The Business of Fashion

Luxury Outlook | Gucci cuts back production capacity

Take a walk into a Gucci store these days and one cannot help but notice the preponderance of logos and icons on almost every Gucci product in sight, especially the brand's leather goods, shoes and accessories. Horsebits, double G's, and Gucci crests abound. But, it seems the conspicuous logos are failing to resonate with consumers in these recessionary times.

Rumours are circulating in Italy that Gucci has dramatically cut production orders to make up for waning demand for the Italian luxury brand's core leather goods offering. If the reports are accurate, it speaks volumes about the worsening climate for luxury goods players in general, but particularly for brands like Gucci which have chosen to follow an explicit "accessible luxury" strategy.

Luxury Outlook | Innovation engine

As the big three U.S. automakers await to hear their fate on a requested bailout from the U.S. government and Citigroup teeters on the verge of bankruptcy, it now seems that the fall of Lehman Brothers, Bear Stearns and other corporate casualities was just the beginning of what is likely to be a global economic meltdown of epic proportions.

With this as the backdrop, a reader recently wrote in to ask about the prospects for aspiring job seekers in the fashion industry more generally. Others have been wondering how some of the emerging businesses that have come to the fore in recent years are faring.

The short answer to both questions is that things are extremely tough out there, but there is always opportunity for innovators.

Luxury Outlook | Finding meaning in design

Back in September, The Business of Fashion caught up with noted futurist Faith Popcorn to talk to her about "recession culture," and how this changes the way consumers scrutinise spending decisions. It seems like a quaint discussion now (because of my questions, not Ms. Popcorn's answers) because our interview took place back when consumers in the U.S. were still spending.

Boy have things changed since then. By the middle of October, Eric Wilson of the New York Times reported of worried U.S. consumers walking into department stores and retailers, shopping bags in hand, returning entire bags of merchandise which had been previously purchased. What's more, he went on to report of dramatic drops in sales at major luxury departments stores in September, including Bergdorf Goodman, Saks, Neiman Marcus and Nordstrom -- and this was even before the astonishing market meltdown in October.

Perhaps my question should have been: "What kind of fashion will inspire them to re-open their wallets?"

Luxury Outlook | "You've been shopping, we won't tell"

In the latest sign of just how quickly consumer psychology is changing, Net-a-Porter yesterday sent an email blast to its huge customer database, offering a "discreet packaging service" to offset the conspicuousness and potential guilt associated with shopping in this, the most severe economic crisis in at least a generation.

Whereas previously the direct marketing email from the world's pre-eminent online luxury fashion retailer would have been accompanied by a strong, aspirational fashion image, the latest email features whispering women in a 1950's era photograph. The ad, while cleverly recalling the current fashion revival of the one-piece dress, focuses its message instead on the opportunity to continue to shop "and receive items in an unbranded recycled brown paper bag."

The move to the discreet strategy is even more noteworthy when one considers that the deluxe packaging usually offered by Net-a-Porter has generally been thought of one of the secrets to the success of the online retailer, and certainly one of the defining moments in its customer experience. Indeed, fashion magazines are currently running two-page Net-a-Porter advertisements showing nothing but the company's famous black boxes.

Luxury Outlook | Grim and grimmer

In recent conversations with global luxury business leaders and American fashion entrepreneurs, young designer brands and fashion executives in the UK's high-street behemoths, the mood has been decidedly downbeat, with rapidly decreasing sales leading to increasingly desperate sale signs. Hiring freezes and spending cutbacks are in place almost across the board. 

Emerging fashion businesses I have spoken to are reporting significant decreases in orders for Spring/Summer 2009. Orders are being cut back or canceled altogether and there are reports of fabric mills in Italy and manufacturers in China facing dire straits as the brakes are put on consumer spending around the world.