HAPPY BIRTHDAY: EPHRAIM MOLINGOANA

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2012 is set to be a particularly important year for South African menswear designer Ephraim Molingoana, not only because he celebrates his 41st birthday today but moreover because this year marks the 10th anniversary of his label, Ephymol.

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Ephymol S/S 2011 Collection, Joburg Fashion Week 2011.

And with the 10th anniversary of Ephymol the designer is steering the label in a new creative direction whose defining characteristics will be its trademark attention to detail and master tailoring, bespoke fabrics, prints and cuts and significantly increased brand marketing – already, Ephymol is available at select Edgars department stores and boutiques in Italy.

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So, as our founder’s most preferred menswear designer celebrates his 41st birthday, we raise a glass – literally – and salute a man who has been a much required answer to many a men’s desire for a return to male elegance and dandyism and all without the unfortunate contemporary associations with femininity.

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HAPPY BIRTHDAY, EPHRAIM!


Photography © Simon Deiner SDR Photo and African Fashion International.


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A CALM CONFIDENCE FOR HAUTE HORLOGERIE

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The Jewellery Editor, Maria Doulton visits the 21st edition of the Salon International de la Haute Horlogerie in Geneva.

Optimism prevailed at the 2012 Salon International de la Haute Horlogerie, despite macroeconomic uncertainties, supply constraints & potential slowdown in Asia.

The atmosphere at 2012’s Salon International de la Haute Horlogerie (SIHH) marked that of calm confidence. 2011 proved to be an outstanding year for Swiss watchmaking – culminating in a new record for exports – yet executives remained mindful of macroeconomic uncertainties, supply constraints and a potential slowdown in Asia.

“We are quite optimistic for 2012,” confirmed Jean-Daniel Pasche, head of the Swiss watch federation, on the eve of the SIHH in Geneva. “Even though the watch industry might not have the same growth rates as the 19-20 per cent increase in watch exports seen in 2011.”


“Brands are worried about Europe, it’s not like buying milk. If things are bad, people stop buying watches.”


“Brands are worried about Europe,” he continued to Reuters. “It’s not like buying milk. If things are bad, people stop buying watches. Risks this year are the economic situation in Europe, U.S. austerity measures and the strong Swiss franc, but we expect the watch fairs to confirm the sector’s resilience.”

Despite being faced with a challenging landscape, brands remained optimistic about the coming twelve months. Vacheron Constantin claims it sold out its planned 2012 output of 19,000 timepieces in the first two days of the fair. CEO Juan-Carlos Torres remained positive that it will be another good year for the brand and does not believe China is likely to experience a sharp slowdown.

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Cartier’s Grand Complication Skeleton Pocket Watch

Officine Panerai shared its aggressive plans for expansion, revealing it will open fifteen new boutiques in the coming twelve months and will begin building a new factory in Neuchatel in March, which could increase its production staff from 130 to near 300. Fellow Richemont producer IWC will invest 50 million Swiss francs to add 25,000 square metres to its production site in Schaffhausen, as it struggles to keep up with demand.

Many conversations were driven by Swatch Group’s decision to reduce supply of components to competitors. Overall industry growth is expected to slow as brands seek alternative suppliers or develop capabilities in-house, but even then executives championed positivity. Many CEO’s were quick to acknowledge the need for unique products – and therefore unique components – in a quest to remain innovative and competitive.


“CEO’s were quick to acknowledge the need for unique products – and therefore components – in a quest to remain competitive.”


Such attitudes were convincingly reflected in the pieces on display. Wallpaper suggested that brands were embracing their invention and artistry to keep ahead of the game, following last year’s exhibition of play it safe, sure-to-sell looks. “Time after time we were shown some of the most creative watch designs in years,” they quipped in their wrap-up.

“Complications – those very technical watch additions such as tourbillons and minute repeaters – became a familiar motif as brands like Jaeger-LeCoultre and Van Cleef & Arpels sought to display their technical know-how. Compelling decorative techniques – enamelling, straw marquetry, tessellation and stone setting – were also popular themes.”

