Techno Luxury & The “Reality Check” on Branded Social Media

While I did get to check out the whopping 10 minutes of this week’s Milan Global Fashion Summit that was dedicated to technology, I was really bummed out not to be able to to to the International Herald Tribune’s Techno Luxury conference held in Berlin last week (the Twitter archive can be found here). It was really a trilogy of disappointments, because the conference encompassed 3 of my favorites: the Luxury+Technology factor (which is a given- being surrounded by fellow geeks and listening to Suzy Menkes and other experts talking about my favorite subject for 2 days is like having died and gone to Heaven); the involvement of my favorite Women’s Wear Daily editor, Melissa Drier, who also happens to have significantly influenced the direction of my career; and Berlin, a city I love for many reasons, including the fact that it so brilliantly embraces its history while barreling into the future.

So I’m both green with envy and thrilled to read the tidbits of info that are coming out of this conference, and am desperately waiting for more details (and video feed, anyone?!).

On Monday, Ms Drier posted an article on the conference in WWD, but for those of you without access, I’ll include some highlights here:

Seen as both an opportunity and a threat, technology is now an unavoidable factor to be reckoned with in the luxury market. And whether it’s virtual retailing, social networking or any manner of digital or cyberspace advance, luxury brands no longer have the option of sidestepping technology.

Amen to that! Of course, the day after this piece was written, many of the traditional industry titans were gathered in Milan to ask themselves the fleeting question of whether the internet has a place in luxury. Let’s hope they were all in Berlin last week, and that‘s why the topic barely made a blip on the Milanese radar.

Mirroring my experience with industry leaders here in Italy, both through work and my experience back in business school when I interviewed dozens of CEOs and Marketing Managers of brands ranging from fashion to fine wine and motorcycles to understand their insight into the future of the luxury market, in the WWD article, Suzy Menkes had the following to say:

“The luxury market hasn’t embraced early enough or completely enough the opportunities of new technology,” IHT fashion editor Suzy Menkes told WWD shortly before the conference kicked off. This year’s technology focus was spurred, in part, by her experience of chief executive officers’ discomfort when queried about a company’s online activities. “All I’d get is a grimace, compared to the tremendous enthusiasm to how they embrace a new store,” she said.

I am very familiar with that grimace, but I personally think that a lot of the problem has to do with the fact that a great deal of the luxury-industry managers aren’t familiar with how the web can help them. With all due respect to Mme. Menkes, I believe it’s actually the luxury industry and not the luxury market – the customers are already there – which has failed to fully embrace the opportunities of new technology. Industry leaders don’t seem to view the internet as an ideal place to build a branded environment, tell your story, build a community and engage in cutting-edge customer service, but rather a murky danger-zone.

In an industry where simply knowing your way around Excel is considered a form of wizardry, it’s hardly surprising that the industry leaders might be intimidated by a technology they don’t understand, both online and off. There is definitely one industry leader out there who gets it- Burberry’s Christopher Bailey is revolutionizing the brand through technology in both marketing and internal processes, building a great digital brand presence with the added benefit of a sustainable impact.

“Technology shouldn’t be scary,” stated Burberry chief creative officer Christopher Bailey. Together with CEO Angela Ahrendts, Bailey has powered Burberry into the virtual and digital forefront both online and in-house via the use of blogs, Twitter, Facebook, Burberry TV, its own social networking site, consumer e-brochures, digital look books, digital and e-commerce links to fashion shows, digital design tools, global videoconferencing, motion sensor lights, a monitor and iPod on every desk, Wi-Fi, Skype, a digital photo studio that can get images online in two hours and so on…

And the payback? Connectivity with ateliers and offices has reduced company air travel by 17 percent, digital look books have saved 32 tons of paper, online sales are growing rapidly and Burberry’s broad online presence provides the brand “with a much broader insight into the consumer and you can build more of a story,” Bailey said.

Sustainability, high ROI and social media brilliance… (I’m in love.)

And, speaking of consumer-insight and the building of the brand story, Ms Dryer goes on to introduce FASHIONAIR, a new multimedia fashion social network/e-commerce aggregator (still in the Beta phase) which seems to have the capability of dominating the online fashion forum through brand representation and creating a killer environment where consumers want to hang out. I’m so excited about this project, but it’s going to require a separate entry (most of which I just wrote and erased for the sake of “brevity”).

Back to the Techno Luxury conference… among the attendees were some of the most prominent fashion bloggers, in addition to the editor of The Business of Fashion and founder of the Luxury Society, Imran Amed. I was just reading this article from The Business of Fashion blog about the recent frenzy of staged social media activity surrounding Fashion Week, which was apparently discussed last week at the conference. I say staged because many brands today are eager to appear “on-trend” with our virtual lifestyles, without realizing that 1) it’s not a trend, and 2) you can’t always “fake it til ya make it” and consider yourself a leader.

