Chanel. Dior. Balenciaga. Dolce & Gabbana. Burberry. These names represent what most people in the fashion world regard to be the best of the best. They are the height of luxury retail, untouchable in regard to both their style and reputation.
For years, the names on the list of true luxury brands have remained stable. There have been no new major players competing for a spot. However, the fashion industry is seeing a huge change in the game as of late. Over the past year, there has been a trend towards what most people consider to be mid-level fashion brands attempting to break into the luxury level.
This is not as simple as it seems. A company can’t just decide one day to be a luxury brand, and customers won’t suddenly be willing to pay $5,000 for one of their handbags. The process requires both good timing and the commitment to developing what experts call a “lifestyle brand.” In order to look at how companies go about this transition, and why this is a good time to make the transition, it is helpful to look closely at two such brands: Coach and Ralph Lauren.
Fashion is an incredibly cyclic industry. It fluctuates not only with trends, but with the economy as well. Brands have to respond to these cycles by adjusting what they are producing. After experiencing losses in recent quarters due to increased competition in the mid level fashion industry, both Coach and Ralph Lauren are taking significant steps to expand into the luxury market.
Economically speaking, this is a good time for brands to begin to expand into the luxury market. Generation Y is currently spending about 2.5 trillion dollars a year in retail. A significant portion of this is spent in the luxury level, as this younger generation that spent their young adult years in the throws of a major recession decides to spend their money on investment pieces. It is this return to “investment fashion,” as well as an uptick in the economy and spending patterns, that makes this the perfect time to expand into the luxury market. The typical consumer is no longer simply looking to buy clothes for practical purposes, but rather to invest in a lifestyle.
The fact that it is a good time to move into luxury fashion does not mean that any brand will be able to. Ralph Lauren and Coach provide an excellent look at brands that are trying to do the same thing, but will have very different results. Ralph Lauren is on the right track and is showing gains in the last quarter whereas many people believe that Coach is too far-gone to become a high luxury brand.
Breaking into the luxury market requires two tasks from a label; first increasing brand recognition, while at the same time creating an air of brand exclusivity. Coach is doing this by closing outlet stores all over the world, and discontinuing many of its less expensive lines. It is difficult to walk through a city and not see the Coach logo dangling from the arms of teenagers and printed over sneakers, wallets, key chains, headbands and umbrellas. These less expensive lines, making their “luxury” clientele less likely to buy their more expensive lines, have diluted the demand for their brand. Coach is having an extremely difficult time disassociating itself from this mid-level brand recognition.
Ralph Lauren, on the other hand, took a more clear approach in distinguishing themselves from their lesser brand, Polo, which has always been marketed as a less expensive off shoot of the Ralph Lauren brand. In 2011, the company dropped the word “Polo” from its corporate name. “It was a very clear statement to focus on Ralph Lauren as a luxury brand,” said David Lauren in an interview with the New York Times.
The second thing that companies must do in order to become a luxury brand is creating a “lifestyle brand.” It is in this area that Coach and Ralph Lauren differ, indicating that it is this specification that seems to be the most important in launching a brand from mid level fashion to luxury. What most people don’t realize is that profit for luxury brands don’t come from the clothes they sell. Most profit for these higher-level companies comes from their accessories and “lifestyle” items. This includes bags, jewelry, perfume, shoes, or even makeup.
But how does a brand go about creating a lifestyle? What makes a young adult feel like a piece of clothing or an accessory can change how they are viewed in their own life? The answer is clear once you look at the brands that currently top the list of luxury labels. Chanel, Dior, Dolce & Gabanna, Valentino, Balenciaga. What do all these brands have in common? They all have a central figure in which the lifestyle they are trying to create is based. Chanel has the famous Mademoiselle, who not only revolutionized women’s fashion, but also became an icon in her own right.
Coach, despite its ascent from leather goods business run out of a loft in Soho to a $5 billion enterprise, has never had a central figure on which to be based. Its lines are seemingly directionless, based upon whatever style or trend is of the moment.
In comparison, Ralph Lauren is going about this by focusing on a new central figure to create its new lifestyle brand around. Ricky Lauren, the wife of Ralph Lauren, is the perfect candidate. The Ricky bag is the centerpiece of Ralph Lauren Corp.’s push into luxury’s upper reaches. By using her as the face of their new luxury campaign, they are creating the woman that every other woman wants to be.
Whether it is feasible or not for either of these brands to reach the luxury level, this marks a larger trend in the fashion industry. The industry is moving away from trends and “of the moment pieces,” into a more economically stable era of investment pieces and using fashion to create a sustainable lifestyle.