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Richard Mille’s Avenger Vertical Tourbillon concept watch

A sure sign that one of the world’s oldest luxury crafts has moved firmly into the 21st, was Richard Mille’s ground-breaking digital 3D display. Visitors watched giant digital watch dials linger in the air, rotating slowly to allow for a detailed view of inner and outer workings. Something that is sure to be repeated both at Baselworld and next year’s SIHH.

If the SIHH does indeed set the tone for the coming year in Haute Horlogerie, 2012 will champion innovation and creative strategic thinking. Change is upon us – dominant markets are changing, supply structures are changing and the landscape is, at the very least, challenging.

But for those that are game, this exciting environment paves the way for products that are truly unique, where design will be driven by the greatest of luxuries; creativity.


To further investigate Timepieces on Luxury Society, we invite your to explore the related materials as follows:

5 Minutes With … Jean-Claude Biver, Hublot
Fondation de la Haute Horlogerie Leverages Film to Fight Counterfeiting
Spotlight: Pierre Dubois, CEO & Founder, Pierre DeRoche
Baselworld Mirrors Changing Landscape of Watches Sector


© Luxury Society, A Calm Confidence for Haute Horlogerie, 30 January 2012, by Sophie Duran.


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CHINA’S MARKET FOR WINE SHOWS MATURITY

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A recent Sotheby’s auction in Hong Kong, where an anonymous Chinese bidder purchased 300 bottles of Chateau Lafite for $539,280.

We take a look at the current climate for fine wines in Mainland China, following the launch of the first-ever Chinese investment fund dedicated to wine.

China’s market for fine wines is maturing and augmenting at a dizzying rate. Wine imports to Hong Kong are poised to break the US$1 billion barrier this year, after soaring by 65% in the first eight months of 2011. And that doesn’t even take the booming Mainland into consideration, a wine market valued at 75 billion Yuan (roughly US$10 billion) in 2009. Domestic wines still account for over two-thirds of the local market, but demand for imported grape wine is surging, as the rising middle class take more overseas travel, exposing them to western customs and wine culture.

Not that interest is sudden. Chinese wine buyers were instrumental in the recovery at the top end of the market, following the dip seen in the wake of the global economic crisis in 2008. The Mainland is now the largest importer of Bordeaux by volume, edging out Germany and driving a jump in exports of French wine. According to Luxuo, exports from the famed French region rose 34 percent in value and 23 percent in volume between July 2010 and June 2011.


“Mainland China is now the largest importer of Bordeaux by volume, Hong Kong is the largest importer by value.”


Messages regarding the market are mixed. Jing Daily recently reported that fine wine prices retreated 7.5 percent in the third quarter of 2011 and that demand for the highest of high-end bottles, particularly Chateau Lafite, were thought to be showing signs of slowing after a nearly three-year-long tear – due partly to the ubiquity, rampant counterfeiting and unsustainably high prices of Lafite and other high-profile wines.

Echoing this sentiment, prime lots of Chateau Lafite, Chateau Latour, Mouton Rothschild and Margaux failed to sell at Sotheby’s Finest and Rarest Wines sale last week in Hong Kong. It was the first auction not to sell out entirely since Sotheby’s entered Hong Kong in 2009. Yet over at Christie’s, just last September, an anonymous Chinese bidder bought 300 bottles of Château Lafite-Rothschild bundled into a single lot for $539,280 – the most expensive single lot sale this year.


“Fine wine prices retreated 7.5 percent in the third quarter of 2011 and demand for the highest of high-end bottles is showing signs of slowing”


Christie’s head of wine for China, Simon Tam, refused to become pessimistic, suggesting instead that the market is simply calming down. “The first generation of wine lovers to discover Lafite now have long-lasting stock and they don’t need to accumulate more.” Mathieu Chadronnier, managing director of CVBG Grands Crus, went so far as to say it was necessary. “We have gone through a period of constant growth. Prices can’t go on increasing forever – this correction was needed.”

The buying landscape is clearly changing. In a first for the country, the Chinese government has approved the first-ever Chinese investment fund specialising in wine, which plans to invest over €110 on wine over a five-year period. Ling Zhijun, a banking professional and wine enthusiast who manages Pacific Asset Management of Beijing, founded the Dinghong Fund. Investors must part with a minimum investment of €1m for a company and €100,000 for an individual, and buying will be managed by Bordeaux negociant Vintex & les Vignobles Grégoire.


