BOSTON — Careful and controlled brand extension is the best way for luxury houses to further leverage brand equity, executives from several such companies told their potential successors.
Speaking at a daylong conference on luxe product and retailing last month at the Harvard Business School, top executives from Jimmy Choo, Tumi, Salvatore Ferragamo USA, Derek Lam and LVMH Moët Hennessy Louis Vuitton outlined plans for new products and stores.
The session, sponsored jointly by the Luxury Goods & Design Business Club and the Retail & Apparel Club at the business school, drew about 300 almost-MBAs, double the attendance from the first such event last year. While two-thirds of the students were from Harvard, students from business schools around the Northeast and as far south as Duke attended.
Robert Bensoussan, chief executive of Jimmy Choo, said the iconic shoe company plans to expand into fragrances, eyewear and other accessories and even into jeans, following the successful launch of a handbag line in 2003.
"We don't want Jimmy Choo just to be known as a shoe brand," Bensoussan said in the conference keynote speech, but added brand extensions will be done "very carefully."
He declined to give a timetable for new product additions when asked later.
While Jimmy Choo's sales are about 70 percent shoes and 30 percent handbags in its established markets of the U.K., the U.S., Asia and the rest of Europe, the sales mix is closer to 50-50, he said.
Jimmy Choo will have 54 branded stores by the end of the year, up from 36 at the end of last year, and has finally found a location on Rodeo Drive "that we can afford," he said. By the end of 2008, store count, including franchises, will be close to 80 worldwide.
Tumi, the luggage maker, will launch a line of men's performance activewear in July, and a similar line for women in spring 2007, said Wendee Lunt, vice president of global marketing and new business development.
The line is being developed jointly with Umbro and will be called Umbro for Tumi. It's aimed at business travelers, with such features as antimicrobial treatment and rapid drying.Lunt told WWD the lines will be offered to department stores and specialty luggage shops, but not sold through athletic apparel retailers.
Tumi also continues to open its own stores. The 50-store retail division will be the company's largest division in volume this year, she said, adding that online sales will account for about 10 percent of its business.
Ferragamo has adopted a "very deliberate" strategy of brand extension, said Dana Gers, senior vice president of marketing at Ferragamo USA. A new line of watches fits the strategy of remaining close to the core product category, she said.
Ferragamo decided not to extend its brand through licensing so it could retain control, she added, noting the extensive licensing agreements done by many large manufacturers have "overexposed" the brands.
Ferragamo is cultivating the next generation of customers with products such as sunglasses and fragrances at prices younger shoppers can afford, but it will not produce lower-priced lines of handbags and shoes just to woo that customer, she said.
Derek Lam, meanwhile, plans to expand its branded offering with accessories rather than developing a second, bridge line of women's apparel, noted ceo Jan Schlottmann, who was joined on a panel by founder Derek Lam.
Pamela Baxter, president and ceo of LVMH perfumes and cosmetics for North America, described how the company revitalized the Dior fragrance brand in the U.S. by closing about 30 percent of the retail outlets, primarily department stores, that didn't match the fashion image of the apparel brand.
Federated Department Stores' acquisition of May Co. has led to some pressure from the retailer for Dior to reenter department stores, "but we are not going to do that," Baxter said, noting the Dior brand will remain at the upper end. "We've reopened at Neiman Marcus and expanded with Saks Fifth Avenue and Nordstrom." The company will support other product lines at the department store level.
Bob Lamey, founder and ceo of Shopbop.com, said customers at the trendy Internet site have become older and more sophisticated as the brands carried have moved to higher price points. New York and Los Angeles are its largest markets, which, he said, initially surprised the company since customers in those cities already have retail access to the latest fashions.New Yorkers, he speculated, don't have time to shop, and Los Angeles is too sprawling. "We try to be the resource for busy people who love fashion."
In a final panel on global supply chain strategy, executives from Target, Tiffany & Co., Limited Brands Inc. and New Balance outlined the challenges of overseas sourcing.
Stacia Andersen, president of Target Sourcing Services, who is responsible for domestic and international sourcing for Target, noted the mass retailer ultimately aims for half of its sales to be its own brands, sourced through TSS. "We are close to that in softlines and apparel, and more like 25 percent in home goods," she said.
Remarking on the luxury goods part of the conference, Andersen commented that, at Target, "as the luxury lifestyle reaches the mass market, we are benchmarking ourselves to continued elevation of our brands and products."
Gers of Ferragamo encouraged the business school students to go into the luxury goods and retail industries, noting a change from designer-based or family-owned businesses to "large companies in need of management skills." But she acknowledged these industries still lag behind others in compensation. "There's very little money, but it's a fun business — and sometimes you get a clothing allowance and great discounts on shoes."
But some students might have a more unorthodox business plan in mind. The speaker who drew the most interest after the panel presentations was Steve Sims, quirky founder and ceo of Bluefish Concierge, a company that specializes in getting wealthy clients into prestigious parties and events to which they have not been invited.
Breaking News: @louisvuitton's men's artistic director @mrkimjones is leaving the French fashion house after nearly 7 years. Jones joined Louis Vuitton in 2011, following a three year tenure as creative director of British luxury goods brand Alfred Dunhill. Jones is to exit Louis Vuitton after showing his fall 2018 collection for the brand in Paris on Thursday. Read the full exclusive story on WWD.com. Link in bio. #wwdnews #wwdfashion
For men’s fall 2018, @giuseppezanotti drew on elements from streetwear, sport, biker, combat and rock ‘n’ roll. Pictured here are a pair of shoes from the collection, featuring zippers, rhinestones, and silver hardware. Head to WWD.com to see a roundup of the accessories from Milan’s men’s fall 2018 shows. #wwdfashion (📷: Andrea Delb)
To celebrate the 25th anniversary of @ralphlauren’s snowboarding collection, the brand is mining its archives. The iconic brand is reintroducing vintage styles and dropping new designs for a color capsule that will be available in Ralph Lauren stores and @openingceremony on January 25. The capsule will consist of 10 pieces, including the Snow Beach Pullover, pictured here, which is a collector’s item that rapper Raekwon wore in Wu-Tang Clan’s “Can It Be All So Simple” video. #wwdfashion (📷: Tom Gould)
For @rochasofficial’s pre-fall 2018 collection, creative director Alessandro Dell’Acqua channeled the sophisticated and intriguing Catherine Denevue in the film “Belle de Jour.” Polished collarless coats, midi skirts, suits and ’60s graphic motifs were all featured in the collection, adding a sense of discreet luxury. See the rest of the photos on WWD.com #wwdfashion
“We tried to produce clothing of that couture quality, but the most daunting part was that we only had a matter of days [to do it],” said costume designer Lou Eyrich, who recreated Gianni Versace’s iconic looks for @americancrimestoryfx. Eyrich searched online retailers and vintage shops for original pieces from the design house and for @penelopecruzoficial, who plays Donatella Versace. Head to WWD.com to read how she created the Versace world. #wwdfashion
Only three months after her stellar debut catwalk season, @kaiagerber has inked her first big design collaboration –– with @karllagerfeld. The collection blends Lagerfeld’s Parisian chic aesthetic and the model’s signature West Coast casual style via RTW, accessories, footwear and more. The #KarlLagerfeldxKaia collection will launch in September with a series of events. Get all the details on WWD.com. #wwdnews #wwdfashion
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews