NYT: Luxury Prices are Falling; the Sky,Too

[Casius]

This thread is one of the best threads going on right now!

From my observation of the current market here in Los Angeles, stores are going on sale much earlier than usual.
Maxfield- Started 40% off just a bit ago which is very unlike them. For the most part they have gone on with business with the "I'm immune to sales" attitude, but the economic downturn has definitely changed that whole mindset. Also, after talking with a few people, I think the owners are finally starting to realize that shoppers are getting more savvy in the way they shop. So it's going to be a lot harder for them to charge hundreds more for the same product you can get elsewhere in the states (not to mention maybe save $1,000 less in Europe).
Fred Segal- Their buy could not withstand LA, let alone LA in this economy. Tons of Ann, Dries, Thom, and Lanvin has hit sale and this is a store that in the past only did 1 seasonal sale. To be honest though, their buys aren't bad, it's just they buy as if the store is located in NYC or Tokyo.

As for which companies are going to struggle through these times, I think the above post by Jon is very accurate. The only thing I could see effecting the Japanese brands is the amount of progression into markets such as Europe and the US. I don't know if most stores are going to risk carrying these designers if they don't already.

One line that wasn't mentioned that I believe is going to be hit hard is Dior Homme/Dior. Lackluster designs and a lack of creativity within the menswear and the distrust in KVA as head designer is going to effect the brand quite a bit. Not that I think they will ever go away (they sell too much cologne and sunglasses for that), but I could definitely see them rethinking the way the line is presented to the consumer.

[casem]

I agree that Dior is F**ked. I don't know anyone that thinks KVA is doing a good job. Dior started everything on sale at 50% off over a month ago.
I would be delighted if Versace fell and freed Plokhov, though I doubt it will, as was mentioned they have too much clout in emerging markets.

Something I am interested in discussing is what will this mean creatively? I've read reports that designers/buyers will be even safer because when money is tight people want classic pieces that will last. I certainly hope that isn't the case because there is already too great a disconnect between what's on the runway and the boring crap on the racks. I could see it going the other way, creativity often flourishes in bleak times. The way I shop, when money is tight a designer piece better be really special, NOT bland, to justify the money.

(BTW: holy crap, Casius is back!)

[Casius]

casem- I think most designers are going to maybe cut down on pieces and hopefully put more focus into more creative items. That's if they're smart and listen to the market. Spring 09 is already done, so no changing will be done there and I'm sure Fall 09 is done as well.
But to be honest, I think a lot of it has to do with the buyers. Most of these stores have been running on what has been tride and true for years and just now starting to realize they haven't kept up with the times. (I speak mostly of Bergdorf, Saks, and Barneys somewhat) All of those luxury retailers have been riding the gravy train for too long and now it's coming to a screeching halt. It'll be interesting to see if buyers change as well as the merchandise for these big companies; I sure hope so.

P.S. There was a rumor going around a bit ago about Plokhov starting his own thing again.....Haven't heard anything new about it for a while though, so maybe it was just that, a rumor.

[Avantster]

Thanks for the article, laika and great posts from everyone.

I'm one of the people who actually think that these sorts of economic crises are GOOD for art/fashion/literature... it trims the fat, gets rid of excess, and even makes the "old players" realize that they aren't immune and invincible. They, too, have to get smart.

I definitely agree here, difficult times such as these will force businesses to become lean again, which is great. I just would hate to see a great designer under a poorly managed business go down.
You also have to wonder - for a while, many of us have been decrying an general decline in the quality of garments while prices have done nothing but increase. Let's hope the 'trimming of the fat' won't result in an inferior product.

I also have to feel sorry for up-and-coming designers that are yet to make it. It's going to be near impossible for them to find investors and just get their wares out there, let alone SELL them.

To compensate for the blandness of the last post, here's my prediction regarding the brands that carry cache on sz:

Great post.

Doma will definitely be one to watch. As A mentioned, he'll have to be quite careful where he takes the label as well as making sure there are no production issues.

Hmm, that makes me wonder, what about womenswear (Gareth Pugh?)

[Faust]

... not sure what to add. following the article you both made for a very compelling discussion.

Certainly all these things have been on my mind. LVMH and Prada group will be cutting back on their lines, I'm sure.

Other brands with outside ownership (Jil Sander, Helmut Lang come to mind) are also especially vulnerable, as rather than being funded by a passionate stakeholder, are parts of a business that may be seen as expendable economically.

Young designers are screwed, though. At least according to the trend I've been seeing which is rapid expansion thanks to borrowed money, from small groups of private investors or banks. From most we'll still see a AW 2009 collection, but whether that collection makes it into production is another matter entirely. We're only just getting started, and the process of contraction is only just beginning.

The process will be very 'darwinian' indeed - expect many big, lumbering companies that have gluttoned themselves on this credit market to take a big hit, while small, dynamic brands may still have a chance but will have to sacrifice a lot just to stay around.

In the end, it's about the passion the designers have to create. For some there is no other alternative.

Yea, but then they'll get hired by some old failing house to revitalize it. Damir Doma for Pierre Cardin I do wonder if young designers are starting to have a web startup company mentality - build up hype and then sell themselves. Seems easier than having to run your own label.