“The first generation of wine lovers to discover Lafite now have long-lasting stock and they don’t need to accumulate more.”


Philippe Larché, one of the partners in negociant Vintex and the fund’s primary advisor and main supplier, revealed that over one-third of wines to be purchased will supply the cellars of fund investors. “The fund is not just about buying and selling grands crus, but also educating customers and introducing them to Bordeaux,” he remarked. “We expect to bring each investor to discover the vineyards of Bordeaux, and to set up wine masterclasses in China, with the participation of owners and winemakers.”

Mr Larché remained relatively unfazed by recent results at the Sotheby’s auction, instead suggesting the result was indicative of a natural evolution in the market, as bidders understand more about wine and how it trades. He, alongside Sotheby’s worldwide head of wine, Serena Sutcliffe, suggested that Second Growths are becoming increasingly popular in Asia, as knowledge of different châteaux broadens.

“China now understands that we don’t have only first growths in Bordeaux. The market is maturing. But I am not anxious. I am very confident that the first growths will go up again in value.”


For more in our series of weekly wraps, please see our most recent editions of The Bulletin as follows:

Luxury Brand CSR: No Longer Just an Option?
Optimism Shines at Frankfurt’s 2011 Motor Show
Paris & Beijing Legitimise Commitments to Design


© Luxury Society, China’s Market for Fine Wine Shows Maturity, 31 October 2011, by Sophie Duran.


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THE FUTURE OF FASHION WEEK, DECIDEDLY DIGITAL

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KCD’s Digital Fashion Shows technology could mean the end of the ‘front row’ as we know it

KCD’s Digital Fashion Shows platform wins the approval of editors and designers, but does it pose the potential to negate the need for the press?

“I was dubious about the technology thing at first but it’s become the complete norm now,” declared British designer Roksanda Ilincic to Vogue UK, following the news that PR powerhouse KCD is to launch complete digital coverage of shows, debuting later this week at New York Fashion Week.

“I think digital fashion shows will definitely be a success,” she continued, “but on the other hand, it will be very different from when people actually see and feel the clothes at a show.”

For decades, the catwalk has been the fundamental place for designers to reach retail buyers, magazine editors and flaunt relationships with influential stylists and celebrities. Digital technology has more recently extended the reach of the runway to consumers and bloggers, whilst the Internet alone has facilitated rapid sharing of complete collections by both brands and the media.


“I think digital fashion shows will be a success, but it will be very different from when people actually see & feel the clothes at a show.”


That said, the most innovative digital catwalk projects have so far focused sharply on consumers. Burberry has led the pack with Runway to Reality (for VIP clients to shop the runway) and last season’s Tweetwalk (for the aspirational advocates on Twitter).

Dolce & Gabanna, Louis Vuitton, Viktor & Rolf and Gucci have all called upon live-stream technology to share their runways with the world, but aside from the selective but brilliant video coverage from Style.com, detail, craftsmanship, inspiration, beauty and construction are often issues left immediately overlooked.

This is all set to change should the fashion set embrace KCD’s Digital Fashion Shows platform, which co-president Ed Filipowski claims will provide “all the information and materials needed to review, cover and potentially buy the collection, just like a physical show.” Uncharacteristically democratic, the KCD model extends a front-row invitation to all invitation-only guests and behind the scenes access to match.


“The platform provides all the information and materials needed to review, cover and potentially buy the collection, just like a physical show.”


Designers pay $150,000 to $300,000 – the approximate cost of a small-to-medium-size show – to share their collection with its password protected guests, who can view the show on computer, tablet or mobile. Designers are required to display looks head-to-foot and provide detail shots, information on the clothes and beauty notes for the use of editors and buyers (WSJ).

The concept has already been celebrated by designer Paul Smith, who believes that the “idea allows a brand to say exactly what it wants to about its collection” and describe collections in all the details the brand feels necessary.

“Suzy Menkes might simply describe a ‘leather jacket’, while we can say what exactly it’s made of, and why it’s the most beautiful item in the world. I’ve struggled in the past with journalists getting it wrong – calling my prints ’computer-generated” when they were actually hand-painted fabrics, for example. So it would make quite a difference to be able to say it ourselves,” he told Vogue UK.