While the article is definitely worth a full read and a spot in your Evernote files, I thought these two points were especially on-point:

It’s not enough to be seen to embrace social media. Brands and retailers must also build real long-term symbiotic relationships with bloggers, not short-term exploitative ones. Excellent examples of this are Lane Crawford, who from the start have supported and worked with Tommy Ton on their ad campaigns, and Burberry and DKNY who hired Mr. Schuman for his photography skills to appear on their website and in their advertisements, respectively.

Finally, consider the point made by Yuli Ziv, a New York-based fashion blogger who said to brands last week: “If you are looking for sales, make sure to provide [bloggers] the detailed product info, pricing and availability, if  SEO optimization is your top goal – make sure you use the right keywords in your pitch, if publicity buzz is what makes you satisfied – give them juicy stories, and if you simply want love – give them the reasons to love you.” It’s as simple as that.

Without beating a dead horse, it’s critical for brands to incorporate digital outreach into their full strategy, and not just dabble in social media in some back office. Yet for many brand leaders, there just isn’t an understanding of technical capabilities, much less of implementation and execution, and without an acceptance that the future is now (how cliché is that?!), they are going to keep throwing money into one-time-only buzz campaigns with no depth or continuity.

As anyone who’s skilled in PR will tell you, the goal of a communications investment today is not to create an event that only provides a short burst of attention, but to create something that can grow and spread on its own. Even if it’s a PR event, there should be a build-up and then an follow-through which can maintain buzz over a period of time far longer than the initial event. Web marketing is the same… and I’m struggling to think of a better medium in history that could ever provide such long-term attention after an event, especially when considering digital video and other multimedia and social content.

This is important… and as one of those “digital natives,” I couldn’t have said it better myself:

I regularly hear reports of major online fashion properties who “can’t find the budgets” to hire young digital natives to help them amp up their online content. This is pennywise, pound foolish, especially as these young talents can be hired for a fraction of the cost of major photo shoot or big-time editor.  –Imran Amed

Finally, what strikes me as perhaps the most insightful part of this analysis is a comment left by Allistair Allen of AnOther Magazine. Put simply:

Hire more Geeks.

Thanks, Allistair.

Reading Material:

Defining Moments: Blog Around the Clock | WWD

From Couture to Conversation | NYT

Once Wary of the Web, Luxury Brands Embrace It | NYT

Luxury Brands and the Case for $4,000 Sunglasses | NYT

My Techno: A Designer Viewpoint | NYT

Nick Knight: Techno King | NYT

Gritty Glamor in Berlin | NYT

You can follow the International Herald Tribune Twitter archive of the Techno Luxury conference here.

References & Reading Material from Jefferson Hack’s Presentation:

Fashion Film on Dazed Digital:
——————————
Lady Gaga Exclusive: http://dazeddigital.com/features/LadyGaga.htm
Swarovski State of Grace: http://www.dazeddigital.com/projects/astateofgrace/Default.aspx
Westwood: http://www.dazeddigital.com/Fashion/article/846/1/Backstage_With_Vivienne_Westwood
Alexander Mcqueen A/W 09: http://www.dazeddigital.com/Fashion/article/2656/1/Alexander_McQueen_AW09
Tim Richardson – Transition : http://www.dazeddigital.com/Fashion/article/1742/1/Rotation
Armani: http://www.dazeddigital.com/Fashion/article/651/1/AX_and_Dazed_present_a_film_by_Matt_Irwin
Carolotta Managio – Mutate: http://www.dazeddigital.com/Fashion/article/2349/1/Mutate
DKNY Turns 20: http://www.dazeddigital.com/Fashion/article/1687/1/DKNY_Turns_20
Martin Margiela: http://www.dazeddigital.com/Fashion/article/2367/1/Instant_Instinct

Authors:
——–
William Gibson : http://www.williamgibsonbooks.com/
Marshall Mcluhan: http://www.marshallmcluhan.com/

Social Media
————
Charles Leadbeater: http://www.charlesleadbeater.net/home.aspx
Mashable: http://mashable.com/author/barb-dybwad/

Augmented Reality:
——————
Total Immersion:  http://www.t-immersion.com/
Layar: http://layar.com/layers/
Bruce Sterling: http://www.wired.com/beyond_the_beyond/

Interactive Design:
——————-
Uxbooth Blog: http://www.uxbooth.com/blog/the-future-of-interface-design/
This Happened:  http://www.thishappened.org/talks/

Future Publishing
—————–
Apple Tablet: http://www.wired.com/gadgetlab/2009/09/apple-tablet-everything
Sony Flexible Full Color Paper Screen: http://www.youtube.com/watch?v=k6bkmPjVF-k&NR=1&feature=fvwp
E-Paper: http://www.youtube.com/watch?v=oq_2LiTxhls

Presentation Formats:
———————
Neil Perkins Presentation from IPA Social October 09: http://www.slideshare.net/The_IPA/neil-perkins-presentation-from-ipa-social-oct-09

Luxury & the Internet: Milano Fashion Global Summit 2009

Last night I had a brief moment to slip out of the office and into the Milano Fashion Global Summit in the center of Milan, where the industry leaders of Italy were gathered to talk about “Who Will Survive” the Global Financial Crisis, and more importantly, how.  Of course, with most speakers getting between 5-10 minutes on the floor, it goes without saying that there was not much depth (or height, in this case?) to the Summit.

