Last night I witnessed the intricate ballet of savvy PR and event-planning that has helped build Marc Jacobs into one of the only truly successful, global luxury brands that has been launched in the past 20 years.
It was evidence of the basic human psychological desire to be part of the cool crowd. You know those nightclubs that intentionally keep people waiting outside to give off the impression of being the hot spot of the moment? This was not all that different, except Marc Jacobs has been doing this for almost 20 years, and he has it down to a fine art. Plus, this is not just hype. He has a reputation for delivering collections that will inspire designers and consumers the world over as they adopt his take on of-the-moment coolness. Nobody wants to miss it. It is the hottest ticket in town
Here's how the night unfolded.
9:00pm - Crowds of guests and press have formed outside the Armory, but nobody is getting in. People are pretty calm, given the show was supposed to start at this time, except for a French woman who insists she must urgently get in now. She is promptly rebuffed.
The Business of Fashion is on the road. Our first stop is in Nassau, the capital city of The Bahamas, an archipelago of islands which has long been a stopping off point for people cruising around the Caribbean. San Salvador Island is where Christopher Columbus first set foot in the New World in 1492 to trade with the Lucayan people. When British loyalists came over in 1717, the islands fell under British control and did not gain full independence until more than 250 years later.
Today, the Bahamas is a rich country, with the 3rd highest GDP per capita in the Western Hemisphere and an economy driven primarily by tourism and offshore banking. A recent mega real-estate development called The Atlantis, financed by Sol Kerzner, the titan known for his over-the-top casinos and hotels in South Africa's Sun City, has further boosted the Bahamas as a tourist destination, primarily for sun-seeking Americans with money to spend and gamble away in the cavernous casinos.
With more than 5 million tourists visiting the islands every year, it's not surprising that many of the luxury brands have set up shop to entice these visitors to do a little shopping. What is surprising is that some of them have allowed their brands to be diluted by haphazard merchandising, market-style bargaining, and poorly-outfitted stores under the control of local franchisees. That said, there are still signs that the luxury industry in Nassau is alive and well.
For years now, the Yves Saint-Laurent brand has been a drag on the otherwise strong results posted by many other fashion brands in the Gucci Group, owned by parent-company PPR. Most recently, Bottega Veneta has been on a tear with strong financial results (eclipsing YSL's top line revenue in 2006) and a leading position in the luxury consumer league tables, making it the number two luxury brand in PPR's stable.
The story for YSL is a lot less fairytale, and a lot more Nightmare on Elm Street. The brand has not been profitable since Gucci Group purchased it in 1999 and is still reportedly losing around €50m a year. The brand turned over €194m in sales in 2006. PPR doesn't break out operating loss of YSL its website and has not provided a timeframe to investors for expected profitability.
This week's Economist ominously warns of "The Trouble with Private Equity" at a time when many in the fashion world are wondering how the infusion of private capital will impact their industry. In the last month alone, La Perla, Samsonite and Valentino have all been snapped up by private equity
funds. Just today, The Sunday Times broke the news
that Prada has also been in talks with private investors. (Not surprisingly,
Prada has denied these reports,
but it is not hard to see why this would be a natural option for Patrizio Bertelli, especially given several failed
attempts at taking Prada public.)
The recent investment exuberance around fashion brands is a dramatic departure from the
stance that many professional investors took even just a few years ago. Back then, they said there was too much "fashion" risk and that without predictable
and stable revenue streams, their highly-leveraged (heavy on debt, light on
equity) investment strategies were untenable. Now, with more and more money fighting for fewer investment opportunities, it seems much of this wisdom
has been thrown out the window.
On my last trip to New York, I finally managed to see the new Tom Ford flagship store in person. After all of the hubbub about its "Hermes and Oprah" similarities, I wanted to judge for myself. Was Cathy Horyn right in criticising the high price-points as being out of reach even for the most discerning male customers? Was Horacio Silva on the mark for panning the store for its overly-exclusive environment?
