International Herald Tribune Fashion 2001 – a conference review

Citation

Jackson, T. (2002), "International Herald Tribune Fashion 2001 – a conference review", Journal of Fashion Marketing and Management, Vol. 6 No. 4. https://doi.org/10.1108/jfmm.2002.28406dac.001

International Herald Tribune Fashion 2001 – a conference review

Tim JacksonThe London College of Fashion, London, UK

Keywords: Fashion, Brands, Designers, Creativity, Mergers and acquisitions

This is a review of the International Herald Tribune "Fashion 2001 – The Business and The Brand" conference held in late November of last year. The conference focussed on fashion in the luxury brand sector and, appropriately enough, was held at the George V Hotel in Paris. Optimists and advocates of an early recovery from the global recession may also have regarded the location as auspicious in addition to prestigious. It was undoubtedly an opulent forum to debate the future success of luxury goods and fashion. The two day event was unique in many respects, but in particular due to the quality and diversity of the speakers and delegates. Convened by the International Herald Tribune and supported by Palm, a key host and speaker throughout was Suzy Menkes. The forthcoming quality, dynamism and focus of the conference became clear after the first two hours of day one, in which Suzy Menkes was followed by Tom Ford and Domenico De Sole, from The Gucci Group, and Christophe Girad from LVMH Fashion Group. The stage had been well and truly set for a revealing insight into the world of luxury fashion.

Methodology

Material used in this paper is sourced from both hard copies of conference speeches and the author's transcription of audio recordings over the two days. All quotations are taken from hard copies of the speeches and presentations made by the speakers and so accurately reflect the words of those concerned.

Themes

In a general address to all participants, Suzy Menkes identified the conference aim as being to gather an international audience of some 250 participants from more than 25 countries for discussion and exchange of ideas. However there were three specific themes that emerged from the contributions of all the speakers. These were, globalisation, branding and the need to balance creativity and craftsmanship with the management of growth and profits. As Tom Ford made clear very early on:

… for me the ultimate test for a product is sales. If I design something that doesn't sell, it means I have failed.

A recurring theme that wove its way through most discussions was the dichotomy between the inevitability of globalisation and a recognition that globalisation had diluted luxury brands and created a host of new problems. After all, if luxury is everywhere surely true luxury is nowhere. Potential dilution of brands clearly has to be balanced against the obvious financial benefits of huge sales from mass-market spin off products such as perfumes.

Globalisation

Over the last ten years, the mantra for business has been "globalisation" based on an assumption that as the world becomes "smaller" and more competitive so businesses need to seek the benefits of global trade to grow sales and survive saturated domestic markets. Despite the many doubts about the relevance and value of such a strategy to all businesses, Tom Ford stated that:

… globalisation is inevitable …

and:

… the world has been united stylistically as it never was in the past. The entire world is watching the same films, listening to the same music and eating the same foods all at the same time. Our cultures are blending. Soon, we will be one global culture.

Jean-Marc Simon, from the Comité Colbert, identified Asia, Europe and America as the dominant markets for luxury goods. Daniel Tribouillard, President of The Leonard Group, added that the luxury product industry is really dominated by Europe and America. He regards the Japanese market as still crucial to the luxury goods market but that the future lies with developing markets in China, Korea and Taiwan.

Increased global demand for brands has been assisted by expansion in consumer access to media, a global entertainment industry and the growing wealth in Western countries, with stock markets peaking in 2000. Umberto Angeloni, Chairman of Bironi, pointed out that the growth of many brands over the last ten years:

… has been fuelled by the accelerated creation of new wealth (during 1999 in the USA alone 1,200 new millionaires daily) and its consumeristic, status-motivated nature.

Backlash

However, there was strong acknowledgement of a backlash to globalisation. A major concern was over problems associated with a one-style-fits-all approach to business. There was agreement that a "global but local" solution was required to re-humanise luxury and create individual character in the global distribution of luxury fashion products. Despite his view about the inevitability of globalisation, Tom Ford predicted that over the next few years people would want:

… something different at exactly the same time. Perhaps something smaller, more personal, yet with more charm.

Suzy Menkes introduced an ethical aspect to the issue, believing that consumers had rejected:

… the idea of going out shopping in our global village.

