Karl Lagerfeld's greatest legacy is an economic model | BoF Professional, This week in fashion

Hello, BoF Professionals, your exclusive "This Week in Fashion" briefing is ready, with member analysis only on the key topic of the week and a summary of the week's main news.

On Tuesday Chanel announced the death of Karl Lagerfeld – the most famous, the most emblematic and prolific fashion designer in the world – which brought the sector, in Paris and around the world, to mourn man widely regarded as his king. He was 85 years old.

Chanel has named Virginie Viard, Lagerfeld's longtime studio director – described by the designer as "my right hand and my left hand" – to succeed him at the creative bar of the famous French luxury brand. At the same time, Fendi, the Roman fur and leather house where Lagerfeld oversaw women's collections for more than 50 years, has not yet announced a succession plan. "This is not the time to discuss his estate," said the House in a statement. "We intend to take the time to honor his life and give him the tribute he deserves."

The appointment of Viard ensures the continuity of Chanel, which is growing rapidly and very profitably. Last June, the company released its annual results for the first time in 108 years, revealing global sales of more than $ 9.6 billion in 2017, up 11% over the previous year, with operating profits of $ 2.69 billion, making it one of the most successful. Luxury companies in the world.

To maintain this trajectory, some predicted that Chanel would need a star designer to succeed Lagerfeld, floating names like Hedi Slimane (now settled in Celine), the former designer of Celine Phoebe Philo and the l & # 39; 39, former Lanvin star, Alber Elbaz. But such an initiative would have been unusual for the owners of Chanel, the discreet family Wertheimer, who waited twelve years after the death of Coco Chanel to name Lagerfeld and decided not to disrupt the model set up the legacy of Gabrielle Chanel and Karl Lagerfeld can continue to live. "

It remains to be seen whether Viard will be able to keep Chanel fresh for years to come in a luxury market looking for something new at a faster and faster pace. But, for the moment, the decision seems good. (Questions remain as to the succession plan of the executive side of the company, where Alain Wertheimer, positioned as a temporary solution, has held the reins for more than three years, after the dismissal of Maureen Chiquet, Chanel's former CEO. )

But Lagerfeld's greatest legacy goes far beyond the homes of Chanel and Fendi. At Chanel, the designer has transformed a dusty French fashion brand into a multi-billion dollar global luxury powerhouse. The game book has been imitated with incredible success by giants such as Louis Vuitton, Christian Dior and Gucci. All of these houses – and many others – use the model created by Lagerfeld.

When the creator arrived at Chanel in 1983, There was no such thing as a global luxury brand as we know it today.. Instead, many of the most fashionable houses in fashion were dormant, their cachet being damaged by unrestrained licensing agreements made in the 1960s and 1970s. But at Chanel, the designer took a set of codes from Long-standing home – the intertwined double Cs, camellias, pearls, tweed jacket, quilted bag, two-tone shoe – and turned them into an iconography of a powerful fashion cult in the world. scale with as much power as mass consumption symbols like the Nike swoosh.

He then created a pyramid of products, ranging from haute couture to the top, to ready-to-wear, accessories, perfumes and cosmetics, up to $ 28 in nail polish. While haute couture and ready-to-wear clothing were out of reach for most consumers, with their selling price of up to $ 100,000 per dress, they created a powerful branded halo that allowed the company to impose improbably high margins on perfume and beauty products purchased by consumers. all over the world who wanted to indulge in Chanel's lifestyle and dream. The basic trick was to maintain the perception of exclusivity while moving millions of units.

"Chanel is a master of the segregation of categories," said Luca Solca, analyst, in 2018. "This strategy consists in limiting iconic products from the basic category to high-end price ranges, while skillfully positioning 39 other categories of products (eg lipsticks) at lower prices to meet the ambitious customers. "

Needless to say, it worked. But while Lagerfeld's playbook remains extremely powerful – witness the explosion of luxury consumption among aspiring Chinese classes as waves of wealth creation transform the country – some elements need to be clearly updated.

On the one hand, the idea of ​​turning the seasonal fashion shows from ready-to-wear and haute couture into multi-million dollar marketing shows with icebergs and space shuttles on the scale The Grand Palais in Paris remains a powerful engine of Chanel's media attention gained. However, the resulting marketing spikes are increasingly out of sync with today's world, where consumers no longer buy in seasonal lots and social media requires new content every day.