I'm afraid the answer is yes. In spades.
For all of the talk about the luxurious feel of the store, I have to say it all felt quite ordinary to me. That is to say, it didn't feel different from most of the other masses of luxury stores that are out there. The grey colour palette and silver store fittings reminded me a bit of the old Gucci store formats (that are now being phased out). Sure, the furniture and materials, based on Ford's London home, were sumptuous and very tasteful. However, the store lacked that special something that makes truly unique retail formats stand out. When you walk into a Chanel store - any Chanel store - you feel like you have truly entered the world of Chanel and all that it stands for. When you walk into Abercrombie & Fitch, there is a certain electricity in how the product and store environment go hand-in-hand to speak about the brand.
This, the Tom Ford store did not have. Not yet, at least. For now, customers need to get through glass cabinets that hold many of the clothes more like museum pieces, than sumptuous articles of clothing. How is a customer going to feel the need to buy a beautiful cashmere sweater if he can't even touch it before asking someone's permission? This is akin to taking a child to a petting zoo and saying, "no petting allowed, unless you ask me first.
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The most disappointing thing for me is that Mr. Ford has completely misjudged the consumer he is going after. After having nailed it at Gucci, he has completely missed the mark here. Ford has insulted the intelligence of the customer by assuming he will pay the steep prices just because of all the frills. Frills or no frills, most luxury customers are very discerning about the product, and by making it so hard to form a judgment, the customer is forced to judge based on the store itself, not the product. The Gucci formula of glamour and sex won't work when you are asking a man to spend $5000+ on a suit. It's no wonder the store was completely empty.
My expections for this store were very high, even with the unfavourable media coverage that I had seen in advance. Mostly, this is because Tom Ford has been selling the idea of his eponymous brand to us for the past year and half. It is also because I respect the man a great deal for his creativity, business acumen and personal style. So, you can say I felt rather disappointed than critical.
Many industry observers have been waiting with baited breath to see what he would come up with. Maybe this is another lesson learned for Mr. Ford, the erstwhile master of PR and spin. Be careful what you say (and how long you say it for, and how often you say it) about a big project in advance of its launch. You might just be setting yourself up for a different kind of high-profile PR than you had expected: the negative kind. Perhaps it would have been better for Mr. Ford to take a listen from the Internet world and go beta first, testing out the concept and honing it carefully before making the big splash.
Top fashion business links for the week of 30 April, 2007:
New York Times - No Store is a Hero to its Valet Either the New York Times really has it in for Tom Ford (perhaps he spurned and interview request or declined an editors request for a discount?) or there is a real issue with Tom Ford's new eponymous business. First, Cathy Horyn criticized Ford's new business for being too niche and too grand (after Ford had provided her with a private tour - you can't buy this woman's vote) and today, in its Critical Shopper feature, Horacio Silva pans the store for confusing "exclusionary for exclusive."
Modabot.de - Brave New Internet World - How the Internet is changing the Fashion Universe Fashion 2.0 is a hot topic. The Business of Fashion recently advocated that big fashion brands should consider the Internet an avenue that they should be cruising down, albeit with necessary caution. Over at Modabot.de, the Berlin-based fashion blog for avantgarde fashionistas, they delve into the topic with vigour, providing a 360 degree view of the fashion blogosphere and some of the new social shopping sites that are bound to change the way consumers shop forever, if not now, then certainly in the years to come.
Style.com - Gathering Moss Sarah Mower at Style.com provides a witty and always insightful peek into the Kate Moss for Top Shop event this week. This is no small business. Philip Green has managed to make this line a pilot project for expanding Top Shop to other markets, particularly the US. Not only will the line bow at Top Shops around the world, it will also be sold at Colette in Paris, Barney's in America and 10 Corso Como in Milan. Mr. Green was even on hand to provide some sales assistance himself. Clearly, this is a business he is counting on.