She picked up on various "anti-capitalist" demonstrations such as the WTO Seattle riots and the poignant No Logo by Naomi Klein as evidence of a changing consumer climate for big brands. Ethical concerns over fashion have traditionally focussed on exploitation of workers, animals, the environment and a series of issues related to the world of fashion modelling. The focus here was concern over the potential erosion of national and cultural identities arising from the global proliferation and dominance of Western brands.

Umberto Angeloni commented that he believes such proliferation is the result of:

… extreme manufacturing and marketing techniques which may be at odds with the concept of luxury. They may also attract an aspirational consumer whose loyalty towards the brand is low and his perception of its essence superficial at best.

Once again the issue of how to maintain acceptable levels of profit growth appears to be in conflict with the need to protect luxury from the masses.

Global branding

Early on in the conference Suzy Menkes identified a need to define the term "global brand" in the context of the luxury brand debate. She quoted Umberto Angeloni when he identified "total recognition throughout the world" as an important characteristic of a global brand. Suzy Menkes supplemented his explanation with:

… a continuity, a reputation for quality and an identifiable aesthetic. It's that soul thing again.

This reference to a "soul" had emerged earlier in her discussion of a backlash to global brands and reflected people's:

… yearning … for work that is not cookie cutter luxury, but touched by human hands.

In her opinion:

To be worthy of its famous name, a fashion brand must have a heart and a soul.

This is a clear reference to the need for luxury brands to retain the integrity of craftsmanship and not be dominated by images concocted in the fickle world of marketing.

The notion that a brand can have a soul is not really much different from it having an image or personality both of which are accepted marketing concepts. The word soul is rich in depth and despite being intangible can be recognised. Suzy Menkes illustrated this through quoting Giorgio Armani from a meeting with him the previous week at his new Casa home store in Paris. The store carries no clothing but is focussed on home products such as tables and sofas. On being asked whether he was pleased with the store he said "It's very Armani: it came from inside myself". Suzy Menkes interpreted this to mean, "He had created a universe for the home, which corresponds exactly to his clothing aesthetic". Further discussion of the esoteric qualities of a brand prompted the metaphor of a DNA that is inextricably associated with a name. One example put forward by Ms Menkes was the powerful Chanel DNA created by Coco Chanel and used by Karl Lagerfeld to develop "endless variations on her image". A further example was Yves Saint Laurent, who is credited with being responsible for "the way modern women dressed for the second half of the twentieth century", according to Menkes. Interestingly, since the conference a debate has emerged over whether the recent retirement of Yves Saint Laurent from fashion presents a significant loss of vision, flair, skills and knowledge from the world of couture, or an opportunity for new talent to reinvigorate fashion with fresh creativity. It will be interesting to see if Tom Ford can continue to create "endless variations" on Yves Saint Laurent's image. Perhaps Giorgio Armani's statement, earlier in 2002 in Milan, that he is "sick of hearing about luxury" is further evidence of the contradiction at the heart of the luxury industry, which relies on volume sales but trades on the notion of exclusivity.

The brand and the product

Tom Ford views a great brand as "an icon". In designing a brand he also believes that for it to be "great" it must stand for something. In a world, such as luxury fashion, which is so heavily immersed in image and marketing messages it was refreshing to hear him say:

And the first thing that it must stand for is a great product.

As a designer he said:

I realised a long time ago that one can either design a dress or design a brand … a dress does not exist in a void, it exists in a world, and its context can radically alter its effect or its success, or its appropriateness, for that matter.

Clearly the context for any product is the market position that houses it. Tom Ford reinforced this principle when, referring to luxury brands, he said:

You must have the right product, but you must also have it beautifully produced, in beautiful stores, at the right time, priced in a manner that the customer perceives its value and it must be delivered with the most perfect service.

The importance of the product to luxury brands was a key issue for all speakers who focussed their presentations on branding. Jean-Marc Simon, from the Comite Colbert, underlined the significance of a brand's "roots" or heritage, combined with its artisan quality and creativity. He acknowledged the need for single, small, family owned companies to evolve and join a larger group of brands, saying that it was through moving away from a single product into a "world" of products that global success had been achieved. After all, the original Louis Vuitton had been famous for its trunk but evolved into the $20 billion LVMH group of brands.

