"With a world-weary sigh, Francesco Trapani slips off his $ 10,000-steel and white gold Bulgari watch, revealing the band's dull underside. Bulgari once polished it to a fine gleam to match the shiny exterior", writes the journalist of the International Herald Tribune (8 December 2008, "Luxury is Losing its Edge") who came to interview Francesco Trapani. "It's more wearable and costs less" ... Cost-cutting. The article confirms that the brand has introduced "lower-cost boxes and bottles for Bulgari's perfume line, which Trapani said customers will not notice." Cost-cutting.
In both cases the brand assumed that "customers will not notice"... while affirming that, "The challenge is to cut costs and diminish expenses, without negatively affecting the image of the brand or the quality."
At the same time Bulgari (see my post of 1st February) was holding a "sample sale" in New York where customers could find watches at -60% and bags at -70%!
What affects Bulgari's image the most? The article in the IHT? The "cost cutting" on products? The "sample sale"? Or the fact that all this happens together?
Le Monde (20 March 2009): Nick Hayeck, CEO of the Swatch Group, announces, "Richemont has cancelled orders. This group has no debts, but if it earns less, the management immediately penalizes the personnel, and brought in partial unemployment at Cartier. But this does not prevent anyone from flying in private aircraft ... " and announces that, "there will be no layoffs or reduction of investment at Swatch". On its cover the 2008 annual report reads, "Please note that this publication is not recommended for acrobats and jugglers of the current financial circus..."
But the real information, which puts the rest into perspective, lies in the words of Nick Hayeck who, speaking of the 2008 results, said, "It is nevertheless the second highest profit in the group's history. One can live with a little less money".
Who is to be believed? Of course, Bulgari shows a net profit that takes them back to 2002 levels, but all the luxury brands experienced a similar situation in 2002/2003! Keep in mind that Bulgari is the only luxury brand (with Gucci), that grew seeing its turnover multiplied by 10 in 10 years (after the arrival of Francesco Trapani).... while ALL the others multiplied by 4 in a similar 10-year period! This "rampant" growth deserves reflexion. Maybe we should pay attention to the fact that the day when it does not happen, a brand is likely to engage in actions that damage its image in the eyes of its customers (and employees) - not polishing the inside of the bracelet, using less expensive packaging, launching "sample sales" in November at -70 %.... In the end, I prefer Nick Hayeck's position: it is more consistent with the ethical expectations of 21st century consumers.
Bulgari, brand of the 20th century?