The Daily Telegraph - Farewell to Floaty and Flirty Is this a harbinger of Chloe's fast fall, after its fast rise on the fashion scene? At the Daily Telegraph, they have joined the chorus of people questioning the design direction taken by new Chloe's new Creative Director, Paulo Melim Andersson. One can definitely appreciate a bit of Marni heritage in the collection he showed for A/W 2007, but the question is whether Chloe loyalists are brand faithful or design faithful. As the Telegraph points out, if it is the latter, then there are plenty of other places for girly girls to look for the look that Chloe has become known for over the past 10 years. Clearly, for a large fashion house like Chloe, a change in creative direction like this should be considered carefully as part of a broader strategic exercise. This is no less important to a fashion business than an airline choosing to fly to a new market (did you know Virgin flies to Nairobi?), a cola company changing their age old formulation (New Coke, anyone?), or Colonel Sanders tweaking the KFC recipe (do you like your chicken more crispy?).
Who said that big brands can't retain the DNA of what made them interesting in the first place?
This past week in New York, I visited the Marc by Marc Jacobs store on Bleecker Street, the little brother store to Marc Jacobs mainline collection. Both businesses are owned by LVMH, the world's largest luxury goods conglomerate. Marc Jacobs is also the Creative Director for Louis Vuitton, the company's largest fashion brand. So, you might expect that the company feels corporate and over marketed.
Thus, it was a pleasant surprise to walk into the Marc store and see a huge yellow chicken mascot sitting in the store window. A (suitably cool) photographer named Thom was taking photos of customers posing with the chicken and then posting them in the store windows for all to see. As Thom explained, the tradition of taking these kinds of photos goes back years in Marc Jacobs history to Marc's infamous Christmas parties, where extravagantly dressed up patrons would pose together as momentos of the party. You can check out some of these photos on Thom's website.
By translating this fun experience into the store, customers are engaging with the Marc Jacobs brand in such a cool way, that is not staged or fake, but an authentic part of Marc's lifestyle and appeal. Some more photos of the instore antics are below.
This marks the week that one of America's most successful fashion brands hits the shores of Europe, with the opening of the first European Abercrombie and Fitch flagship in London's Savile Row. The hype has been nonstop, with the media going crazy, London buses trumpeting the new store's appearance by draping themselves in images of perfectly proportioned models baring their torsos (and the preferred Abercrombie aesthetic) for all to see. According to reports, there will always be two models in swimwear in the store at all times.
Shopping at an AF store is about the experience of Abercrombie and Fitch. It speaks volumes about the brand and what it stands for. The signature music. The achingly hip (an invariably attractive) store associates. The artfully ripped clothes and distressed sweatshirts. I remember being shocked one day, walking into a suburban Chicago A&F store to see the sales associate spraying perfume on the mannequins in the store. It seemed to me that over years, the company had got its in-store experience down to an exact science, a formula that works in New York and Newport and everywhere in between.
The science of A&F is now being tested in London. It will be interesting to see how this formulaic aesthetic and defined approach works in London. Up until now, the brand has had quite a bit of appeal here in Europe, especially because of the fact that it wasn't (legally) available here. European shoppers would come back with one of those perfectly hip pieces of Americana -- jeans or a sweatshirt -- as a postcard of their latest trip Stateside. What Abercrombie does, it does very well indeed.
However, once the brand becomes more readily available here and the novelty factor wears off, this tried-and-true formula will be put to the same test as every other store's offering. London shoppers are a demanding bunch and are used to rapid turns of inventory, cutting edge design, an innovative merchandising. They will be looking for something fresh each time they come into the store, and I suspect the formula may need some tweaking and constructive diversions from the tried-and-true in order to translate Abercrombie's American success to this new market. With that said, I can't wait to check out the store myself and see how it has all turned out.
Yes, this blog is a commentary on the Business of Fashion. But, it is also a blog, more generally, on how you can take artistic and creative ideas and channel them in a way that is economically sustainable (and commercially lucrative) over the long term; how you can make the worlds of creativity and commerce co-exisit and feed off of each other harmoniously, without worrying about "selling out." Yes there is always a tension between the creatives and the corporates, but if the right balance is struck, the results can be magical.
