THE LITTLE BAG THAT COULD
CHRISTIAN DIOR IS BANKING ON ITS LADY DIOR BAG TO LEAD THE REPOSITIONING OF ITS ACCESSORIES BUSINESS.

Byline: Katherine Weisman

PARIS — Chanel has its quilted sacs. Gucci has its bamboo handles. Hermes has the Kelly bag. And, since 1995, when the house of Christian Dior added a little cane-chair stitching and jingling gold letters, it has had the Lady Dior bag, making the company an important member of the branded handbag club.
Dior, a newcomer to the nonlicensed accessories game, had the good fortune to make an immediate success of the Lady Dior bag when it was launched via in-house production. The bag was hurled onto the fashion map by none other than the late Princess Diana, who received one as a gift in the fall of 1995. She was photographed sporting the sac everywhere, from hospitals in England to visits in Argentina.
In fact, the Lady Dior bag is the only successful bag Dior has had in years, since its leather goods and many other branded categories had been produced largely under licensing agreements, a system that resulted in an inconsistent range.
Dior bought back most of these licenses in 1994 and 1995, and Lady Dior is the cornerstone of a strategy to revamp all Dior accessories — from silk scarves to fashion jewelry — under the creative direction of designer John Galliano. By the end of this year, Dior expects to sell 140,000 Lady Diors, for a 40 percent increase over 1996. While that figure might pale next to the volume of sister company Louis Vuitton, Lady Dior bags start at about $1,000 a pop, making the numbers pretty impressive. Vuitton, like Dior, is controlled by luxury goods tycoon Bernard Arnault.
Plus, the bag hasn’t even been fully rolled out in the U.S. And the real shocker is that this expensive bag is impractical.
“You find more functionality in less expensive bags,” said Sidney Toledano, deputy general manager of Christian Dior Couture, who heads leather goods development and Dior’s store network. In its original best-selling size, the bag is a tight squeeze for an agenda or makeup case. And, even though there is a zipper, the entry is narrow.
To make the bag more user-friendly, the company added a larger, quasi-work bag size in 1996, and a detachable shoulder strap.
The Lady Dior collection, now in 267 variations, is the first step in Dior’s strategy to rebuild its entire accessories line.
The goal is to have products that complement house designer Galliano’s luxury ready-to-wear and couture lines, and more importantly, that are strong enough to steal share from high-profile competitors like Chanel, Hermes, Gucci and Prada, and from top players in small leather goods, like Cartier.
Dior has made a good start with Lady Dior, but international retailers have said the company has a way to go.
Dior handbags, for example, have had a weak identity. Because licensing partners in markets as varied as the U.S. and Japan made different kinds of handbags, the line’s image was inconsistent.
Retailers also said that while Christian Dior fashion jewelry sells very well, its design is not notably Dior.
As for silk scarves, not even Chanel has been able to grab that market away from Hermes. One former Dior executive noted that before the company bought back many of its licenses, the brand’s identity was linked to the goods its licensing partners produced.
“That includes the 100 percent polyester ties from Warnaco,” the executive noted.
Now, there are no more polyester ties, and in its new strategy of starting the accessories lines from scratch, Dior is heading for the highest of the high end. To help build brand image, the house developed an accessories visual for its ad campaign by Nick Knight, which ended up being Galliano’s favorite image. And to keep the products exclusive, Dior is limiting distribution to its network of some 70 stores and, beginning next year, a select number of leased corners in department or specialty stores.
The Printemps flagship here, for example, is opening a Dior corner this fall; Le Bon Marche here already has one. Dior also has an in-store shop in Harrods in London, and in several Japanese department stores. Plans for shops in American stores are being negotiated.
Until a few years ago, there were practically no Dior accessories in its own stores. When the company worked under licensing agreements, there were basically two avenues: licensed accessories with wide distribution, or a small, exclusive range of goods sold only in Dior shops, made either by licensees or subcontractors.
Now, the company is promoting the idea that a Dior store should be a destination shop for any product bearing the house’s label. Sources said Dior aims to have leather goods contribute 50 percent of sales in its stores.
The Lady Dior is linked technically, and spiritually within the house, to Dior fashion. The company describes the Lady Dior bag as a “couture bag” and not just a couture accessory. The quilting of the material is a couture technique, and not a traditional leather goods technique. The quilted pattern follows the caning of the chair used by Christian Dior himself, reflecting the house’s fashion history. Dior also chose lambskin as the principle skin, describing it to be a “more couture material,” compared with the plebeian calfskin. And the gold plating, which covers the hardware and the dangling logo, contains three microns of gold, compared with an industry average of two microns or less.
The bag is not only a genius of invention but also of scrupulous editing by a design team determined to create a sac that screams Dior, albeit in a ladylike way.