In addition, a "millennial state of mind" is needed in the luxury market. The Y and Z generations are already the main driver of luxury growth, with 85% of the expansion in 2017, according to Bain. And the values ​​of this new cohort of consumers are increasingly opposed to the traditional economic model of luxury, which some consider as unkind. its high prices, glossy commercials, glitzy flagship products, and seasonal goggles rooted in a tired and inauthentic formula, coupled with old-fashioned social hierarchy and extravagance ideas, while streetwear brands offer the community captivate the imagination of today's consumers.

It's worth noting that James Jebbia, the streetwear giant's stealthy founder Supreme – often dubbed "the Chanel of downtown New York" – turned to Lagerfeld and the fabulous central French for clues on how to build your brand. "I'm very much influenced by Chanel and by what Karl Lagerfeld did," Jebbia told The New York Times at the opening of his first Paris boutique in 2016. We now see in the luxury goods brand Streetwear as Supreme for clues on how to adapt Lagerfeld 's model to the dynamics of a new generation.

Lagerfeld himself was intimately aware of the need for change. "Someone has to do something different," he said once. "It's very dangerous to think that you know everything."

NEWS IN BRIEF

FASHION, TRADE AND ECONOMY

Burberry apologizes for the "noose" hoodie after the model complains. Managing Director Marco Gobbetti and creative director Riccardo Tisci apologized for putting on a hoodie with knot-shaped ties on the London Fashion Week podium at Burberry. Knotted chains surfaced after model Liz Kennedy complained before the show and on Instagram, saying the noose evoked not only lynchings, but also suicides. Tisci apologized and said: "Although the design is inspired by a nautical theme, I realize that it was insensitive." This is the latest in a long list of recent public relations mistakes made by luxury brands such as Prada and Gucci – both of which have launched blackface-like products. but they excused themselves and took them off the shelves – and the senseless Chinese-themed advertising campaign of Dolce and Gabbana.

Chinese Fosun makes an offer on the German fashion chain Tom Tailor. The Chinese conglomerate announced Tuesday a public takeover bid on the troubled German clothing retailer, thus strengthening its presence in the fashion sector in Europe. Tom Tailor shares jumped 14% to € 2.46 after the company announced that Fosun was increasing its stake to 35.35% by buying new shares worth € 2.26 each. This will bring Fosun's stake above the 30% threshold that triggers a mandatory takeover bid under German law.

Twitter's Nike target storms after breaking the shoe of the basketball star. Duke University star Zion Williamson left the field limping after the match accident against the only rival of his school, the University of North Carolina. Twitter has lit up the jokes and jokes of the sports brand, pushing the Zion keyword at the top of the list of global trends Wednesday night. Former President Barack Obama, on the verge of shock at a high-level clash, was shown on a video pretending with an incredulous look: "His shoe's broken!"

Flowerbx raises $ 5.5 million for its launch in the United States. The Flower Delivery Service Directly to Consumers and Wholesales based in London – founded by the former Senior Vice President of Communications Tom Ford – raised 4.2 million pounds ($ 5.5 million) and will use this capital for its launch in New York in May and its future expansion into the United States. The online floral brand quickly got the support of Natalie Massenet and Carmen Busquets, and is already present in Belgium, Ireland, France and Germany.

Footasylum shares rose 59% after the registration of JD Sports. Shares rose 58.6% after UK retailer JD Sports announced it had acquired an 8.3% stake and could buy close to 30% of its smaller competitor. JD, which owns a network of more than 2,400 stores, has however stated that it does not "intend to make an offer for Footasylum" under the Merger Regulation. Footasylum was forced to cut prices in its 60 stores after a disappointing run until Christmas.

Events against climate change disrupt London Fashion Week. The ecologist group Extinction Rebellion led the protesters chanting "There is no fashion on a dead planet", while some of the biggest names in British fashion were showing their collections fall / winter 2019. At the Victoria Beckham show at Tate Britain, they blocked cars sponsored by Mercedes-Benz, dressed in turf and carrying placards stating "Ethics is still fashionable," among other sharp slogans.

