Fashion and Luxury Groups: New Actors in a Dynamic and Global Scenario

April 11, 2019

In the world of luxury, we have been used for some years to the ever increasing presence and consolidation of three groups: LVMH, Kering and Richemont. Although different from each other, the three luxury groups are characterized by being European and having brands with a very long history and tradition, which base their positioning on a strong identity linked to exclusivity and heritage, elements that are not easy to reproduce quickly by competitors.

Recently, however, other tendencies are developing to consolidate the sector starting from some American companies. Coach and Michael Kors are two interesting examples. The history of the two brands is similar despite having Coach a few more decades. Both cannot be defined as exclusive luxury, since they do not have the pedigree (or the prices) of Hermes or Luis Vuitton. Instead, they are companies that have long launched their businesses and brands that can be linked to the concept of accessible luxury or lifestyle brands.

In both cases we have a very American idea of ​​buying, for example a women’s bag, as a special treat. A buying opportunity that constitutes an occasional expense, but without the need to make an ostentatious purchase and therefore without spending a figure remotely comparable to that of a car (for example 300 or 600 euros instead of 8000 or 10000 euros), as happens in the case of brands like Hermes or Luis Vuitton. Michael Kors is also stylistically inclined to the imitation of great brands like Chanel.

In a global market where the competition of mass brands like Zara and H&M is increasingly aggressive and capable of playing on different grounds, sometimes using (as in the case of limited edition collections with famous designers) some luxury codes, and where many local brands in different countries work on the mid-range with excellent products, brands like Coach and Michael Kors cannot sit on their laurels. An interesting option could be to try to climb a few steps on the price positioning scale, trying to reach the floor where we have the most exclusive luxury, with the highest margin. Unfortunately, this type of attempt rarely succeeds, first of all due to the strength of the exclusive luxury brands already present for a long time which, belonging to large groups, succeed in interdiction actions on distribution channels such as large department stores. Moreover, it would still be a very long process, given that it is not easy to make consumers forget the history of an accessible luxury brand, by simply using stylistic codes, products and shops with a more exclusive character.

Consumers, in fact, remember for a long time, and they will long remember the solid work of brand extension that both Coach and Michael Kors have done, perhaps even at the price of a certain dilution of the premium values ​​of the two brands.

The other way, which seems to have been chosen in recent times by both Coach and Michael Kors, is to imitate the three big luxury groups in the growth process (financial, real estate and distribution synergies are important) through brand acquisitions, and to do so by acquiring brands that help them increase the overall profile of the group towards a greater presence in the luxury markets (if not in the exclusive one, in any case of a higher price level).

Michael Kors has thus acquired Jimmy Choo and Versace in these years, also forming a group and giving it the name of an Italian island, Capri (according to the company’s definition, an “iconic, glamorous and luxury destination”). Coach instead, has recently acquired Kate Spade, a fearsome rival of Michael Kors, after having acquired Stuart Weitzman some time ago.

Even if it is not possible to say wether this is the best recipe for the survival and development of each brand, it is nevertheless true that this long-term strategic vision can be very beneficial for businesses, contrasting with the prevailing short term vision that companies often tend to have by following the demands of the financial market. Although it is not possible to identify a perfect and unambiguous recipe for business success, it is undeniable that stable growth can only be guaranteed by effective management skills and an attitude projected towards the future in the brand building and management process.

The Global MBA in Design, Fashion and Luxury Goods of Bologna Business School trains new generations of business leaders who know how to set up and implement lasting strategies for building brands and companies, taking into account the need to interact positively with the various stakeholders and ensuring that the urge for short-term results is integrated with the development of a long-term vision of the companies, both on the industrial and financial side.

 

Angelo Manaresi, Director of the Global MBA in Design, Fashion and Luxury Goods




Apply

Oops! We could not locate your form.

Back To Top