Unfortunately, I couldn’t get away in time to hear Matteo Marzotto speak about his plans for reviving the Vionnet brand, but I was able to make it there towards the end of the day, when one of my favorite topics was being highlighted: Web & Mobile Luxury. However, upon arriving at the venue, I was disappointed to find that the presentation was entitled: “Is Luxury Compatible with the Internet?”

Seriously?! …After writing about this for more than a year, and studying and working in the field for longer, I sometimes can’t believe that we are still hearing this question asked among those considered to be the industry elite.

But I digress.

The presentation was delivered by Jacques-Antoine Granjon, French CEO of vente-privee.com, a members-only online retailer of some 850 brands, typically selling end-of season products through 3-day flash sales. It’s kind of like the European version of Gilt Groupe, with what appears to be a much smaller selection of merchandise and fewer high-profile brands.

The presentation was brief, but in his defense, with only 8 minutes to deliver a message to convince business leaders that luxury and the internet do belong together, he made an entertaining synopsis.

Without further ado….

My Brief Notes on the… Brief Presentation

Following are the notes I took from the presentation. I tried to keep it as verbatim as possible, so read this with a French accent. To begin to illustrate his point, Granjon started with an analogy to online luxury…

Question: What is the most exclusive toy in the world of luxury today?

Answer: The Luxury Jet

• It saves time & offers control (controlling the when & where in life = freedom)
• It provides the best service (with highly skilled staff, pilots, maintenance & 1-to-1 travel care)
• It offers the utmost in innovation & know-how (provided through superior R&D, highest quality materials, technology & design)
• It is exclusive (traveling alone, in privacy = power)
• It provides the dream (exploration, imagination)

These five points represent the luxury codes, which the internet can provide for brands. BUT, these codes are not enough for luxury online. There are several more points:

1. The internet is not just a new format of boutique. It requires a new distribution strategy.
2. It accelerates growth and visibility of brands everywhere around the world, but only if controlled.
3. There can be no mistakes, because the internet is permanent, and it takes time to build a presence.
4. The internet is a world that requires new skills and entrepreneurial determination. In addition to the luxury codes mentioned above, in order to be successful on the internet, luxury brands need the following:

• Tech skills: must evolve as quickly as they emerge
• Digital factory: create graphics, coding, etc
• B2C distribution centers
• Award-winning customer relationship services
• Knowledge of online marketing

I see your point, but…

For those of you out there who are, like me, thinking, “That’s IT?” after reading this… yes, that’s it.

They still don’t get it. While it may seem obvious if not insufficient to those of us who eat, sleep and breathe this stuff, I have personally met CEOs and marketing managers of major luxury brands within the last year who are reluctant to start developing a branded web-presence because they fear losing control of the brand image. On the other hand, I have also met online wizards who are eager to take advantage of this lack of luxury presence online, but fail to realize that they need savvy logistics and distribution systems as well as a killer CRM program before even contemplating the notion of luxury e-commerce.

But, back to that presentation. There are two primary associations to luxury that are critical, and are blatantly missing here. When a branded online environment is created, they should definitely be addressed.

The first, and perhaps the most important of all luxury codes is connectivity (this can mean a lot of things, among them the connection a customer feels to what a brand represents, like American Aristocracy with Ralph Lauren, or to a brand’s history of jaw-dropping elegance and sex, which is what a customer is buying in a modern Vionnet dress). Some people will call this “history,” but I think it’s also important to indicate that the luxury customer is  buying into a community, connecting that history with their own.

Most luxury brands have a profound history, and if they don’t start with one, it’s often fabricated, as was the case with the Tod’s brand under Diego Della Valle’s brilliant marketing strategy (he had shoes from the new Tod’s brand superimposed on famous images of Audrey Hepburn and other classic icons). Just as the luxury jet connects us either to a location from our past, or to an exciting future, so does the luxury brand. There is a story behind it- something both intimately familiar and excitingly new. The internet is the perfect vehicle to convey that history, to tell the story about how a particular brand developed and why that brand is loved, and to build a connected community of “lovers” around it, like a family that shares the same values.

Finally, an unfortunate association to luxury that is certainly present with the private jet, and a term which occurred in my graduate research on the topic more than any of the other luxury codes, is waste or excess. Happily, the internet can help to eliminate waste in so many ways, from streamlining the supply chain on the back-end to providing the transparency that allows consumers to understand and choose what tradeoffs they are willing to make between such hot points as carbon footprints, “Made in…” issues, labor conditions, and production materials, versus price and quality.

