Wednesday, April 23, 2014

The Two Sides of Luxury

Aspirational brands rely on a high-low strategy. They price their main lines high for the super rich. But they hedge low on their entry-level diffusion lines. 

Aspirants dream about Birkin bags, but they'll settle for anything with an Hermès logo on it. So Hermès sells Birkins to wealthy socialites, and not-quite-Birkins to those who've seen them on TV.
In doing so, it captures all the marketplace demand for its brand name through price discrimination. Some luxury brands eschew aspirational customers altogether - you won't find a Tom Ford suit for less than a couple of grand.
High-end prices have gone off the deep end; as the Wall Street Journal reported, "in the past five years, the price of a Chanel quilted handbag has increased 70 per cent to $4,900. Cartier's Trinity gold bracelet now sells for $16,300, 48 per cent more than in 2009."
And luxury sales are slowing down. Consumption was an impressive $390 billion in 2013, a 7 per cent increase over 2012 - but a drop from 11 per cent growth rate in 2011.
Hermes Ostrich Birkin Bag. Photo / Wikipedia-Wen-Cheng Liu
Hermes Ostrich Birkin Bag. Photo / Wikipedia-Wen-Cheng Liu
The projected rate in 2015 is only 6 per cent. Time attributes the slowdown to a cooling market in China, where President Xi Jinping recently initiated a crackdown on bribery and corruption (major drivers of luxury purchases, especially among government officials).
China's lower-middle class and "mass affluent" class are giving way to its upper-middle - a curious trend that McKinsey Consulting explains as spending on experiences, like spas and weekend getaways.
In the coming years, China's famed obsession with red Bordeaux, Italian automobiles and Swiss watches will become the sole province of the country's superrich. Others will have to make due with midtier brands.
The pattern is roughly the same in the United States, as aspirational consumers give up on Gucci and turn to the more reasonably priced Michael Kors, Uniqlo and Topshop.
Those that sell to the aspirational range - Armani, Prada and LVMH - are seeing the big bottom fall out. They're being forced into a pickle. They can drop their diffusion pricing even lower, in a bid to win back the aspirational shoppers, but doing so might cheapen their brand image, sacrificing high-end customers in a fruitless quest to recapture the low end.
Or they can let the low-end go, which would mean drastically culling product lines, scaling back operations, and hoping to compete with the 0.1 per cent's growing taste for bespoke and artisanal goods.
Not everyone will be so nimble. BMW has overextended itself by playing more in various entry-level aspirational markets; even BMW enthusiasts are confused about how many market segments, models and diffusion lines the automaker sells.
Luxury brands will have to choose which dream they're selling. Or they'll pay a steep price for their indecision. We won't be able to afford some of them, and that's just as well - many of them can no longer afford us.