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Burberry’s Runway to Reality allowed VIP clients to order directly from the catwalk, on custom iPad technology within Burberry stores

Editors such as Vanessa Friedman (Financial Times) and Alexandra Schuman (Vogue UK) have also acknowledged its conceptual relevance, citing “economic pressures on magazines, newspapers and retailers” and the need to cover “a huge amount of collections” as key reasons KCD’s platform could become an industry staple.

Designers and editors alike have mused on the benefits the platform could have on the quality of coverage as well as product, particularly when it comes to autumn and spring pre-collections. Roksanda Ilincic explained it could curb the need for her brand to travel to New York to sell the pre-collection, a process that often delays work on the mainline.

Vanessa Friedman explained that digital coverage could put two pre-collections that currently run sporadically for two months “all in one place, to be viewed and reviewed as a whole in a way that has been impossible thus far.” But she then went on to wonder what this could all mean for the role of the critic, begging the question: “if editorial outlets can get all this information for free, why have a middleman?”


“The platform begins to negate the need for the press. These days brands can reach huge audiences via our own social media.”


Paul Smith concurred, suggesting that the platform “begins to negate the need for the press. These days we can reach huge audiences via our own social media,” he continued. “A brand need only put someone famous in its clothes and eight million people on Facebook can know about it immediately.”

It is doubtful the platform will change the structure of the fashion media in its formative years. Brands may relish the ability to tell their own story in great detail, but it is difficult to think any technology could rapidly replace the current system of press coverage based largely on attendance.

But in an increasingly digital media arena, the system certainly has the potential to enhance the richness – and accuracy – of content and ensure truly global coverage, unrestricted by the costs associated with fashion week travel. For young designers attempting to reach a large audience on a relatively small dime, it makes nothing but sense.

“There is an entire generation of people whose eyes are trained digitally – it’s how they view fashion,” explains Ed Filipowski. “We need to look at our industry and ask how we can cater to that, as well as maintaining the integrity and credibility of fashion while making our lives easier. This way, we can hopefully offer a creative way of offering a front row experience to more than just the usual elite few. This way everyone gets the fashion knowledge.”


To further investigate Fashion & Digital Technology on Luxury Society, we invite your to explore the related materials as follows:

Luxury Society Report: The Digital Agenda
Digital Leaders: Kamel Ouadi, EVP, NOWNESS
The Latest Digital, Chanel, Valentino & Montblanc
Augmenting Luxury Realities: Jonathan Chippindale, Holition


© Luxury Society, The Future of Fashion Week, Decidedly Digital, 6 February 2012, by Sophie Duran.


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LUXURY PROPERTY DEMAND OUTSTRIPS SUPPLY IN LONDON & MANHATTAN

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Located on a Penthouse floor in the Time Warner Center, this Manhattan property is listed with Sotheby’s for $60 million.

Looming economic uncertainty seems not to be affecting the high end property markets of London and Manhattan, instead the wealthy can’t seem to find enough property to buy

A “herd-like mentality” is said to have spurred luxury property buyers in the past several quarters, as the wealthy once again enthusiastically invest in hotspots like London and Manhattan. Despite forecasted economic storms and the liberal use of the words ‘debt’ and ‘crisis’, both locations are currently enjoying such a boom at the high end of the market, that demand has outstripped supply.

According to real-estate broker Savills Plc., the number of London houses and apartments that sold for more than 5 million pounds rose 31 percent to 262 in the nine months through September. Over in Manhattan, the supply of apartments for sale over 5 million dollars, reached the lowest level for an October since 2007. As Shari Scharfer-Rollins, SVP at the Corcoran Group brokerage puts it: “Inventory is down and demand is up.”

Christie’s recent State of the International Luxury Market report suggested that scarcity of property was driving up luxury real estate prices, particularly in top cities such as London, Paris, Hong Kong, New York and Beverley Hills. The report also went on to muse that sellers worldwide have adapted to a new reality in luxury housing and are beginning to accept that their residence is not going to command the same price that it might have in 2007.


“Market activity and optimism increased throughout 2011. Inventory is down and demand is up.”