Moving on to the other points of the presentation, I disagree with a couple of things:

• His point: The internet accelerates growth and visibility of brands everywhere around the world, but only if controlled.
  • My point: The internet accelerates growth and visibility of brands everywhere around the world, regardless of whether or not the brand controls the message. It’s always better to establish your own online presence than to entrust it solely to outsiders and amateurs, who could accelerate brand growth and visibility in an entirely undesirable way.
• His point: There can be no mistakes, because the internet is permanent, and it takes time to build a presence.
  • My point: No one is infallible. Tell a brand manager that she has to be perfect in every way on the internet, and she will never build a presence there. The beauty of the internet is that you can address mistakes right away: you apologize, publicly correct the situation, and in the process it’s likely that you actually increase your fan-base because people trust you.

So, for those of you out there who are fashion/web geeks like me, take heart: we’ve got a lot of fun work to do!

And, by the way, I noticed that the Vionnet site is not developed. If anyone knows Matteo Marzotto, let him know that I’d love to help!

Return to “Luxury”

Throughout the past few years, many luxury companies have followed the model of growth that includes frantic brand-buying sprees and diversification into complementary categories such as interior design and technology.

Based on the conversation among industry leaders that just closed in Monte Carlo at the Financial Times’ Business of Luxury Summit, that very trend is what will be avoided in the future, as luxury companies seek to preserve an image of quality in the eye of the consumer.

The Honeymoon is Over

During the boom years, many luxury companies ventured into secondary product and service endeavors spanning the range from cell phones to hotels, under the strategic principles that 1) these outshoots serve to further their brand image, 2) their reputation of quality could transcend from the product category they had built a name upon, and 3) that “everyone else was doing it” – they didn’t want to be left out of the game.

Pushing the Brand Image

The idea that these complementary product categories could further the brand image began from the right perspective. After all, what better way to promote a fashion label’s home collection than to furnish an entire hotel under the brand name? When coupled with the managerial expertise of EMAAR Hotels & Resorts, the Armani brand has done just that. However, the brand image of Armani was established in sartorial minimalism and modernity, and while that can be reflected in some ways through the environmental design of a hotel, to convey the brand experience through hospitality is another matter. With tourism lagging in the economic crisis, it is doubtful that Mr. Armani wants the concept of minimalism conveyed through empty hotels.

The real problem emerges when the brand image is exposed to elements outside of the company’s core capabilities. Just as in licensing out fashion products for manufacture or sales to external parties, final control over the product and customer experience is lost. This poses a significant risk.

Transcending Quality

While the concept of co-branding is a nice way to give more consumers access to a brand they love, the benefits are often shortsighted. While the Total-Look trend died in developed markets in the 80s, co-branding projects served as a way to reignite the flame. Fashion companies went beyond the traditional accessories categories typically reserved for leather goods (shoes, bags, belts, etc) and began to venture into tech projects. Although this allowed several die-hard brand enthusiasts to more adequately encompass their life in a brand of choice, it also allowed some brand outsiders to have a “piece of the brand image” without the purchase of more traditional items.

I have several points on this: for the fashion-cell phone explosion, brands from Prada to Dolce & Gabbana and Armani have played the game, coupling brand imaging in aesthetics with the technological capabilities of LG, Motorola or Samsung, respectively. However, the development process for the Prada cell phone was tedious and expansive, and Prada had to sacrifice some brand imaging points while LG had to sacrifice some cutting-edge technologies to bring the project to fruition. An equal compromise in aesthetic and technological appeal serves neither the fashion brand nor the technology company. The expertise of neither brand could be fully conveyed in the project, driving the perception of quality down. This is what happens when you venture too far from your core capabilities, without enough understanding of the new category.

On the other hand, Hermes worked on a limited-edition co-branding project with Bugatti to create the Bugatti Veyron Fbg par Hermes. While Bugatti pumped this high-performance dream car full of the best automotive technology on offer, Hermes stuck to their core capabilities in leather goods and sartorial excellence to outfit the vehicle in the finest interior upholstery and complementary accessories. The resulting product is a $1.5 million car that definitely will not be driven by every brand enthusiast, but it certainly represented the best of both brands! Furthermore, the project achieved greater market exposure for Hermes and Bugatti through a lot of positive press coverage in both the luxury, fashion, automotive and leisure categories.

Playing the Game

For years, the idea that luxury was an easy business to make money from prevailed. Companies entered the sector and shortened product cycles, product categories offered, store locations, and so on in an effort to milk the market for all it was worth. According to Bernard Arnault, “Some investors pushed by the frenzy of doing something were going to invest in almost everything. As luxury was perceived as an industry where you can make money easily, they were pushed to buy brands without knowing how to make them work.”

