The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
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In February, Pietro Beccari will succeed Sidney Toledano as the chief executive of the storied yet newly Millennial-friendly French luxury megabrand Dior, exiting his role at the helm of Fendi in one of the biggest executive shuffles in the history of LVMH. (Toledano is set to become chairman of the LVMH Fashion Group, stepping into the shoes of Pierre-Yves Roussel, who will transition into the role of special advisor to LVMH chairman and chief executive Bernard Arnault).
For Beccari, the move to Dior is a step into the biggest leagues of fashion. But the strength of his track record at Fendi speaks for itself. Over the past five years, Beccari has turned the Roman fur and leather house around, boosting brand awareness, elevating the perception of the product and creating new relevance with young consumers, a strategically important segment.
“Young people are talking on digital, are generating interest for the brand — to be relevant for them is being relevant to all,” Beccari explained, as Fendi prepared to unveil its newly refurbished boutique on London’s Sloane Street. “Just as a diamond has many facets, a luxury brand has many aspects, many touch points,” he continued. “We worked on the product, we worked on the stores and we worked on the communications, which is the magic powder that makes everything fly.”
At the core of the revamp was a conscious decision to double down on the powerful tension that has animated the brand since the 1960s when creative director Karl Lagerfeld invented Fendi’s double ‘F’ logo and devised the formula: “fun fur.” While Beccari worked closely with Lagerfeld and Silvia Venturi Fendi to raise the sophistication level — and average price — of Fendi’s offering, they also introduced new products that were playful, social media-savvy and accessible to Millennials.
“With the micro-bags, the straps, the bag bugs, we have been generating strong innovation based on irony and luxury,” said Beccari. “‘Innovation’ is a powerful word, together with ‘surprise’ and ‘authenticity.’ This enabled us to reach a certain target group and create a phenomenon. It was all done with the precise goal of rejuvenating the image of the brand.” Today, Fendi has estimated revenues of €1.3 billion ($1.53 billion), according to analysts, up more than ten times since LVMH took control of the company in 2001.
On the topic of Dior, Beccari was tight-lipped. “I’m discovering as we speak. I would be very arrogant to say what I would change before I even start,” he said. “Today I met with Kris Van Assche, the other day I met with Maria Grazia [Chiuri]. We start talking and what I feel is a big sense of pride and responsibility to take on such an iconic and giant brand and to try to carry on the success the senior team has built in the last five years. They doubled the brand’s size.”
As he prepares for his new role and a new year, Beccari shared six observations on a luxury market that, in some ways, is also in the process of being born anew against a complex backdrop of synchronised global economic growth, heightened geopolitical risk, digital disruption and a pendulum swing to the East.
1. ‘DISSATISFACTION’ IS THE ANTIDOTE TO DISRUPTION
To stay disruptive and avoid disruption, luxury companies must be faster, better and maintain a ‘reserve of dissatisfaction.’
“LVMH has always been disruptive. Going to China for the first time was disruptive. Louis Vuitton was the first luxury brand to open, in 1985, a huge store of more than 1,000 square meters. Some criticised it, but it was disruptive. Mr. Arnault is more likely to tell you that the project is not ambitious enough. Disruption means to be faster, better and always have a reserve of dissatisfaction.”
2. EMBRACE SPEED — AND SLOWNESS
In a world where consumer expectation and trends are being shaped at the speed of Instagram, luxury brands must learn to move both quickly and slowly.
“The answer is coming back to what we discussed before, which is tension. I think these tensions include modern/traditional, super-innovative/super-artisanal. One of the tensions is around speed. I think luxury is slow by definition. But consumption is becoming much faster, so you have to respond to both things. Take this beautiful crocodile jacket. There are consumers who are willing to wait six months to get a piece, which no one else can get. But at the same time you have an army of people queueing up for the latest collaboration. I think these clients are the same. They may be queueing one day for innovation, and they maybe be waiting seven months for a jacket. This kind of tension is part of good brand management.”
3. STORES WON’T DIE IN A DIGITAL AGE
In a digital world, where more and more sales take place online, the purpose of stores will change — and remain the same.
“You come for an experience. People say, “Why should I go to a store today?” The answer is: you discover something, you spend time, you touch and feel, you sit down on a beautiful chair and caress the mink — it’s an experience that you cannot have online. You have to be attractive enough for people to come, have a sip of champagne, maybe spend a few hours here. But speaking to the store manager, I think they have sold two furs today, each more than £20,000. You can be a poet, an artist, an architect, but when you’re operating in retail, sales per square foot will remain the best way to measure performance.”
4. BREXIT WON’T STOP LONDON
London will surely suffer from Brexit, but the forces driving local luxury consumption are here to stay.
“In London, we are going through a difficult phase, but London remains one of the capitals of the world and the home of many super rich and sophisticated people. On this particular street [Sloane Street] there is a very particular clientele. You don’t live here with foot traffic, you live with private appointments. There is a public in London that exists today that will also exist post-Brexit.”
5. MASS CUSTOMISATION IS HERE
Luxury customers are embracing customisation, but it’s about the experience as much as the product.
“Mass customisation is the next phase of the internet. We did an offline experiment at Saks. We have a beautiful shoe that is a very simple sneaker, but customisable, because you can change the lurex band on the upper and you can put your initial on the back. We sold 120 pairs in one week, so we’re going to put this kind of customisation online with Farfetch. People want to play around and create things themselves. They see the life of a creative person and they want to play God for once. They want to be the one choosing the colours and choosing things that make them feel even more part of the world that they like.”
6. AMAZON, ALIBABA — NOT NEVER, BUT NOT NOW
While platforms like Amazon and Alibaba may one day be too big to ignore, for the moment there’s work to be done enhancing existing digital channels.
