LUXURY CONGLOMERATES LOOK TO HERITAGE REVIVAL

5543_3537977-5096454_medium

Maison Moynat, founded in 1849, revived by LVMH in 2011

James Lawson, director of Ledbury Research, explains why well capitalised entrepreneurs are looking for opportunities with dormant prestige brands

The current economic slowdown, combined with densely crowded prestige markets, has led many entrepreneurs to consider reanimating an old brand rather than creating a new one. This entails acquiring the brand, either to restart its original activities or to use its reputation to start new production.

A brand is normally considered dormant – and, therefore, available for acquisition – if its trademarks have not been used for a number of consecutive years, usually three or five, depending on the country.

By reviving an old brand, entrepreneurs will benefit from its existing brand recognition and equity, usually defined as a combination of positive visual, verbal and emotional associations. That is to say, an historic brand intrinsically carries a sense of heritage, credibility and longevity.


“By reviving an old brand, entrepreneurs will benefit from its existing brand recognition and equity.”


Also, from a financial perspective, unlike the creation of a new brand, the reanimation of an historic brand would require a smaller initial investment to cover marketing costs.

However, reviving an old brand can also present a number of disadvantages. Beyond questioning why the brand died originally, the new products, for example, might not appeal to a younger generation or take into consideration the changes in consumers’ taste.

In addition, using an old brand to commercialise a new range of products could generate confusion in those customers who still associate it with the old products.


“Using an old brand to commercialise a new range of products could generate consumer confusion.”


Recently, the trend of re-launching historic brands has become particularly significant across the luxury industry, especially among major luxury groups that are looking for historic fashion houses with deep roots and a high level of authenticity.

A classic example is Faberge whose brand was long used for fragrances and cosmetics and only recently saw the original production of jewelled eggs restored. Similarly, LVMH acquired Moynat, a luxury leather luggage house that was founded 150 years ago but whose brand had been dormant for the past three decades.

Moreover, following its successful re-launch of the French shoemaker Roger Vivier a few years ago, this year Tod’s resuscitated Maison Schiapparelli, a fashion brand that had been dormant since 1954.


“Reviving historic brands requires a significant initial investment that only major luxury groups could likely contemplate.”


Undoubtedly, reviving historic brands requires a significant initial investment that only major luxury groups could likely contemplate, and in most cases, the name and the logo represent the only elements of continuity between the historic brand and its present incarnation.

Nevertheless, it appears to be a cost-efficient development strategy for companies looking to create an exclusive niche brand characterised by a strong sense of history and heritage.


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

2012’s Best Global Luxury Brands
What Makes for a Successful Luxury Re-Brand?
Has Luxury Brand Diversification Gone Too Far?


© Luxury Society, Luxury Conglomerates Look to Heritage Revival, 04 December 2012, by James Lawson.


Ledbury Research
is a research company specialising in the understanding and engaging of High Net Worth Individuals.

Bespoke consumer work spans all forms of quantitative and qualitative research, typically conducted on a multi-country basis, in wealth hubs around the world.

The analyst team delivers market information, trends and analysis through regular reports on the luxury and wealth markets.


Live the life!

MEN: THE NEW LUXURY BIG SPENDERS?

4840_screen_shot_2012-03-27_at_2

James Lawson, director of Ledbury Research, highlights the promise of luxury for men, but feels that Chinese trends may mask a global shift

Accounting for 40% of global sales, men’s spending on luxury also grew almost twice as fast as women’s in 2011, 14% compared with 8% respectively (Bain). This segment therefore remains heavily in focus by those in the luxury sector, with the likes of Burberry and Coach flagging it as an area of expansion and aiming to join the ranks of menswear veterans Giorgio Armani, Hugo Boss and Dunhill.

At Burberry, where menswear and men’s accessories currently represent 27% of sales, the brand is looking to “double sales over time”. Coach has developed a dedicated men’s space at its flagship on Madison Avenue, subsequently leading to a doubling of its men’s sales to 20%.

Luxury giants have also jumped onto the bandwagon: LVMH’s Berluti expanded its niche from luxury footwear to debut its first men’s ready-to-wear collection at Paris Fashion Week in January, while PPR bought Italian suitmaker Brioni in November last year and signalled its faith in the segment’s prospects by announcing an expanded offering as well as new flagship plans for Europe, America, China and the Middle East.


“ Accounting for 40% of global sales, men’s spending on luxury also grew almost twice as fast as women’s in 2011 ”


Alexander McQueen is another brand investing in menswear. The PPR owned house will open a 185sqm dedicated space on London’s Savile Row in September, showcasing both the ready-to-wear collection and Alexander McQueen by Huntsman, a bespoke service announced in January. Prices for the bespoke service will range from £4,500 – £5,000 and the pieces will take about 12 weeks to make.

Creative director, Sarah Burton, said bespoke was a natural progression for the brands menswear offering. “We already offer couture for women, and wanted to add it for men. And our clients were asking for it. With this service we want to give them beautiful, handcrafted clothes, and emphasize artisanal work,” she told WWD.

4837_screen_shot_2012-03-27_at_2

Net-a-Porter’s menswear counterpart, Mr Porter, launched in February 2011.

 

Many attribute this growth to China, where men account for over two-thirds (70%) of all luxury sales. This is in part due to the popular gift-giving culture amongst businessmen and government officials. The question, however, is whether this has been overhyped, and if Chinese male appetites for luxury are sustainable in the long term.

Because while China may currently still be dominated by male spending, this appears to be changing: we are seeing Chinese women play an increasing role in wealth creation (see High Net Worth December 2011). The rise of self-purchasing women may soon come to overshadow male demand in China, and cause a shift in the balance of luxury demand between the genders (see Ledbury’s Modern Matriarch Chinese Wealth Segment).