As consumers were hungry for “more, more, more,” the luxury companies were all too happy to provide it, with little consideration for consequences beyond the immediate bottom line. Referring back to brand diversification, CEO and founder of Tod’s Spa Diego Della Valle noted, “Several times I had to fight for our vision against external pressures, which were demanding we did perfumes, or mobile phones. My answer was that it wasn’t our competency. If I want a mobile phone, I want to buy it from Nokia.”

With market pressures mounting, brands began to churn out an ever-increasing supply of product collections. The highest brands of luxury in fashion found themselves competing on the same playing field of “fast-fashion” powerhouses such as H&M and Zara. You might be thinking, “How did this NOT seem like a problem?!” However, as long as the money was rolling in, shareholders were happy and companies felt little incentive to buck the trend in strategy.

The problem really emerged when the frantic consumer spending cycles ground to a halt after years of proliferation, luxury labels slashed their prices, and core customers were left wondering what they were paying for in the first place.

Saving the Marriage

Just like any relationship on the rocks, luxury companies and their customers have to go back to their core values to re-build the bond that has been broken by years of inconsistency.

At the end of the day, a luxury company should represent solid quality and categorical leadership. The key words here are quality and leadership. When luxury brands diverge from their core capabilities where they exhibit the highest level of expertise, it is a letdown to all brand loyalists. When they chase the market instead of leading it, they let the brand down.

Many of the CEOs speaking at the Financial Times’ Business of Luxury Summit confirmed this attitude, including Berndt Hauptkorn, CEO if the privately held group Labelux. “During this period of growth, there were concepts that were superficial, that didn’t deliver in terms of product quality,” Hauptkorn said, arguing these brands won’t survive the economic downturn unscathed. “There will be a shakeout because there was overcapacity in the market. It will be a market with stronger brands and with a clearer message.”

Preserving Quality

The industry has begun to realize that once the economy recovers, customers will place a particular emphasis on values like quality and craftsmanship, but also exclusivity, as well as commitment to social and environmental responsibility. Companies that have remained true to their capabilities and core message throughout the boom years have seen less damage and a faster rebound than others in the recession.

In an effort to protect the intrinsic value of luxury brands, companies and production regions are going back to their most valued resources in production to strengthen intrinsic values in quality. According to Imran Amed, editor of Luxury Society, “In the end, it is the enduring quality and craftsmanship that count the most because this goes right to the heart of the way luxury products are conceived and created. Combined with great design, service and innovation, craftsmanship is what enables us to deliver lasting products that resonate with a new consumer mindset fixated on value.”

While most luxury brands have cut back on retail space, collection sizes, and various departmental employees, for the luxury-savvy brands a focus remains on preserving the original craft of the brand. This includes the protection of craftsmen and artisans that produce their high-quality products, in addition to sustainable practices both environmental and strategic.

Having been through several recessions since he began creating the world’s largest luxury group in 1985, Arnault stated that his key to success includes a solid long-term outlook: a generational business concept, not a 3-5 year plan. This allows a company to move forward with the big picture, and reduces the impulse to act on short-term trends in the market. “It is a natural tendency of companies during a crisis such as the one we are in to cut costs, drop prices, and stop expanding, because it has the most immediate impact on numbers,” he says. “But what we have learned in the many crises we have been through is that this is a mistake, especially when it comes to luxury.”

Mr. Arnault also believes the government investment, reactive companies and a refusal to change course in spite of the current market crisis will help companies and production regions to preserve their capabilities. However, while some long-term-minded companies such as Chanel, Bulgari and Hermès have taken affirmative steps to preserve the dwindling numbers of craftsmen that produce their goods, other companies have stood by while production has been outsourced to unskilled worker regions abroad in the effort to feed the speeding consumer cycles of the boom years. While this labor pool of skilled workers is all but lost in the UK, there are efforts to retain and nurture growth there as well as in France and Italy.

Follow the Leader

In addition to increasing fashion cycles to pander to the whims of a fast-fashion-oriented market, luxury companies have been tailoring their products and marketing campaigns to lure existing customers.

The very history of luxury illustrates the point that luxury brands and designers provide items for the customer, which are so exciting the customer hadn’t even thought of them. This is what originally made customers line up at the doors of the original artisans and designers- to see something new.

The recent years of endless market research, managerial consensus and client-centric focus on demand has diluted the interesting aspects of luxury. According to Jean-Noel Kapferer and Vincent Bastien, authors of Luxury Strategy – Break the Rules of Marketing to Build Luxury Brands,  “Luxury brands today are the trailblazers of tomorrow’s taste. Once a consumer segment is identified it is too late to exploit it. …There is no surprise in existing demand. This is why all classic luxury… was created through emotional intuition.”

They go on to say, “As a cultural creator, luxury brands should set their own high standards. Listening to the consumer is the best route to a lack of differentiation, and failure to inspire the dream – the two levers of desire that are the only paths out of the recession in the luxury world.”

