In The Name of Fashion

China’s Going To Take Over The World

Posted in Companies, Influence by inthenameoffashion on January 22, 2010

First Chanel, then Prada and now Hermes?

Designers are going where the  money is – and in this case, it’s China. Bain expects that China’s luxury spending will increase by 12% in 2010, thus spurring new found attention to customers living in China. WWD reports that in addition to being the most populous country, China has also endured and recovered from the recession better than the U.S., Japan and European countries. Surprisingly, China’s GDP also gained 8.7% in 2009, a nice little surprise for their government, who only expected an increase of 8%.

Starting off with Chanel, they recently released a collection debuted in Shanghai with heavy Asian influences. Additionally, Karl directed and produced an imaginative web video called Paris-Shanghai A Fantasy, The Trip Coco Only Made in Her Dream, of Coco Chanel and her China inspiration. But a thumbs down because they used non-Asian actors / models to portray Asian people.

Then off to Prada, who’s First Spring video was produced by Chinese artist Yang Fudong. The video showcased some of Prada’s menswear, while taking place in Shanghai. Despite the fact that there was no actual story to this video, it had actual Chinese people playing Chinese people (can you imagine??), so a thumbs up.

Most recently is Hermes, who has recently supported a new brand in China called Shang Xia (meaning “topsy turvy” – something had to have been lost in translation there). They will sell clothing, accessories, furniture and other lifestyle necessities. The managing and artistic director is Qiong Er Jiang, who has designed for Hermes in the past. Can’t wait to see these products and how the Chinese customer will react to them.

Despite China being a superpower now, there are no local luxury brands that have thrived in the Chinese environment. China’s population mostly looks to the U.S. and Europe to fulfill their luxury fantasies, but will things change now that they are becoming increasingly important in the global arena (look at how they tried to stop Google!)?

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Follow the Checkered Plaid!

Posted in Companies by inthenameoffashion on January 21, 2010

Burberry has been one of the companies making waves in the industry. As a traditional luxury brand with a rich British heritage, the company has broken out of its conservative nature to embrace modernization, kicking off with the Art of the Trench collaboration with Scott Schuman of Sartorialist fame, a website often viewed as the paradigm for brand customer engagement. Breaking traditional coverage of runway shows, Burberry has been one of the first to offer live streams of shows and live commenting (though I’m sure moderated) on their website. A new ad campaign with 19-year-old Emma Watson, most recently joined by her brother, also helped to revitalize and garner more attention to the brand. Lastly, Burberry has also given back to the community, creating a storm with their return to London Fashion Week and contributing to reviving London as a major fashion showcase.

With stellar 3rd quarter results, it was clear that these marketing efforts had paid off. Not only did the company beat analyst expectations, but also outperformed their previous 3rd quarter by 15.5%, in both wholesale and retail (buuut just to put things in perspective, last year around this time the economy was severely depressed). Regardless, in a time where companies are struggling to stay alive, Burberry has handily shown their new powerful position as a leading player in the luxury industry.

Dennis Weber, an analyst from Evolution Securities commented, “The macro environment remains tough and the outlook for the wider luxury environment therefore uncertain. But Burberry’s Pyramid strategy is working well and leads to market share gains in important markets, like the US.” (The Guardian)

And that led me to the point of this post. What exactly is the pyramid strategy?

The pyramid strategy refers to is the distinction across Burberry’s lines and different product offerings. The position correlates with the cost, number produced and desirability of the line. As you move up the pyramid, the product becomes more expensive, fewer items are produced and the desirability of the item increases.

For instance, Burberry has 4 lines:

  1. Burberry Prosrum
  2. Burberry London
  3. Burberry Brit
  4. Burberry Sport

A general fashion line pyramid would have these qualities:

Adjusted for Burberry’s portfolio:

Other important things to consider, which cross over fashion lines, are products and geography. (Burberry’s November Investor Pack, released Dec 2009)

Across 4 products:

  1. Womenswear
  2. Menswear
  3. Children
  4. Non-apparel

Spanning 5 geographies:

  1. Europe
  2. Spain
  3. Americas
  4. Asia Pacific
  5. Rest of World

From their corporate website, they’ve outlined where they will focus efforts for this year:

  • Leveraging the franchise
  • Intensifying the non-apparel development
  • Accelerating retail-led growth
  • Investing in under-penetrated markets
  • Pursuing operational excellence

AND have delivered in most areas. So far, so good non? Burberry to lead us out of the recession (at least the UK)!

*Another good read on Burberry.