For example, when John Galliano takes his fantastical ideas from Haute Couture origami and oriental dreams and declines them for his RTW show in a way that is sumptuous, beautiful and (just slightly) more accessible to a larger audience, he understands the realitities of the business, but does not compromise his creative energy for this. He just finds a way for them to co-exist. In this way, the high costs of designing and showing a couture collection are justified not only by the brand-building and awareness of the Dior brand that comes from these spectacles, but also because his couture collection acts as a creative playground from where he can take the most extreme creative ideas and then use the same raw material to adapt them for RTW, fragrance and accessories which are huge money makers.
Today, I was reading an article from the New York Times on one of my favourite Indie bands, The Arcade Fire whose balance of creative and business sense, one could argue, is equally astute as Galliano's. I first came to hear of the band through word of mouth a few years ago from friends in Montreal and New York. Intrigued, I showed up outside the venue for Arcade Fire's intimate sold-out European debut concert in a tiny venue at King's College in central London, without a ticket in hand. With a bit of patience and some luck, I managed to snag a ticket from someone who had an extra one to sell and walked into this concert, knowing almost nothing about the band. There was a palpable sense of expectation in the air. The room was filled with important European music industry execs who wanted to see what all of the trans-Atlantic fuss was all about, hard-core fans who had been following the band's progress on blogs and music media like NME and pitchforkmedia.com, and many former Montrealers like me who wanted to share in the excitement of a homegrown Montreal talent creating waves in the global music industry. I walked away that night knowing I had witnessed a magical creative moment.
Since then, The Arcade Fire have gone on to play sell-out shows all over the world, their debut album Funeral has sold 750,000 copies, and they now count Bono and David Bowie among their biggest fans. Not bad for a bunch of former McGill University students who were signed up to an independent record label. Expectations have therefore been even higher for their second album Neon Bible. which comes out on March 6th.
The Times article today struck a chord (really, I swear, no pun intended) with me as it was clear from the article that it is not only their creative talent and vision that has propelled them to success. It is also their common sense approach to business, aptitude for marketing and PR (while still remaining somewhat mysterious), and the strong collaborative and consensus driven leadership style of Win Butler and Regine Chassagne.
First, the common sense. This isn't a band that went on alcohol-binge-benders bashing up hotel rooms and burning through cash like the paper it is. This is a band that paid for the recording of its own albums, bought a studio-cum-Church to record its second album, retained rights to its master recroding and brand, and then licensed it to music companies Merge and Universal. Furthermore, they are constantly pushing the creative envelope (another similarity to Galliano) but do so in way that is still reasonable (which Galliano has learned though the year). For example, they shipped themselves off to Budapest to work with a 60 piece orchestra there because it was more financially realistic to do so than doing the same in North America. In short, they have kept control of their affairs, their cash, and themselves so that they can shape their creative output in a way that is consistent with their values and insipiration, but that also allows them to reap financial rewards. To be clear, these are not ascetic idealist types who think that commercial success somehow invalidates the value of their creative success. They have found a way to be comfortable with both.
When it comes to marketing, these guys have combined the use of edgy new media and traditional mainstream media platforms to create a huge profile and awareness of their music and brand. First, they seize the zeitgeist of their target audience and deliver marketing messages that resonate because they are authentic and true to what Arcade Fire stands for. As the NYT article points out, instead of a 'professional' marketing strategy for their new album they produced instead an iMovie for distribution on YouTube, complete with a toll-free 1-800 hotline number for fans to call in to hear material from the new album. What the article fails to mention is that their professional marketing strategy has also been built on venerable media outlets like TIME Magazine and the New York Times reporting on the band's curious modus operandi and cult following as a cultural interest piece, while at the same time giving them another important audience to reach: the audience who will pay for their music because it is perceived as cool and hip by those in the know. Broad media coverage like this is priceless, but the band manages to do it without losing their creative edge. To top it all off, their penchant for theatrics is not just a little similar to Galliano's use of spectacle and fantasy in his runway shows. Both Galliano and the Arcade Fire understand that conjuring up and delivering dreams that people want to be part of is always the making of great marketing.