Resultantly, market activity and optimism increased throughout 2011. Christie’s went so far as to identify ‘a lack of quality housing inventory’ as the biggest challenge markets were to face in the coming months. A sentiment this week echoed by Jason Haber, CEO of New York real estate broker Rubicon.

Speaking with Bloomberg, Mr. Haber revealed that his agents were now cold-mailing townhouse owners around New York City, to see if anyone might consider selling. “That’s not something you would do if the market was flush with high-end inventory,” he said of the strategy. “That’s a sign of the times. This is a ready, willing and able buyer and we can’t find the product for him.”

In London – albeit for varying reasons – luxury homebuyers are having similar troubles. The locals especially, following news that of the number of London houses and apartments that sold for more than 5 million pounds, overseas buyers comprised 65 percent. Knight Frank identified wealthy southern Europeans as buyers of properties worth at least 1 million pounds in London’s well to do Chelsea and South Kensington, generally as pure investments, second homes, or accommodation for children studying at university.


“This is a sign of the times. We have a ready, willing and able buyer and we can’t find the product for him.”


Investments identified as particularly timely by Philip Beresford, compiler of London’s Estates Gazette Rich list. “London is doing well on the back of the luxury market as the world’s billionaires flood in, either as investors in the property market or buyers of top end properties as bolt holes in these very uncertain times,” he revealed to Reuters.

Particular interest has been noted from Italy, Greece and Spain, where the wealthy are said to be attracted by the security and stability of the London property market, as well as liquidity and well-kept property registers. “We’ve got Italian and Greek buyers who have confirmed that view … They want to have money in a safe haven, preferably not a bank, or stocks because it is too volatile,” remarked Nick Candy, development manager and designer of One Hyde Park.

The 1 billion pound development is home to apartments ranging from £7 – £136 million pounds each, which are according to Mr. Candy, attracting interest from buyers currently experiencing instability in home markets. “We have a lot of viewings going on from any country that has got economic or political turmoil,” he told Reuters.


“ The dollar is weak and foreign buyers find that they can get more in New York City as an investment than they used to be able to ”


And then there is the issue of currency. Property agency Knight Frank recently revealed research suggesting that Chinese buyers benefited from a 24 percent purchasing power discount based on the Yuan-sterling forex rate between the peak of the prime London housing market in March 2008 and October 2011.

Chinese luxury home buyers were said to be leading a legion of “cash-rich non-UK investors” in search of upmarket London homes, with demand driven by currency exchange rates that produce discounts of up to a quarter on purchase prices. A similar tale unfolds across the pond in Manhattan, as Ms. Scharfer-Rollins confirms: “The dollar is weak and I think foreign buyers find that they can get more in New York City as an investment than they used to be able to.”


© Luxury Society, Luxury Property Demand Outstrips Supply in London & Manhattan, 21 November 2011, by Sophie Duran.


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MENSWEAR A/W ‘12: EXTREME LUXURY IN CLIMATIC AUSTERITY

“There are at least two ways in which you can deal with what’s going on in the world. You can confront it right up close, or you can escape into a dream world in your gold bullion embroidered Dolce & Gabbana cape.”

Whilst Tim Blanks may have been referencing Dolce & Gabbana’s Baroque inspired, chandelier lined catwalk, he also articulated the dichotomous mix of climatic austerity and extreme luxury that categorised the Autumn Winter 2012 menswear shows in Paris and Milan.

The creative and corporate alike seemed acutely aware of the storm clouds lingering over the European economy. A conversation difficult to avoid when menswear presentations were immediately preceded by Standard & Poor’s decision to downgrade the sovereign credit ratings of both Italy and France. Yet the mood did not suffer any collateral pessimism, nor did brands seek to hide from the luxuries they are best known for.


“ A dichotomous mix of climatic austerity and extreme luxury categorised the Autumn Winter 2012 menswear shows in Paris and Milan.”


Instead houses championed the hyper luxurious. Gold filigree threads on Baroque-inspired evening suits at Dolce & Gabbana, golden studs and tuxedos encrusted with crystals at Versace, gold on gloves and leather bags at Burberry Prorsum. Even at Calvin Klein, widely known for its minimalist approach to luxury, blazers could be found in ostentatious alligator.