‘Bringing Home the Birkin’ - Chapter 1: Barcelona on the Brain

Barcelona on the Brain
I've always thought the use of a ringing phone to symbolize the onset of great personal change was a cheap plot device, and a gross oversimplification of the various factors that inspire human metamorphosis. However, now I know better: sometimes you really can trace it all back to a phone call.
In my particular case, that life-changing phone call came early one wintry Cape Cod day — early enough that my roommate, Kate, and I were still cheerfully ensconced in our morning routine of Peet's coffee, PJs, and Rosie O'Donnell. Neither the caller nor the subject matter was by any means unusual — it was the Boston — based agency that represented me, giving me my newest assignment. A weeklong hair and makeup job for IBM in Barcelona, it had the allure of an escape from the drab and drear of mid-March Provincetown. The call certainly felt routine at the time, but we don't always know our Rubicon when it rings ...
At least workwise, things weren't so shabby. I had a career that people who didn't know better might consider glamorous. As a beautician who specialized in commercial photography, I had spent most of the last decade trigger-happy with a can of hairspray and a powder puff. And somehow, along my merry way, I had also cofounded a company. Named Team, it was an agency that represented artists who worked, in one capacity or another, in the photography and advertising industries. The concept was both convenience and strength in numbers. Normally, an advertising exec needed to make about half a dozen phone calls to pull together a photo shoot. What my company did was turn those six calls into one. Makeup artists, hairstylists, wardrobe stylists, location scouts, production managers, food stylists — we had it all under one roof. But good as it had been to me, my initial euphoria at being part of the fashion industry I had always worshipped as spectator was starting to wane. I had learned that celebrities were just people with name recognition, and photo shoots were as tedious as board meetings, once you had been to hundreds of them. Ten years of crafting updos and vanquishing shiny noses had driven me to uncharacteristic self-analysis. Was this really how I wanted to spend the rest of my life? Maybe not, but for now I knew one thing: I was going to Spain.
I loved traveling for work, eagerly snapping up what the industry called "go-away jobs." Nomadic by nature, I took the adage "home is where the heart is" literally — a hotel room morphed into home as long as I was in it (with the added bonuses of crisp sheets, fresh towels, and chocolates on my pillow). But lately I found myself becoming more jaded by my globe-trotting. Not because of the silly things you always heard those bridge-club biddies bemoaning in the airport — it wasn't lost luggage or the lack of a proper bagel that had me down. I didn't mind the calculus of currency conversion or the etymology of exotic entrées. No, it wasn't the inconvenience inherent to travel that was burning me out. It was boredom. I had increasingly noticed a sinister sameness about each of these foreign cities. Before my very eyes, every place was turning into every place else. I fervently hoped that Barcelona would prove to be the exception.
I sighed with disappointment and slumped against the hot vinyl seat of the taxi. Other than the flamenco music on the radio and the blinding glare of the Catalan sun, so far Barcelona felt about as foreign to me as Boston. Tacky billboards advertising electronics and cheap hotels flashed by my window at an alarming rate. Was there any place left in the world that didn't look like one giant strip mall? Maybe it was time for me to settle down. Maybe I needed the white picket fence and the Weber grill after all.
A mere five minutes later, my cynicism forgotten, I was as mesmerized by the view as a midwesterner crossing the George Washington Bridge into Manhattan. I didn't know which way to look. To my left loomed the impressive bulk of the 1992 Olympic Stadium, capped off by a towering white spire that was an unlikely mating of futuristic space station and computer-generated sculpture. To my right, the Mediterranean. I was dazzled not only by the turquoise shimmer of the sea but by the hundreds of boats lining the docks. Luxury cruise ships, privately owned yachts, behemoth tankers, modest sailboats — somehow, seeing one of the world's biggest ports was far more impressive than reading about it in Fodor's. Suddenly, I was as excited as a little kid on his first field trip.
But it wasn't until we left the highway and entered the city's perimeter that I truly fell under its spell. None of my extensive jet-setting had prepared me for Barcelona's unique urban landscape — palm trees edged the narrow streets, ornate buildings leaned companionably against each other, and laundry adorned nearly every balcony. The architecture spanned centuries of design — gothic intermingled with modernist, contemporary coalesced with classic. It could have been jarring to the senses, but as I would later learn, Barcelona had a way of turning the incongruous into the harmonious. It looked like the European city I had always dreamed of but, of late, had despaired of ever finding. I was captivated.
My eight-hour days of grooming models and painting faces put a dent in what little time I had to prowl the city. However, even with the constraints of the IBM gig cutting into my tourist time, I still sampled enough of the Barcelona lifestyle to grow ever more enamored. My first instincts about the city's physical charm had been wrong — it was far more spectacular than I originally supposed. With a population of nearly two million spread out over sixty square miles, Barcelona is segmented into dozens of neighborhoods, each possessed of its own particular charm. I was hard-pressed to find an undesirable location; the place was a real estate agent's wet dream.

Excerpted from Bringing Home the Birkin by Michael Tonello Copyright 2008 by Michael Tonello. Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Illustration by Hiroshi Tanabe, the New York Times.

Monday, April 21, 2014

Wrapped Handles: So Ugly, So Tacky

Who do we have to blame for this nightmare trend?

Sunday, April 20, 2014

Follow-up to Hermes Belt ....

...from a few days ago (on this blog).

I was asked "What would happen if a customer was at Hermes buying three pairs of trousers, each a different color,  would they not sell the customer three belts?"

And, "Does this belt rationing also pertain to shoes? Is there an annual shoe limit?" 

Something to ponder on this Easter Sunday...

Excuse me...

(hat tip Ward)

Saturday, April 19, 2014

Spotted on Facebook: Birkin Wedding Registry

People are asking where we are registering for our engagement party and wedding.
We registered at:
✅Gift Cards
✅Range Rover
✅Hermes Birkin


Friday, April 18, 2014

Are Hermes Belts the New Birkin? Hermes Playing Games...

This just in. 

Received this email moments ago and thought you'd all get a chuckle out of it:

"A customer of ours ordered two belts on The next day she ordered a third one
Then she got a call from Hermes informing her that she can only buy 2 belts per year."

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May 18, 2008
Bag Man