Jean-Marc Simon came back to the importance of integrity in a brand. Integrity was based on the inherent quality of the brand and the mastery of its development. He believed that its "roots" commanded the potential for it to develop over time into a successful global brand. He also drew a distinction between a fashion brand and a luxury brand with a heritage based on quality and craftsmanship. A dormant luxury brand can start up again quickly, as illustrated by Tom Ford and Gucci, whereas a sleeping fashion brand is dead. The example chosen to illustrate the latter point was Pierre Cardin, which Jean-Marc Simon viewed as a great fashion brand, which had failed to become a great global brand. This view generated some debate from the audience.

The Comité Colbert is the French luxury goods association that manages and promotes 66 French brands, 30 of which Monsieur Simon said have moved from a product into a world. He quoted the Hermes "Le mode de Hermes" catalogue as an example.

Luxury groups

Another dimension of the globalisation of brands is the evolution of family owned artisan based businesses into a "corporate family" of brands within a luxury group, such as LVMH, Gucci and Richemont. Each group has a shared creative direction and a clear profit goal. Whereas once the focus of an individual brand was principally on "the product" it has shifted to ensuring "shareholder value" for the group. This focus on the financial fundamentals of the luxury industry was the subject of interesting presentations from Michael Zanoui of Morgan Stanley and Joanna Waterous of McKinsey. These two presentations also commented on the impact of "11 September" on sales within the luxury goods industry.

Morgan Stanley and McKinsey

The principal theme to Michael Zanoui's presentation was that the luxury goods sector had slowed down well before the impact of the attack on The World Trade Centre. As Head of Mergers and Acquisitions, Mr Zanoui concentrated on the falling levels of M&A activity between 1999 and 2001. The decline in activity illustrated in Table I indicates that the luxury industry was suffering from the global recession well before the 11 September outrage.

Table I. Merger and acquisition activity in the luxury sector

Reductions in capital spending and profit warnings had helped to reduce confidence in the market. However, relatively low valuations means that opportunities exist for further consolidation. Michael Zanoui speculated that if the other major groups borrowed up to half of LVMH's current 38 per cent debt to market capitalisation ratio there could be a further $8 billion to fund future mergers and acquisitions (see Table II).

Table II. Concentrated M&A firepower

Joanna Waterous, from McKinsey, underlined the significance of the larger publicly owned groups by revealing 17 public companies accounted for 65 per cent of luxury goods sales in 2000 (see Table III ).

Table III. The 17 public companies that accounted for 65 per cent of luxury sales - 2000

This compares with the top ten privately owned luxury brand companies that accounted for 9 per cent of sales in the same period (see Table IV).

Table IV. Top ten privately owned companies accounting for 9 per cent of luxury goods sales in 2000

It would seem that size matters and that future success for many small luxury brands rests in some kind of liaison with the powerful luxury groups. Indeed Umberto Angeloni acknowledged that:

It is conventional wisdom that a relatively small and family owned company cannot survive in today's competitive market, and that it cannot achieve nor sustain, double digit growth rates.

Although he added the Bironi experience seemed to contradict such a philosophy as it had been able to survive as a niche global brand by focussing on quality and restricting its distribution. He also warned of a downside to aggressive global branding resulting in:

… growing dilution, both of a brand's customer base (no longer only affluent) and of its essence (no longer related to the core product or to its cultural identity).

His concern over the "dilution" or broadening of the customer base to include "aspirational" customers related to demand being "intrinsically more volatile in times of recession". The argument being that the mainstream aspirational consumer is more likely to stop spending on luxury products when they become financially stretched, whereas the rich consumer is less affected by fluctuations in economic conditions. This is in contrast to the behaviour of wealthy consumers, or high net worth individuals, who are less affected by fluctuations in economic conditions.

