Two recent examples show us that economic conditions directly affect business models in the fashion world and that a period of great change has begun:
- Brioni, the Italian fashion brand, was built around two central elements: the custom-made suit ("made-to-measure formal wear") and exclusivity - as signified by its motto, "To be one of a kind", and their prices (suits retail from $ 4,000 to $ 47,000). The New York Times of 11th August 2009 informs us that Brioni is launching... a tee shirt! This is light-years away from the core concept of the brand: No doubt this tee shirt will sell at $ 250, but we are entering here the realm of casual wear and are no more in the custom-made. Brioni, which "invented" the semi-industrial custom-made in the 60s (like Charvet did for shirts), moves perilously away from its original playing field in order to resemble other fashion brands. A new generation has taken over at Brioni, which hopes to thereby expand the client base by setting casual wear sales targets at 50% of its turnover. Suggestion: Why does Brioni not offer custom-made casual wear instead? A tee shirt is after all a tee shirt, even if it is signed Brioni.
- The Wall Street Journal of July 30th announced that Saks and Bloomingdale's were (re)launching their own menswear collections. Saks is launching the "Men's Collection" and Bloomingdale's "The Men's Store" (a brand that is replacing "Joseph & Lyman" and "Metropolitan View"). These converging initiatives are interesting for three main reasons:
- Both department stores are competing directly with the luxury brands and designer labels they helped to launch in the American market: they are apparently convinced that private labels can more easily penetrate the men's market, and they are doing it under their own names. Luxury brands are going to feel the heat in this market.
- They offer their collections at prices that are 30% to 40% lower than designer labels and luxury brands: consumer price benchmarks have tumbled because of the economic crisis and the department stores themselves have largely contributed to this situation (see my post of 15th March about sales at Saks at -70%). The business models at Saks and Bloomingdale's are getting a changeover based on the same reasoning that luxury brands held 15 years ago: "Eliminate the middlemen and keep the entire margin for ourselves".
- They use sub-contractors that allow them to offer quality products to their customers: Todd & Duncan for cashmere, Loro Piana for overcoats... The strength of private labels in fashion will lie in the need for certain smaller-sized luxury brands to find new customers: at the distributors, for example.
The 21st century has only just begun: it looks like it will be exciting.