“ Many attribute this growth to China, where men account for over two-thirds (70%) of all luxury sales ”


Despite this, brands are still targeting men, the new big luxury spenders. This is partly due to the globally shifting attitudes. Traditionally male spend has been impacted faster and harder by the downturn, but men are now becoming more discerning.

Net -a-Porter’s Mr. Porter (since February 2011), Gilt Groupe’s GiltMAN (October 2009) and the latter’s full-price men’s site Park & Bond (August 2011) have not only tapped into the relatively underpenetrated online space in menswear, they have also recognized the change in the shopping habits of today’s men and have invested heavily in their editorial content.

Park & Bond, a partnership with GQ magazine, offers advice and how-tos, buying guides, and even free personal shopper assistance on their website to “find your own personal style”. As a further sign of male demand, Gilt has invested in a full-price men’s site before that for women, indicating the large potential in online male luxury spend.


The above is based on a collection of insights taken from Ledbury Research’s flagship publication High Net Worth. For more information please visit this link.


Ledbury Research
is a research company specialising in the understanding and engaging of High Net Worth Individuals.

Bespoke consumer work spans all forms of quantitative and qualitative research, typically conducted on a multi-country basis, in wealth hubs around the world.

The analyst team delivers market information, trends and analysis through regular reports on the luxury and wealth markets.


© Luxury Society, Men: The New Luxury Big Spenders?, 10 April 2012, by James Lawson.


Live the life!

THE MIXED PERFORMANCE OF LUXURY IN 2011

Aside

4432_Superyacht_1_medium

James Lawson, director of Ledbury Research, shares the key market insights that characterised the luxury industry in 2011.

The Story So Far

Following strong performance in 2010, luxury momentum was sustained throughout the first half of 2011. Growth forecasts remain in double digits going into 2012 – Ledbury forecasts growth at 16% for 2011 and a 11% for next year. That said, greater caution is advised in the short-term, as certain segments still have some way to go, before demand fully recovers from the effects of the economic crisis.

Using the year-on-year quarterly figures of the key segments of the luxury industry, we can see that luxury has been in positive terrain since the start of 2010. Particularly strong results in 2010 made for more challenging comparables, however, performance has held up relatively well, with double-digit growth for the first two quarters of 2011.

Asia has been central to this growth, however other regions – such as South America – have also emerged this year as promising markets for luxury. Europe and the US, while still not fully recovered, are expanding again and the Middle East also showed positive movement over the period. Notably, Japan withstood the effects of the March earthquake better than expected and posted growth, following several consecutive years of contraction.


“ Going forward, luxury executives are upbeat about performance and it is anticipated that China will continue to drive this ”


Looking to the Future

Going forward, luxury executives are upbeat about performance and it is anticipated that China will continue to drive this. Separately , research undertaken by Bain & Co and Altagamma, suggests that the global luxury market will expand to €191 bn in 2011 – up from €173 bn in 2010 – and mark the second consecutive year of double-digit growth for the luxury industry.

Regionally, Europe currently accounts for the largest share overall (37%), however this will shrink due to rapid growth in Asia-Pacific, which currently holds 17% of the market. China (€9.6 bn) is now bigger than that in the UK (€9.0 bn) and is being driven by demand for luxury cars, hotels and, personal luxury. China will grow to €12.9 bn by the end of the year. Brazil meanwhile, is a small (€1.9 bn) market, and is forecast to increase to €2.3 bn by the end of the year. Luxury demand there will be characterised by demand for fine wines.

4427_Screen_shot_2011-12-05_at_8_43_40_AM_png_medium

A Star Performer: Swiss Timepieces

Demand for Swiss watches recorded strong growth (22%) in 2010, following significant declines in 2009 (-22%). The resurgence in watch consumption was driven by Asia, where luxury watches are frequently bought as gifts. In total, the region accounted for more than half (53%) of global demand, and registered a 35% uptick on demand in 2009 (FHS). In addition, the average Asian consumer purchased more expensive watches than their counterparts in Europe and the US (FHS).

Growth in Europe (10%) and America (15%) was positive, however, sales in Europe have not yet returned to pre-crisis levels. Further, 2009 saw a 36% contraction in American sales, thereby making for a relatively easier base for comparison in 2010. That said, luxury watches are expected to sustain this momentum in the near future and indeed pegged to be one of the star performers of 2011. Many luxury brands are expanding into this segment as a result.


“ The average Asian consumer purchased more expensive watches than their counterparts in Europe and the US ”


Challenges Ahead: Yachts

Sadly, the same levels of performance optimism cannot be seen in the case of Yachts, with sales expected to fall again this year – albeit to a much lesser extent than in 2010.

The declines of the past 2 years are largely attributable to a fall-off in demand from the US, which has historically been the biggest market in regional terms, and also Europe where there has long been a tradition of yachting. Demand is not expected to pick up in either market again until there is more economic certainty.

Another compounding factor in the yachting industry is that, unlike many other luxury segments, where Chinese demand has cushioned the fall in demand from the West, yachting in China is still in its infancy. Currently, there is no culture of yachting in China, and it is mainly the Hong Kong Chinese who enjoy the past time. This is expected to change, and the past two years has seen several Chinese yachting brands launch to cater to domestic demand.


The above is a collection of insights taken from Ledbury Research’s flagship publication High Net Worth. For more information please visit this link.

© Luxury Society, The Mixed Performance of Luxury in 2011 by James Lawson.


Live the life!