While that does not mean companies should ignore the customer altogether (of course not), it does basically state the obvious that luxury players must be leaders in quality and innovation at all times, without submitting to frivolous market demands that might inflate the bottom line temporarily, but in the long run will break the bank and eventually the brand.

However, it should also go without saying that in order to be a leader, luxury brands must appeal to new consumers in Gen X & Y as Baby Boomers retire. In order to do that, they must earn their trust through demonstrated quality, sustainability and a legitimate brand story.  And where will the new market hear that story? Online.

More Info

Financial Times’ Business of Luxury Report 2009

http://www.ft.com/reports/business-luxury-2009

Luxury Society Issue 5: Return to the Craft

http://beta.luxurysociety.com/articles/a-return-to-craft

Luxury Execs Emphasize Exclusivity and New Focus

Luxury Execs Emphasize Exclusivity and New Focus – WWD.com

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The Italian System for Fashion: Present & Future

Changes Around the Turn of the Century

The end of the 20th Century saw the advent of minimalism and grunge, where shopping for fashion was viewed as politically incorrect. At the same time, it was a period of no limitations and turmoil between globalization, the War in Kuwait, unemployment, AIDS, and the constant provision of media-created “emotion” which went hand-in-hand with celebrity stalking. This emotional overload and negative view of overt consumption led to an increased interest in the eco-look and the spread of street fashion and athletic wear (including the Puma/Jil Sander and Adidas/Yamamoto collaborations). The market froze after 9-11, coming back with a sense of controlled vivacity, where people felt a renewed interest in self-expression. The trend of mix-and-match also emerged, allowing people to make their own way, far from the rules of the 80s Total Look.

Rampant consumerism came back, and most brands responded by producing products in lower price ranges to attract aspirational clientele seeking to buy into a luxury lifestyle. The proliferation of retail outlets from first-tier cities through third tier cities, together with mass media and global web communications ensured that people all around the world could access fashion and luxury. While an excessive consumption trend helped contribute to the credit crisis, it also helped to fuel the argument for conscientious spending, Corporate Social Responsibility (CSR) and ethical fashion.

Today, advances in technology for textile development are increasing exponentially through intelligent materials, with no signs of stopping (including micro, thermo-regulator, anti-stress and perfumed fibers, bio-protective fabrics, etc). The men’s fashion segment also continues to grow into the multi-category system paralleled with womenswear.

Among these market changes, the Italian system continues to evolve.

The Present & Future of Italian Fashion

What is “Made in Italy”?

Today, most of the remaining original Italian designers are reaching retirement, if they haven’t already. The whole of Europe is losing factory jobs in textiles and clothing as firms de-localize and imports increase, although Italy has seen this trend occur more slowly than others.

However, with ever-diminishing production occurring within Italy, and with the country’s most prominent design houses being handed over to the leadership of international talents or private investment firms (the latest is Safilo), it is difficult to say what “Made in Italy” means today. There is currently an ongoing dispute in Europe as to the relevance of “Made in” labels. Northern European countries have already lost the majority of their factories to delocalization, and do not want the “Made in” label, as their goods are imported.

Within the Southern European countries, where the remaining manufacturers are typically located, lobbyists push to maintain the “Made in” labels on garments. However, even in Italy, manufacturers are producing parts in China and law only requires that a portion of the product be made within Italy to be considered “Made in Italy.” In fact, there was great controversy last year when an exposé on shady production processes aired at dinner time in Italy. The news piece showed Chinese immigrants working in sweatshop conditions as leathersmiths for designer brands, though within the borders of Italy (Prato and Florence). This system was initiated so brands could maintain their localized production, though with arguably less-skillful workers. Some Italian manufacturers viewed this move as a way to keep a closer eye on the outsourced production, using the cheaper labor force while maintaining local facilities. (You can read an English write-up on the case here.)

A Dying Breed

Also suffering are the Italian production districts, evolved from generations of craftsmen with tacit knowledge of leather goods and textiles. These districts naturally developed into their own textile and leather goods pipelines, with separate small factories or workshops supporting one another through their own particular specialties. They created very attractive production communities, where brands and larger manufacturing companies could source work. Young Italians no longer want to follow their parents into production or craft-related vocations, and so the Chinese are coming to provide the labor necessary to get the job done. Meanwhile, the production pipeline of these districts is breaking down because the cost is forcing the bigger manufacturers and their brands to send work to Asia or Turkey… or it is being internalized with high-tech machinery and operators.

Today’s Italian production companies have grown smaller as imports increase, and knock-offs are a major force in destroying manufacturing innovation. However, even as their numbers dwindle, it was the Italian fabric weavers and leather workers who manufactured the most creative works, making Italy a key player in the international fashion scene.

In addition to the production side, on the creative end we’ve seen prominent Italian designers retiring. While other fashion capitols have a history of nourishing and promoting their young designers, in Italy, you typically must already have a name in place in order to be successful. Very few new designers have climbed the the ranks of Italian fashion since the late 80s. This adds pressure to the “Founder’s Dilemma,” which poses a challenge when a brand is built around a specific personality, and that personality is no longer involved with the brand. In the last year alone, two prominent Italian designs, Gianfranco Ferré and Valentino, left the fashion world and were skeptically replaced by young designers with mixed results.

