Christian Dior chief executive Sidney Toledano famously said two years ago that when he heard the company had sold more than 300 T-shirts in one day, he decided enough was enough. Since then Toledano has made it his mission to recapture the exclusivity he felt had been lost as a result of sacrificing prestige for a high profile.
At the Dior show in Paris last week, the label presented a mature, sleek collection that was hailed as its best in years. The clothes were aimed at grown-up, sophisticated women and deliberately away from size zero teenagers.
This shift in emphasis by Dior was also evident in many of its rivals’ shows in Milan and Paris. Prada presented soft, full skirts and suits, Versace showed understated silk dresses and even Gucci has softened its rock chick edges.
Yves Saint Laurent’s recovery continues apace under the helmsmanship of Valerie Hermann, who was poached from arch-rival LVMH in 2005. Last month, Hermann fought hard to hold on to her chief designer Stefano Pilati, known for producing restrained clothes, after it had been rumoured he was considering a move to Valentino. Pilati and Hermann have transformed the ailing brand with a combination of elegant designs and careful management.
Sandford C Bernstein luxury goods analyst Luca Solca says: “If you want to be a key player in this industry you need to grow as fast as possible without cheapening the brand.”
The fine balance that luxury brands have to strike between creating a youthful buzz and maintaining exclusivity has, in recent years, erred on the side of teen appeal. Being adored by fans of Paris Hilton et al may have shifted millions of T-shirts and accessories, but in the process many of the brands have lost their lustre.
Ties with the past
Some luxury brands, such as Hermès, Louis Vuitton and Chanel, were founded in the 18th and 19th centuries, when luxury denoted superior quality, tradition and craftsmanship that was available only to the elite.
Globalisation and the growth in spending power of the middle classes has dramatically increased demand, and many analysts feel that satisfying this has inevitably led to a lack of exclusivity.
The brands are working hard to recapture it. Gone are many of the low-price entry items, such as slogan daubed T-shirts, keyrings and cheaper handbags. Advertising, too, is noticeably less flashy.
The global market for luxury branded products is worth £131bn per year, and is predicted to hit £225bn by 2012 (Verdict Research). A major growth area, in both mature and emerging markets, is expected to be watches and jewellery.
Lead analyst at Verdict, Maureen Hinton, says: “Jewellery is becoming much more important and fashionable among the brands. Gucci, for example, is placing much more emphasis in this area.”
Hinton also points out that further growth will be generated by brands taking control of their distribution channels and bringing more of their retail networks under direct control.
As part of the repositioning, brands are also becoming masters of their own destiny and opening more stores, some of which are architecturally spectacular, in a bid to offer a powerful brand experience.
Smells like snobbery
In the saturated female fragrance market, several houses, including Armani, Chanel and Guerlain, are creating a point of difference by selling their top-end products from a strictly controlled number of outlets in an attempt to create an exclusive environment.
Solca concludes: “Luxury is becoming very interesting. On the one hand, there is demand from very high net worth individuals requiring sophisticated products, and on the other, benefits from increasing wealth in emerging markets.” Brands will have to develop in a way that makes them appealing to a broad range of consumers around the world and there is a growing feeling that this can only be achieved by creating products that are truly aspirational.