Luxe Houses Cut Costs

Once-pampered executives are flying coach; orchids are replacing fresh-cutflowers in stores and showrooms.

From flowers to lighting to invitations, firms are cutting back this season.

As the global recession bites into luxury sales, store openings and events are being canceled or postponed, sample collections downsized, advertising budgets slashed, and workforces trimmed.

This story first appeared in the March 2, 2009 issue of WWD.  Subscribe Today.

But corners are being cut in unexpected places, too: Once-pampered executives are flying coach; orchids are replacing fresh-cut flowers in stores and showrooms, and show invitations are being slapped with printed labels instead of painstaking, florid calligraphy.

And with the European leg of the fall collections well under way, look out for continued cuts in the number of seats, catering services, lighting and the quantity of Champagne flowing — if any.

In Milan, where the runway shows wind up tonight with Versace, it’s clear that the checkbook for celebrity appearances has been tucked away, with A-list actresses as scarce as encouraging economic indicators. Show producer Gabriella Mazzei of Without Production, whose clients include Burberry, Gucci and Prada, said pinching pennies has been a priority this season.

“In this economic climate, budgets have been downsized; materials are chosen with more attention, and catering and modeling expenses have been cut. But the importance given to sets hasn’t changed. Clients are seeking to optimize their efforts, and they are asking us to negotiate prices with suppliers,” she said.

“A lot of companies are definitely cutting budgets and there’s a tendency to cut the superfluous. Shows are simpler, with less scenography and with fewer seats,” added Bibi Terenzi, founder of Spec Entertainment, another production company. “Many companies are cutting their budget for catering, and Champagne may not be offered.”

“Clients are certainly paying more attention to expenses — the number of models, number of invites,” added Paola Baratto of Elite models in Milan. “There is a tendency to be more low profile.”

Hair and makeup artists are also feeling a pullback. “Starting in October, there is much less work, it’s practically at a standstill,” said Anna Maria Abbate, agent for Close-up Hair and Makeup.

And the fashion pack can expect a similar dialing down when Paris Fashion Week gets under way Wednesday. Several brands are staging more intimate shows, often in their headquarters. These include Martine Sitbon, Anne-Valerie Hash and Sonia Rykiel, who will stage two shows in her Saint Germain flagship boutique for the first time since the Seventies.

Commuun, Jean-Paul Knott and Undercover are among designers scaling down to presentations or store events. “In fashion, there’s already this system in place that you can’t avoid that involves spending a lot of money on a show. This period has thrown not only the catwalk show into question but also the general running of our business. It’s a challenge for us all to think about what we do or don’t keep,” said Kaito Hori, co-designer of Paris-based Commuun, which will present to a more select crowd at Paris’ Maison des Métallos on March 10.

Even runway lighting won’t be as fancy this season.

“Budgets are definitely going down,” said Paris-based lighting designer Thierry Dreyfus, noting budgets for his illuminations began shrinking last season. Some houses are spending as much as 25 or 50 percent less than previously, Dreyfus continued, declining to give names. “On the final work, I don’t think anybody will see it,” he said.

For the Comme des Garçons men’s show in January in Paris, for instance, each model’s shadow bounced off the back wall, a visually effective yet low-cost set-up, using just one projector at floor level.

Designers are increasingly opting to stage installations or show films, Dreyfus said. “The ones who were really clever anticipated what is happening now,” he said. “It’s about product at the end of the day and products have to be seen very close.”

Off the runway, companies are looking at every cost, down to the minutest level. “I heard about an Italian jeweler who said they would no longer polish the undersides of their watches,” said Elisabeth Ponsolle des Portes, president and chief executive officer of the Comité Colbert, the French luxury association.

Cost cutting must be taken at company and not at product level, she said, pointing to the many traditional ways of reducing budgets for travel, restaurants and advertising. “I just got back from China and the hotels there are empty,” she said.

Yet Ponsolle des Portes hopes “luxury’s detox diet” could lead to innovation.

Take Van Cleef’s Serti Mystérieux, (Mysterious Setting in English) a technique where the prongs are concealed beneath the gems they hold, which the jewelry company patented in 1933. “That innovation came in the wake of the big crisis of ’29. It shows that financial constraints can give rise to creativity,” she said.

Jean-Jacques Picart, a Paris-based industry consultant whose clients include LVMH Moët Hennessy Louis Vuitton, said public relations budgets are down by 30 to 50 percent at many brands, forcing them to assign priorities to regions and product categories.

“We can’t act like there is no crisis: We must face it. This means changing our way of working, our way of thinking, to optimize the budgets. It means being more creative, not only in the [design] studio — everywhere in the company,” he said.

Picart said the cuts extend to events and editor gifts, fewer models on the runway and smaller budgets for the set design at shows.

Parisian florist Henri Moulié said business since Christmas has nosedived by 30 to 40 percent. Distant are the days, he rued, when flowers were an integral part of fashion shows, culminating in a wall of prune anemones for Tom Ford during his Yves Saint Laurent years. The petal count in boutiques has dramatically withered, too.

“Budgets are very reduced everywhere and are only going down, even for the big older houses,” Moulié said, declaring durable plants or flowers “the new formula,” notably orchids.

According to a European source, Louis Vuitton will save up to 1.5 million euros, or $1.9 million, by reducing the flower compositions in its stores. Vuitton declined to comment on the figure.

And another source said Gucci has dramatically trimmed its employee cell phone contracts as a cost-saving measure. Gucci declined to comment.

Paris-based calligrapher Nicholas Ouchenir cited an abrupt slowing of business over the past month. Having never courted work since the launch of his company five years ago, this is the first season Ouchenir, who works with many of the main luxury brands, has ever had to solicit commissions. To boost business, he’s also lopped prices by around 20 percent.

Though it can prove detrimental to a luxury brand’s image, particularly those with a clientele that is used to personalized attention, calligraphy tends to be one of the first things to go, Ouchenir said. There are ways of compromising, however, with many brands this season opting to, say, having only the invitation, and not the envelope, handwritten, or reserving handwritten invites for the top tier of guests, with stickers for the rank and file.

“It’s tough.…I still have the same clients, but in terms of the final budget it’s not the same,” he said.