“Luxury! That’s it, pure luxury,” quipped menswear director Kim Jones, when The Guardian pressed him on his overall mood toward his AW12 collection for Louis Vuitton.

“We were looking at lots of Japanese references, so we were also looking at lots of Japanese fabric companies. We came across this mill that could only make twenty centimetres a day – all done by hand – and I just thought that was the ultimate luxury in terms of suiting,” Jones reiterated to Style.com.

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(L – R) Gold filigree at Dolce & Gabbana, Alligator suiting at Calvin Klein and crystal tuxedos at Versace.

The combination of the expensive and hedonistic, in a time of general frugality and preservation, seems almost nonsensical. Yet these collections – for both their timing and accents of flamboyance – make nothing other than perfect business sense. Whilst the greater economy suffers, luxury has prospered, and few segments are prospering as hard and fast as menswear.

Consultancy Bain & Co estimates the luxury menswear market to be worth 180 billion euros ($240 billion) and growing at about fourteen per cent a year, nearly double that of luxury womenswear at eight per cent (Reuters).

Jean-Marc Bellaiche, consultant at Boston Consulting Group, believes that the market has traditionally been underserved, suggesting that menswear “remains very underdeveloped compared to the woman’s market, so there is a lot of catching up to do.”


“ The luxury menswear market is worth €180 billion euros and growing at about 14% a year, nearly double that of luxury womenswear.”


Whether chief creatives are taking note of such predictions, or simply basking in the glow of 2011’S revenues, design seems to be making some space for the commercially risky. Bread-and-butter casual wear and suiting remained, but far more houses seemed more at ease experimenting with colour, embellishment and shape, than previous seasons.

Dries Van Noten expressed some commercial trepidation in launching his ‘psychedelic elegance’ collection. “It’s a risk. I’m fully aware, I’m actually quite nervous now,” he shared with Tim Blanks. “I just said ’let’s go for that, lets bring in colour, lets bring in fun’. I’m fully aware that it’s a risk to go that way, but I just wanted to do that.”

One could also muse that the importance of new geographies, particularly China and India, will begin to pave the way for more experimental and extravagant menswear. After all, these are not cultures that have been built on carbon black, achingly slim Hedi Slimane suits.

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Some of the more experimental looks from Dries Van Noten’s ‘psychedelic elegance’ collection.

Not that such suits won’t have a place in the east, particularly as the regions modernise. But hopefully there will also be space for lavish embroidery, colourful silks and less-tested-in-the-west silhouettes, incorporating elements regional traditional dress. Hermès have embraced the production of the Sari, why not menswear next?

The segment is also blooming at a particularly fertile time for luxury goods – current economic woes don’t yet seem to carry the social connotations that accompanied 2008’s GFC. In short, shopping hasn’t yet seemed to have gone out of fashion.

“Everyone stopped shopping in 2008 because there was a crisis of confidence; everyone’s financial portfolio was hit,” remarked the Business of Fashion’s Imran Ahmed to CNN. “And, even if you did have money and weren’t that affected by everything, it was seen as a bit crass to go out spending on luxury goods. Now that a certain amount of time has elapsed, I think that hesitation to shop has dissipated somewhat and the big spenders are out spending again.”

With expected double-digit growth in 2012, as well as an expanding range of products to better serve segments and regions, Menswear looks to be the luxury category to beat in the coming twelve months. And if recent collections are anything to go by, they will best positioned to satiate many different palettes.


To further investigate Menswear and Fashion Week on Luxury Society, we invite your to explore the related materials as follows:


© Luxury Society, Menswear AW12: Extreme Luxury in Climatic Austerity, 23 January 2012, by Sophie Duran.


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A NEW WAVE OF OPPORTUNITY FOR LUXURY BRANDS IN INDIA?

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Hermès Horniman Circle, Mumbai, India’s only stand-alone, street level luxury retail store.

India has passed legislation allowing 100% foreign direct investment in retail stores for the first time. But given its complex landscape, is one change significant enough to start a revolution?

Following two years worth of intense political debate, India’s union cabinet has agreed to allow 51 percent foreign direct investment (FDI) in multi-brand and 100 percent FDI in monobrand retail. In layman’s terms, luxury brands are finally able to open directly owned, operated and controlled boutiques, in one of the world’s fastest growing economies.