Focus on Retail

Fashion companies have moved their focus downstream into retail, where experience shopping became the new communication tool. Italian brands have excelled in this retail model, rolling out branded temples to shopping in both developed and emerging markets. This had been a great model for generating revenue until the beginning of the financial crisis, which forced many retailers to close their doors, pack up and go home. In addition to creating more demand than most Italian manufacturers were able to economically provide, it also had the controversial effect of spreading luxury goods across such a vast environment that many began to ask if an item that could be found anywhere could still be considered luxury.

Question: if it’s no longer Made in Italy, and it’s available everywhere, does it still fit within the Italian model? Can it be considered luxury?

Digitally Challenged

In spite of having a historic foundation of market-savvy entrepreneurs who enabled Italian fashion to flourish, Italian companies have been among the slowest to evolve their business model in support of the digital age we will live in from this point on. YOOX has been working diligently over the last 2 years to expand their e-commerce services from fewer than 5 Italian brands to more than 20 by the year’s end. However, with such rapid growth of the company’s client group, complaints about disorganization and customer service, quality control issues and a general lack of bleeding-edge technology and brand imaging must be dealt with, in order to preserve the luxury status so carefully simulated in the physical retail environment.

A New Foundation

With the current state of the economy, many brands are struggling. Budgets are being pulled from fashion week and marketing to make ends meet. However, as new designers refuse to become celebrity circuses, and supermodels are an extinct breed, the system needs an infusion of excitement to revitalize the industry.

In the place of generations of craftsmen, a new group of technologically skilled, creative young people have emerged. Universities in Italy have provided a focus in research and development in new textiles and industrial techniques, as well as fashion design, e-commerce, brand management and marketing. The way I see it, Italian companies still have a chance at maintaining their Italian-brand viability if they focus on some key success factors which they maintain.

The following are my ideas of some key resources in Italian fashion and luxury, and how to utilize them:

• Italian heritage and family ownership of the majority of brands: market the origins of the brand and focus on the highest craftsmanship within the labels, and reign in investment in cheap production that dilutes the brand image (focus on the top of the brand pyramid, not the mass-market base). Nothing is worth damage to the brand.
• The last remnants of skilled Italian craftsmen, who have tacit knowledge passed down through the generations in addition to more recently acquired technical skills: groups like Altagamma would serve the industry well to promote these people, as they have a lot to offer in terms of passing down a great legacy. Since time is running out on this resource, it seems prudent to put some marketing muscle behind these artists, promoting their irreplaceable skills as something honorable and special, not “country” and uneducated.
• Students trained in textiles R&D and business innovation: there is an increasing market for ethical fashion, and Corporate Social Responsibility (CSR) will continue to grow as a concern for fashion and luxury consumers. These young graduates can help move the Italian industry forward to implement new techniques that are environmentally friendly and ethically sound. Italy can be a leader in this realm based on a heritage of innovation, the existing manufacturing infrastructure and the skills of its labor pool.
• A large labor pool of digitally-savvy, internationally minded young people who grew up in a branded environment: as the Luxury Society just reported, it’s time that the patriarchs of the European fashion and luxury sector took a moment to listen to their grandchildren. The necessary knowledge and capabilities required to move the Made in Italy industry into the future is ready and waiting (and currently underemployed).

Main point: The commitment to heritage in production is what boosted the Italian brands in the world’s eye. The reluctance of some of the most prominent brands to continue advancing with an evolving market may be the downfall of the Italian industry.

Digital Fashion

Get ready!

The iPhone is expected to be the shopping norm by December 2010, according to today’s news.

Today’s Women’s Wear Daily reports that YOOX has been the latest to initiate its online shopping portal via the iPhone. Other retailers, such as Shopstyle, Amazon, Sears and SVC have long since developed their own Smartphone applications. In the meanwhile, for those who haven’t developed their own iPhone applications, companies such as Demandware are crafting retail websites  to maintain functionality across a range of Smartphone devices, including the iPhone, BlackBerry, or Palm.

A loophole for luxury?

Even if Smartphones only make up 4% of new mobile phone sales by the end of the year, as predicted by analyst Ramon Llamas of International Data Corp, it makes sense that the majority of those buyers are also luxury shoppers. They’re going to be expecting something from their favorite brands, no?

In the land of luxury, trailblazers Chanel and Ralph Lauren have already adapted iPhone applications to display their fashion shows. However, so does the ever-convenient Style.com application- in fact it provides them all, in addition to information on the models, and the Vogue blogs and headlines! (By the way, this app is so fierce that it actually boosted iPhone sales. Check out the comments in this article.)