Designers and creativity

Much had been said over the two days about the essence of a luxury brand and the dilemma of needing to grow without sacrificing exclusivity. But another theme that some may argue is central to success in these kind of businesses, is the effective management of creativity. Suzy Menkes reflected on the many British designers who were "creative to the core" but had failed to make a success of their own businesses. Hussein Chalayan is a good example of this as his business ran into financial difficulties last year, despite possessing a huge talent. Many British designers have achieved global recognition primarily through their work for famous European fashion houses. Most recently with John Galliano at Christian Dior, Julien MacDonald at Givenchy, Alexander McQueen at Gucci and Stella McCartney ex-Chloe and now associated with Gucci.

Suzy Menkes highlighted the potential difficulties arising from clashes in creative direction and control after the takeover of a small fashion label by a "conglomerate". She picked up on the idea of a "marriage" to describe the relationship between a designer and manager. There is shared passion and feelings, which is balanced by the need to make concessions and adaptations. She warned of the potential for failure in the relationship if too much creative control is removed from a designer. As she observed:

We have seen some of these marriages end in divorce. It is dispiriting to see that the great wave of acquisitions of small individual companies by fashion conglomerates has ended in some very ugly developments, like the departure of Jil Sander from the house that carries her name. Although I know that designers can be difficult, prickly and often unreasonable, I must tell you that I would defend to the death their right to keep creative control.

Interestingly, the fashion house "Jil Sander" is considered by many to be still struggling under the creative direction of Milan Vukmirovic, following the takeover by Prada and departure of Jil Sander herself.

Blending creation and management

Ralph Toledano, Chairman and CEO of Chloe, spoke of the importance of the "creation-management" entity. He attributes the success of a couture house to two factors:

… the creative power, the radiance of a designer, on the one hand

and:

… the competence and the strategic vision of management, on the other hand.

He supported this with examples from fashion houses that had been based on a foundation of two people. In France he quoted Christian Dior, based on Christian Dior and Jacques Rouet, Yves Saint-Laurent, based on the pair Yves Saint-Laurent and Pierre Berge and Chanel, which is personified by Karl Lagerfeld but discretely run by Alain Wertheimer. Similarly in Italy he referenced Tom Ford and Domenico De Sole for Gucci, Miuccia Prada and Patrizio Bertelli for Prada and Gianni Versace with his brother Santo.

In a world where ideas and information are quickly accessible to everyone and speed to market is a constant pressure, originality is sometimes hard to find. Suzy Menkes talked of the vital importance of nurturing originality, citing the example of Christian Lacroix's inspiration for a hand held purse. She reminisced:

I was convinced that he would cite Audrey Hepburn in some old movie. But instead, he started telling me about finding a piece of driftwood on the beach and envisaging it as the handle for a bag.

Much later in the conference Steve McCracken, Vice President of DuPont Apparel & Textile Sciences, underlined the importance of originality when he presented the "equation", "Fashion + Innovation = Consumer relevance". The trick for most businesses is how to achieve sustainable and profitable differentiation by harnessing creativity.

There is a perception that the abstract nature of creativity does not sit easily with the tough logic of management. However Ralph Toledano believes that real success is only possible through a partnership and identified important characteristics of both managers and creators for this to succeed. The manager's first mission is to allow the creator to express the full range of his talent. He must constantly listen, dispel any doubts and show commitment to delivering solutions. In implementing this:

… sometimes he (the manager) will have to convince, and other times he will have to impose.

Ralph Toledano sees the creator as:

… first an artist, but an artist who has understood that his designs have a purpose. It is Creation applied to garments and accessories, which must be manufactured, sold, merchandised and worn. As any other consumer good. Therefore, in him, intelligence and realism must coexist with talent.

As if to underline the point about the inseparability of the creator and manager's goal, Steve McCracken said: "In the end, innovation is all any of us get paid for."

Final thoughts

In a world of increasing homogeneity a big question for fashion businesses, luxury or otherwise, is how to reflect significant trends while being differentiated from competitors. For a luxury brand there is the additional problem of how to balance global availability on a sufficient scale to be profitable, with the requirement to be exclusive. The emergence of the multi-brand luxury group, such as LVMH or the Gucci Group NV, is one method used to increase group sales whilst maintaining individual brand exclusivity. Star designers, powerful imagery and "must-have" limited editions have their place, but a key message of this conference was that a luxury brand must have integrity.