An economy that has produced more than 200,000 millionaires, trailing only the United States and China, according to Reuters. Despite such affluence, the region only accounts for only half a percent of the global luxury market ($846 million), as compared to Greater China, which accounts for 10 percent of the very same pie ($17 billion).

India is without one single Tiffany & Co store. Louis Vuitton – an arguable benchmark in the case of luxury retail – has only three stores in India, all three of which are located within upscale hotels or luxury malls. Hermès is currently the only luxury brand in the country to have a stand-alone store at street level, following this year’s opening in Horniman Circle, Mumbai.


“ The complexity of India’s luxury retail landscape makes it difficult to predict whether or not this change in ownership legislation will have a rapid impact on store openings ”


The complexity of India’s luxury retail landscape makes it difficult to predict whether or not this change in ownership legislation will have a rapid impact on store openings. Product import duties in India hover at 30 percent, real estate is heavily regulated, existing retail infrastructure is non-existent and potential street-level environments are often unkempt. Challenges not addressed by the sudden ability to set-up company owned shops.

“The challenge is infrastructure. Luxury requires an ecosystem,” identified Anand Ramanathan, manager at KPMG Advisory. “It’s pointless having a luxury mall on a road that is potholed. Even the so-called ‘luxury malls’ in India are not really luxury. They have issues with basic infrastructure, with training of staff, it’s just not a luxury experience.”

Further inhibiting the potential for change are the behaviours of Indian luxury consumers, which are not necessarily geared to support local retail. India’s affluent have developed a habit of purchasing goods overseas, where they find the selection more diverse and the costs significantly lower, as a direct result of the underdeveloped state of domestic luxury retail.

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Hermès have begun to manufacture Saris in Paris, available exclusively in its Indian stores.

As business in domestic stores remains slow, buying becomes cautious and ranges become limited. Particularly ironic as it then further inhibits the potential for growing local sales. And range is always going to be a sticking point for luxury brands, as the Indian consumer demonstrates significant disparity in taste, to those consumers in the west, meaning that products that work in Paris, won’t necessarily work in Pune.

The last landmark change in legislation was passed in 2006, allowing 51 percent FDI in single brand retail and resulting in the entry of more than 50 global brands with local partners in India, according to WWD. It will be interesting to see if last week’s announcement rallies the same level of interest and activity from international luxury brands, given the array of challenges market entrants will still face.

That said, it seems entirely plausible that these factors can be overcome – or at the very least managed – in the future. Luxury conglomerates now have a much greater scope to create their own retail destinations in India and begin to plant the seeds of desire, which will hopefully result in the next generation of affluents aspiring to buy their products.

If brands move towards directly owned and operated stores, they will begin to increase their internal understanding of complex real estate regulations and position themselves more strongly for future expansion. The creation of luxury retail precincts and street-level destinations – driven by a potential alliance of luxury brands entering the market independently – could help to solve problems associated with a lack of eco-system and help to create the correct environment in which Indians can experience true luxury.


“ It’s difficult, it’s frustrating, to do business here. Real estate regulations, bureaucracy, it takes years to set up office – Bertrand Michaud, Hermès India ”


The local market will benefit from brands commanding a more intimate understanding of local retail and developing both marketing and products to best suit the region. With any luck, consumers will also benefit from more competitive pricing and a diverse range of goods and services.

Speaking with Reuters at the time of the Mumbai launch, president of Hermès India, Bertrand Michaud, made the remark: “It’s difficult, it’s frustrating, to do business here. Real estate regulations, bureaucracy, it takes years to set up office, the goods sit at customs for months. I wish they would make it easier.”

And whilst the bureaucracy and taxes may remain, India may be that one crucial step closer to ‘making it easier’ for luxury brands to invest in real estate and be present in a market rife with opportunity, without ceding control of brand image and operations to distribution partners. Maybe, just maybe, this change and its resulting developments, will ignite a system of functionality and demand for luxury goods, reflective of India’s exponentially growing wealth.


© Luxury Society, A New Wave of Opportunity for Luxury Brands in India?, 28 November 2011, by Sophie Duran.


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