What does this mean for our luxury players? Their products are available online through various retailers, and brand enthusiasts can watch the latest fashion shows (with added details) and read the headlines on CondeNast’s Style.com application. If, by chance, I happen to leave Milan and have a Chanel shopping emergency in Paris, I can google the address, so the location finders are not terribly original either. What I’m saying is this: Props to you at Chanel and Ralph Lauren for getting your own apps out there, but is that all you got?!

Bespoke service & building an online luxe environment

Here’s what I want out of a luxury brand: I want the feel of the brand. I want the background story behind the items I love- how it was conceived, how it was constructed; what makes it special. I want to know what music the design team is listening to, and I want to be able to download playlists from fashion week and songs that are related to the collection, whether from inspiration or just setting the mood. If, like in last year’s Versace collection, there has been a collaboration with a specific artist, I want to see some images of the artist’s original work, and where I might be able to see a gallery exhibit. If I watch the fashion show on a brand’s application, I would like some function that allows me to purchase a specific item I see, with my own measurements safely recorded into the brand’s vault… I want a virtual reminder of the service I would receive in-store, if in fact, I was in a store. (You know when you’re in a real luxury environment, and you should know when you’re in a virtual luxury environment, as well.)

Basically, I want the luxury retailing experience that is just-for-me, and I want the insider information on the brands I love. Dolce & Gabbana has made headway on this through the creation of their online magazine Swide.com. Let’s get that into an iPhone application, combine it with the online retail capabilities currently being developed for the brand by YOOX, and we’re in business!

When leaders become followers

The fashion and luxury industry was once a cutting-edge beacon of hope in the advertising world. The desire and longing it was produced with such buzz now seems like a stale yawn in today’s virtual environment, and I think that, unless the big guys step up and start innovating, their current model of following the mass market online will do more to devalue the idea of luxury than any 70% off sales could have done in the early days of the recession.

The fact that most luxury brands have limited to no online presence and retailing capabilities, much less their barely existent Smartphone presence, gives me reason to worry not only about the future of my profession, but also about the future of the luxury industry itself.

Where I see another real promise is in the fashion media industry, and they are definitely stepping up to the challenge. I love fashion and cultural magazines, but I hate carrying them around (especially with today’s weight limits for carry-on items). If I can squish my favorite magazines down into my iPhone, well, that’s something I’d definitely pay for. I’m really hoping that the rest of Conde Nast’s media portfolio and others follow suit. Vogue wins again!

The French System for Fashion & Luxury

French fashion has long been reflective of social and economic hierarchy, illuminating the distinction among classes. Beginning with the Royal Court of the Sun King, France became the capitol of rich fashion. After Charles Worth created the business of haute couture in the 1800s, Paris became the creative center for a business model that has evolved greatly, yet still remains centered around the spirit of haute couture.

Haute couture is identified as unique pieces constructed with precious materials, made-to-measure, and made for special occasions- not daily wear. A dress of this nature today should run you on average between 20,000 and 30,000 euro and up. Where there were once more than 30,000 clients per year for the highest form of French fashion, today there remain less than 3,000, and most of these are irregular clients. Hence, haute couture is not a big business anymore; it is unaffordable and impractical, as there are fewer and fewer occasions in today’s world to wear such items. Therefore, it has become much less profitable than it once was, having lost the link with modern life.

Most companies that made their name in haute couture today sell mostly accessible products and democratic accessories like lipstick, perfumes, and so on. However, to continue to sell these more “basic” goods at high profit margins, they must continue to produce high fashion. People are now buying the legacy of couture, rather than the couture itself. Therefore, to make the big bucks selling goods at the bottom, you must be positioned at the top.

According to French law as of 2008, 50 garments per season must be produced by hand, by at least 20 skilled in-house workers for a fashion company to be considered a house of haute couture. (This model is changing under the current economic situation, in order to protect the existing haute couture legacy; too many couturiers were closing their doors under the weight of these expensive restrictions.) These companies lack a bottom-up business model, and have no second-lines: consider French powerhouses Dior and Chanel, as opposed to Armani, Ralph Lauren, Dolce & Gabbana, etc.

Brand images and communications demonstrate a high level of arrogance and provocation. Have you ever wondered how or why that “crazy stuff that nobody is ever going to buy” makes it onto the catwalk? The most elaborate and provocative designs are taken onto the runway because the goal is not mass profitability, but to demonstrate creativity and uniqueness. Consider the wild boys Jean Paul Gaultier for Hermes, or John Galliano for Dior (below).

In fact, most clients are unaware of exactly who is the designer behind today’s major labels. Instead, they typically know what celebrities are wearing them (the Poiret legacy lives on!).

To summarize, the French business model is derived from a long tradition of craft and individualism. Couture was the original product of the French fashion and luxury system, which is now integrated with accessories. The image of sophistication and provocation are used to produce the sense of luxury, which is what the companies are selling. Viola!

Here’s my hastily-made visual (with apologies to France):