“We have so much to do with digital on our own channels that we should first go to the bottom of this exercise before thinking about going on a bigger scale with platforms, like Amazon and Alibaba, which becomes messy and difficult to control. I think we should first focus on our own site and our department stores partners which carry us online before we face this question.”
THE NEWS IN BRIEF
BUSINESS AND THE ECONOMY
Europe's biggest mall owner buys Westfield for $25 billion. Unibail-Rodamco of France is buying Australia's Westfield Corporation in a deal that will create the world's largest mall operator. There are 35 Westfield shopping centres in the UK and the US, while Unibail-Rodamco has 71 sites in Europe. The takeover is the second major deal involving shopping malls this week: Hammerson is set to become Britain's largest shopping centre owner if its £3.4 billion bid for Intu is accepted.
Patagonia, REI, The North Face hit back at Trump. Outdoor clothing retailers are speaking out against US President Trump's plan to slash the size of two national monuments in Utah by about two million acres, marking the first time in nearly 50 years that a president has reversed land protections. Unexpectedly, this has proven good for business: as Patagonia officially filed a lawsuit against Trump to block the cuts, many people lauded the company's decision and its sales numbers rose.
L Catterton acquires a majority stake in Ganni. The private equity firm, whose shareholders include LVMH and Groupe Arnault, has acquired a 51 percent stake in the Danish mid-market brand. The terms of the transaction were undisclosed. While Ganni will maintain its headquarters in Copenhagen, it will now focus on expanding in the US, Europe and Asia.
Inditex sees sales growth slowdown in the third quarter. Sales at the world's biggest clothing retailer rose 6 percent year-over-year to €6.3 billion ($7.4 billion) between August and October, in line with analysts' forecasts, after 10 percent growth in February to October. Third-quarter net profit rose 2.7 percent to €975 million. The company is also seeking a buyer for 16 Zara stores in the Iberian Peninsula as online purchasing takes off in Spain.
Target to buy Shipt for $550 million as it bets on same-day delivery. The deal is the Minneapolis-based retailer's latest move to invest in its logistics operations as competition grows fiercer. (Rivals Walmart and Best Buy recently started offering same-day service to keep pace with Amazon.) Earlier this year Target acquired software company Grand Junction, which manages local and same-day deliveries.
Allbirds sues Steve Madden. The direct-to-consumer shoe brand has filed a trade dress infringement lawsuit against Steve Madden for allegedly copying its signature wool lace-up sneakers. The shoes in question, TheSteven by Steve Madden women's "Traveler" shoes, are available for $89 at Macy's, Zappos and other retailers as well as through Steve Madden's own channels. Allbirds is currently only available online and through two stores in San Francisco and New York.
Reformation raises $25 million to fuel brick-and-mortar growth. Founder and chief executive Yael Aflalo will use the Series B round of financing, led by Stripes Group with participation from 14W and Imaginary Ventures — the new venture capital firm founded by Natalie Massenet and Nick Brown — to open more tech-enabled retail locations.
Li & Fung sells product verticals for $1.1 billion. The massive global trading and sourcing group is selling off its sweater, furniture and beauty product verticals in order to further simplify its business. Revenue for the three verticals totaled $1.87 billion in the year ending September 30.
Acne Studios, Balenciaga and J.W. Anderson reveal new show format. Acne Studios will swap Paris Fashion Week for Couture Week, joining a growing number of ready-to-wear brands that are showing at the same time as haute couture. The Swedish label will also consolidate its women's pre-collections and ready-to-wear collections. Meanwhile, Balenciaga and J.W. Anderson will combine their men's and women's collections, starting with the Autumn/Winter 2018 shows in Paris and London, respectively.
Jonathan Saunders | Source: Courtesy
Jonathan Saunders resigns from DVF. The designer is leaving his role as chief creative officer, having joined the business in May 2016. During his tenure, he was tasked with revamping the brand across all of its incarnations, from corporate identity and product, to store design and marketing. Saunders' last collection for DVF was Pre-Fall 2018.
Michael Kors commits to going fur-free. The American accessible luxury brand will no longer use animal fur in its products, with production being phased out by the end of December 2018. The move follows a similar initiative by Gucci, which in October pledged to drop fur from its collections, joining brands like Calvin Klein, Ralph Lauren, Tommy Hilfiger and Armani, which are all fur-free.
Toni & Guy co-founder passes away. Giuseppe "Toni" Mascolo, who co-founded the hairdressing chain with his brother Gaetano "Guy" Mascolo, has died aged 75. Toni, who was also the chief executive of the firm, and Guy opened the first salon in south London in 1963, offering a unisex service that stood in contrast to traditional barber shops and women-only hair salons. Today, Toni & Guy has grown to 475 shops in 48 countries.
Jil Sander hosts first museum exhibition. The German founder and designer who defined female fashion over four decades is the subject of a new exhibition at the Museum Angewandten Kunst in Frankfurt. After changing hands multiple times, the brand — from which Sander departed for the third time in 2013 — is currently being rebooted by creative directors Luke and Lucie Meier.
Zalando seeks brand partnerships to fend off Amazon. After a pilot with Adidas, Europe's leading online fashion retailer has signed up 700 brands to its partner programme, which now accounts for nearly 10 percent of the total value of goods sold on its site, with a long-term target of 20 to 30 percent. In comparison, Amazon has signed up more than 350 brands in Europe over the past year and has notably partnered with Nike in the US.
More users may outsource holiday shopping to voice tech. Almost 40 percent of consumers who own in-home assistants, such as Amazon's Echo with Alexa virtual assistant technology, are considering using them for holiday shopping this year. That figure has doubled from last year, according to new research.
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