[Faust]

casem- I think most designers are going to maybe cut down on pieces and hopefully put more focus into more creative items. That's if they're smart and listen to the market. Spring 09 is already done, so no changing will be done there and I'm sure Fall 09 is done as well.
But to be honest, I think a lot of it has to do with the buyers. Most of these stores have been running on what has been tride and true for years and just now starting to realize they haven't kept up with the times. (I speak mostly of Bergdorf, Saks, and Barneys somewhat) All of those luxury retailers have been riding the gravy train for too long and now it's coming to a screeching halt. It'll be interesting to see if buyers change as well as the merchandise for these big companies; I sure hope so.

P.S. There was a rumor going around a bit ago about Plokhov starting his own thing again.....Haven't heard anything new about it for a while though, so maybe it was just that, a rumor.

Great point. US retailers are totally fucked this coming season - 1) recession 2) they bought SS09 with a weak $, which is now 15-20% stronger depending on the currency (this means I personally would be doing my shopping in Europe).

And, yea, somebody please let Plokhov go - this is a bad experiment that should've never happened. That bitch won't let him take any credit nor be creative.

Otherwise, Jon, great post - I think your analysis are pretty accurate (despite putting some of the same brands in two different categories ). I do think that Raf may be in trouble. Shit just doesn't sell - he's lost his place in the avant garde and never gained it in the mainstream.

I also find it hilarious that no one mentioned Dior, but I think it's for the exact same reason that Casem stated - it's history to us.

[Jon]

Yea, but then they'll get hired by some old failing house to revitalize it. Damir Doma for Pierre Cardin I do wonder if young designers are starting to have a web startup company mentality - build up hype and then sell themselves. Seems easier than having to run your own label.

I think this is where we're going to see the biggest change. No more breaking into the market with a big bang, like in the past. Passionate designers will find a way to manuever themselves into the market based on quality product, but a lack of $$ will mean that their operation will be small and focused.

Innovation will come not only from the designs, but also from their business models and approaches. (ie: showing once a year; collections based around unisex designs; greater consideration of online presence) Mirroring the emphasis of marketing in art - entire brands come to embody some abstract concept. This already happens, but it will become more important because of the challenges mounting against breakthrough designers makes it vital to have a clear identity.

I think that the designer/showroom relationship will be more vital to the operations of the market and in a way that reflects the relationship between the artist and art dealer.

[Casius]

The other thing about all of this too, is that retailers are starting to figure out they can't keep upping their prices season to season because of shoppers becoming more savvy. Like you mentioned Faust, most of us could do our shopping in Europe and save hundreds or even thousands.

One thing Jon touched on is American designers, whom I think will weather this storm quite well, especially the ones who produce in the U.S. Retailers here in the States like the fact collections are made here and will most likely buy into some of those brands more because they won't have to deal with importing, taxes, etc. etc. Not to mention they are more or less supporting U.S. business which needs to happen right now. It's a shame more things aren't produced here but I guess it all boils down to greed.

[Jon]

the only problem with that, Cas, is that American product tends to be inferior to European and Japanese product. It has nothing to do with greed, only logistics. and if they want to be successful and famous they MUST sell in the other markets. markets which they are clearly at a disadvantage. taking your product to europe or japan means you will be priced a LOT higher in the boutiques there, which reduces your competitiveness massively. look at Cloak.

and don't blame retailers for the prices. for the most part, there is an agreed upon mark-up, usually stated in the showrooms - by the showrooms - and retailers stick with that. higher prices in boutiques in N. America reflect the cost of importing the goods (including exchange rates and other economic costs).

[KodakII]

As far as womens designer go, I wonder how labels like Rodarte will survive. They are sort of demi-couture and do not produce any mid range products(AFAIK). Who can afford a $3000 dress or a $2400 sweater? Their target market and the prices they demand just do not add up to me. I hope they can make it through these tough times.

[Casius]

Oh yea, I definitely don't blame the retailers. The last thing they want to do is raise prices to their customers and I understand that. I also know most manufacturers are increasing prices on pretty much everything (leather, fabric, labor, etc.).
I guess what I meant to say is that it's a trickle down from the manufacturer to the designer to the retailer. There are indeed cases where retailers are charging more for one reason or another though, but that's been a problem even before this whole economic crisis.

Agree about the American designers being able to branch out to Europe and Asian markets. It's a shame facilities aren't as good here as Europe and Japan but I guess that's what happens when the majority of companies here go straight to China/Vietnam/etc.

[Faust]

As far as womens designer go, I wonder how labels like Rodarte will survive. They are sort of demi-couture and do not produce any mid range products(AFAIK). Who can afford a $3000 dress or a $2400 sweater? Their target market and the prices they demand just do not add up to me. I hope they can make it through these tough times.

I would imagine in their case, being backed by Harvey Weinstein, they are plugged into Hollywood enough to stay afloat (and anyway, i don't think money matters in that case), but it would be interesting where the pozens, hapfazours and schoulers (bad spelling on all) of this world end up.