The UK is tackling the problem of sustainable fashion development. Clothing taxes and more stringent regulations to force the sector to act in a more sustainable way have been proposed in a new report by a group of British legislators representing several parties. Amazon and Boohoo, as well as luxury brands like Versace, are in the sights of Parliament. Fashion companies should benefit from tax incentives to produce environmentally friendly clothing – and penalties if they do not – the report says.

Inditex launches in the United States the brand Pull & Bear, associated with Netflix. The Spanish owner will start exploiting his Pull & Bear brand for young Americans on Wednesday, while the retailer plans to sell to all countries around the world next year. The brand will be available via online orders in the United States, its 34th largest online market worldwide. Inditex already operates 94 Zara stores, three Massimo Dutti shops and one Bershka in the United States, but declined to say whether it planned to open Pull & Bear stores there.

The beauty business

Henkel becomes a vegan to boost the beauty sector. The German consumer goods company and owner of Schwarzkopf and Persil has announced new formulations and brands of hair care, seeking to exploit consumer demand for more natural ingredients, while trying to revive the slow growth of its sector of beauty. Henkel will relaunch its European brand of Schauma Shampoo with a "vegan" formula, extend its range of Nature Box hair and body care products with cold-pressed oils to more markets and launch a new line "free-from" hair dye called OnlyLove.

Virtual metamorphoses are better than ever. Beauty companies are trying to make money. Augmented Reality (AR), which has been available for a few years in a handful of mobile applications, but has largely failed to appeal to consumers, is becoming more widespread and selling real world products through virtual technology. makeup. AR has become specific enough that leading beauty companies, including Ulta Beauty, Sephora and L'Oreal, are using it to try to sell their latest products. Consumers want to try it to experiment quickly, without touching messy and unhygienic test products. .

Glossier launches an oil-based makeup remover. Following the cult success of the Milky Jelly Cleanser, the beauty brand has launched a new product with similar functions, but dissolves makeup more quickly. Created with micellar water, pro-vitamin B5 and comfrey root extract, Milky Oil is a bi-phase formula designed to eliminate water repellent makeup. It is also approved by ophthalmologists, vegan, humane and sold as ideal for sensitive types.

PEOPLE

Karl Lagerfeld dies in Paris. Deceased perhaps the most iconic designer in the world and arguably the most prolific, Lagerfeld died at the age of 85. In his seven-year career, he simultaneously created collections for Chanel and Fendi, in addition to his own signature label. The late creator presents Chanel, which he helped turn into a megabrand world with an annual business turnover of $ 9.6 billion, his biggest creative challenge since the death of Gabrielle "Coco" Chanel , there is nearly half a century. Virginie Viard, a long-time designer, is now responsible for the collections. Meanwhile, a successor has not yet been announced to Fendi.

Salvatore Ferragamo appoint creative director. The Italian fashion house has named Paul Andrew as creative director. Andrew, who recently became the brand's female creative director, joined the company in September 2016 as director of women's shoes. The company also announced that Guillaume Meilland, who will retain his role as director of men's ready-to-wear design, is given the additional responsibility of studio director under Andrew's direction.

Bethany Williams wins the Royal Award for her ethical fashion. The Duchess of Cornwall awarded the British designer the Queen Elizabeth II Award for British Design, a prestigious award for young designers who make a difference to society. Since I graduated from London College of Fashion In 2016, Williams built his business with a particular focus on social and environmental concerns. His clothing line is made from sustainable materials, in partnership with charities for social change.

MEDIA AND TECHNOLOGY

Online retailers should pay higher taxes to save UK stores. According to a government report, internet giants such as Amazon, Asos and Boohoo should pay higher taxes in the UK, such as "green taxes" on transport and packaging . Some 70,000 jobs were lost in the UK retail trade in 2018 when chains such as Marks & Spencer and Debenhams announced plans to close hundreds of stores. Internet sales are an important factor as UK consumers spend more on the Internet than any other European country.

The SoYoung application of plastic surgery to Tencent record for its US IPO. The Chinese cosmetic surgery website has confidentially filed an initial public offering for US savings and could yield about $ 300 million. SoYoung, founded in 2013, allows customers to review and book interchangeable procedures through its application and websites, as well as share processing experiences through messages, images and videos.