Finally, they also seem to have the management of their ever-growing cast of musicians and complex business affairs under control. And, while its seems that the band is driven by consensus and shared values of what feels right and consistent with what Arcade Fire is about, there is also clear leadership in place in the form of Win Butler and Regine Chassagne. Butler strikes me as a visionary leader who knows where he wants to take things and inspires others to come along with him. Regine pushes people to test the limits of their creative energy and this brings the most out of her bandmates. Even if the results arent always spectacular, she encourages risk-taking. At a recent London show that didnt go off as they wanted, she improvised and brought the audience outside the concert venue and fired up one of their hits from the first album. Leadership in innovation, clarity and vision is something this band has in spades.
And so, I think Arcade Fire is a great case study for any young designers who want to be true to their creative selves while still recognise the need for commercial success. You can check out a video of their impromptu performance in London's Porchester Hall lobby below to witness the almost religous fervour that captivates the audience as they launch into one of Arcade Fire's best songs from the first album. If you look carefully you can see Coldplay's Chris Martin amongst the Arcade Fire faithful.
Vanessa Friedman has written an insightful article on the career of Giles Deacon, one of London's most celebrated emerging designers -- though, the 'emerging' title can't be his for much longer, especially now that he has been appointed Creative Director of the British fashion house, DAKS.
As I suggested in a previous post, I still wonder whether Giles' destiny is actually to become Creative Director for a Parisian fashion house of international renown. (Suzy Menkes asserted the same point this week in her glowing review of Giles show yesterday in the IHT). It would not be hard to fathom that DAKS is yet another stepping stone in a career that has seen Giles go from Bottega Veneta to Gucci and finally to his own label. If one were looking for a case study on how to carefully build a platform for success in the fashion industry, Giles' story is a good one. Before he set up his own label, he trained with the best at St Martins and then went on to work with the best, including a stint with Tom Ford at Gucci where he must have learned a great deal from Ford, one of the masters of luxury brand management. Now, with 6 seasons of his own label under his belt and his widespread recognition as a creative force to be reckoned with, Giles has also proved he has the creative wings to soar with the biggest names in the industry. But, before he can do that, he needs to prove that his designs have the commercial muscle to support an international fashion brand, and hence the new role with Daks.
In her article, Friedman makes much of the fact that it would have been a dealbreaker for Giles if DAKS required him to shut down his label in order to focus on their line full-time. In fact, she says, DAKS encouraged Giles to keep his own label, as a furtive playground in which he could explore his vast creative interests, while keeping to a more commercial formula for DAKS. I would have recommended that DAKS think about going even further by investing directly in Mr. Deacon's label to share further in the benefits of the increased attention that Giles will surely earn as a result of the DAKS' substantial investment in rejuventating the brand. Also, by tying Giles' own label's future to their cash and operational support, they may have at least been able to try to hold on to him for longer than his 2 year contract, by offering more support for his business in the future.
What will DAKS do in 2 years if Giles leaves, once DAKS have found some of that creative momentum they are looking for from Giles? What's to keep him from going off and designing for a big fashion house in Paris when they come knocking (and come knocking they will -- they already are). Even then, Giles may not have been open to taking any investment from DAKS because his plans may always have been to leave. Also, why give away any equity in his business when the consultancy fee may be enough to keep his business running? On the other hand, his business could surely use some professional management and operational support to grow more quickly and deliver what the buyers are expecting, when they are expecting it -- and DAKS could have brought this to the table. Now Giles will need to find someone else to help him with that if he is to truly monetise the elaborate groundwork he has put into place (either knowingly or organically) to get him where he is today. He has little room for error.
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