The reincarnated Lady Dior first appeared in microfiber in May 1995 at about $430, at current exchange rates.
“This is very expensive for microfiber,” Toledano admitted, noting the gold plating was only two microns thick at that time. By October, the company had launched the lambskin edition.
The true fairy tale of Lady Dior’s success came when French first-lady-turned-fairy-godmother Bernadette Chirac needed a present for Princess Diana, on the occasion of Diana’s visit to the opening of the Cezanne exhibit here. Chirac chose a black version.
That November, Lady Diana was photographed sporting the little number. Numerous photos and an enormous preholiday ad campaign — as ambitious as one for a perfume launch — put Dior stores in the bittersweet position of being out of stock.
The success continued in 1996, and the bag helped Dior Couture sales grow more than 20 percent that year.
The bag’s popularity has trickled down to other leather goods, where sales have grow tenfold in three years. The company was quick to resolve the problem of supply and demand and nimble subcontractors upped their production.
Now, the company has a plant in Italy, operating since the beginning of the year, which is dedicated to Lady Dior bags. Louis Vuitton also manufactures some of the Lady Dior line, illustrating how synergies are exploited among companies in Arnault’s empire.
While the essential design of Lady Dior doesn’t change, the line is constantly being tinkered with. The interior has been reinforced, and some models have “nails” on the bottom to protect the leather. Lady Dior has added new materials — glossy glazed calfskin, satin, denim and costly crocodile — to offer a Lady Dior for just about everyone, for any occasion.
New this fall are Chinese swinging tassels or black and white ponyskin. The classic version is still going strong.
But despite its many versions, it is still one bag, and for the moment, the fashion community — especially competitors — is waiting to see what Dior does next. The former Dior executive noted the Lady Dior bag has been so well advertised that it is the only thing actually selling in Dior stores.
“One bag does not a collection make — and it seems that they only have one bag,” said one major retailer, who, like all the retailers interviewed for this story, spoke on condition of anonymity. “If they are serious, they need to create what Chanel and Gucci have done. All the products have to have the same image. Galliano has the ability, but I don’t know if he has the discipline.”
The retailers also questioned whether Lady Dior was repre-sentative of Galliano’s design. Perhaps they ignore the fact that Chanel’s quilted bags do not exactly shout Karl Lagerfeld.
Toledano was quick to rebut retailers’ charges, noting it is not so bad to be on the fashion map with one bag. He cited Hermes with its Kelly bag, and the fact that while overall revenues for the luxury house once were slanted heavily in silks and leather goods, all product lines from watches to ready-to-wear are growing, resulting in a more even distribution of sales. He also said sales in Dior stores of all company products grew for the first half of this year.
“In our New York store, cumulative sales for the first six months of this year for leather goods, accessories and ready-to-wear posted high double-digit growth compared with the same period last year,” he noted.
And, to be fair to Dior, the first half of this year was a transition period, fashionwise. While Galliano showed his first Dior haute couture in January, the clothes in the store were from Gianfranco Ferre’s last collection for the house.
Another potential problem, posed by a Dior competitor, was that with all the hype over Lady Dior, the bag will start to attract more “mass” buyers.
If the Dior client sees the bag — either the original or a counterfeit — too frequently, she will drop it altogether, and the bag will lose its cachet.
Toledano responded that the same criticism was levied against the monogram canvas bags of Vuitton, which remains the company’s best-selling line, even with introductions of new products like the Epi range. Having such a strong line is not a weakness; it is the development of a product that becomes a classic.
“Plus, we are far from having saturated the market,” Toledano noted. “Our pricing puts us in the very high end, and you just don’t sell millions here.”
Dior executives know the Christian Dior accessories collection must be broader than the Lady Dior bag. The accessories teams are working to develop a successor to Lady Dior and to build strength in scarves, shoes and jewelry for a balanced sales mix.
Meanwhile, sunglasses and watches are still going strong. Dior is maintaining its licensing agreements with Safilo and Benedom, respectively, for these products since they require technical know-how and enjoy distribution in specialized retailers, in addition to Dior stores.
Retailers see strong potential in Dior’s new accessories strategy. And while some stores have lost revenues because of discontinued licenses — like the one for suits and coats with The Jones Apparel Group, New York, which by most accounts was a growing and profitable line — they are willing to bet on Galliano and the executive teams behind him.
“Dior is one of the most powerful brands in the world. It’s all about elegance and luxury,” said one American retailer. “Its strategy is right. As much as we are sorry to lose the business with a substantial resource, it is restructuring all its products, which makes sense.”

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