Trade down (even moderately) to recapture volume and risk losing your high-end customers, and brand cachet, to emerging, boutique brands, who can build businesses on the lower volume currently available in the luxury market. Or, retain your market position as a luxury brand and trendsetter, figure out a way to survive on much lower volume in the short term, and hope for the best in the longer… Read more »
t.j. reid
Guest
t.j. reid
11 years 7 months ago

I love fashion–it’s my business–it’s my children’s business. My son, designer Billy Reid, sells luxury and does it quite from NY to Dallas. My daughter owns a store in Louisiana where she sells t-shirts as low as $10–but usually with $150 jeans and sometimes even $800 Billy Reid boots. Shoppers are all over the board, have been, always will be, and most don’t mind mixing and matching their choices.

Economy changes and hard times or good times don’t alter a fashion personality or style. A rough spot in finances might slow the customer down, but only till they can come up with the money for that to-die-for item. Fashionistas will never forsake their favorites at any price.

But back to the $10 top at Wal-Mart. I fully understand designers doing lower priced goods for other outlets, but who wants to wear a name that is found in Wal-Mart? Suddenly the pride of owning and wearing that designer name would be destroyed for me!

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