The Luxury Market amidst the Recession and Other Bedtime Stories

It's natural to think that in times of downsizing and economic difficulties for the vast majority of people in the western world via a domino-effect of the world economy, prices of goods should follow and adjust to demand and reduced affluence. Interestingly and somewhat perversely, the luxury market differentiates itself from the above mentioned syllogism in its agressive ~yet macroeconomically sane~ swift that seemingly raises prices to truly unatainable levels for most. The crux of the matter is why? What repurcussions is this creating? And where will it stop? In discussing this with online acquaintances, some of which happen to be investors, I came across interesting and eye-opening facts from which I deduct some conclusions concerning the marketing course that is being shaped.

The business headlines were rampant with pessimistic sounding news: Porsche sales skidding by 36%, Daimler sales sliding by 35%, Tiffany cutting forecast, as their post holiday sales declined by 21% and the luxe store Saks Fifth Avenue cutting jobs after facing a decline of their stock from $18 to $2.41 per share. So did Burberrys. "After a holiday season marked by steep discounting, the sector, whose clientele traditionally didn't worry about price, finds itself forced to redefine "luxury" while searching for ways to lure paying customers back into their stores." [source]. The quintessential American group of fragrances and cosmetics, the Lauder Group, cut forecast too, cutting 550million$ of costs by laying off people. And yet, right and left, I have been watching prices get raised in many items that are specifically attached to the point of focus of this very venue, ie.fine fragrance.

There were rumours by the end of last year that luxury brands would lower their prices, but so far nothing in that direction has materialized. Ironically, lowering the prices damages the prestige, the image, the very "unattainability" which is de iuro the very definition of luxury itself. During hardship people will specify their purchases geared by the very notion of prestige and what is perceived as quality, i.e. buying things that are not cheap but also do not lose their value long-term. Brands like Hermès or Chanel are sort of benefiting from this course, treating it to different effects: Whereas Chanel ~having the most recgnisable luxe brand on the planet~ is trying to handle both the wanna-be luxury participants crowding for its more mainstream products and the connoisseurs hankering after the more arcane , Hermès is playing it old-school, patrician sang froid (ie. not seen to be making an effort, although obviously nothing is left to chance). To wit: Their fourth-quarter revenues rose 6.2%, despite a 13% drop in Japan.[source] "The definition of luxury is going to evolve," said Saks Chief Executive Steve Sadove in an interview. "Consumers still want brands and luxury even though they may think of it differently. Anyone that says luxury is dead, they are wrong". Across the board, top-end retailers are trimming costs and inventory and launching initiatives aimed at drumming up business without resorting to profit-eroding discounts. A sense of urgency is evident, as the economic downturn that has been pinching the rest of the retail sector for months finally caught up with the premium end of the market. [source]

Yet the French luxury giant LVMH buoyed by strong performances from Parfums Christian Dior and perfumery chain Sephora, has flouted the global recession by posting full-year global sales growth of 4% and keeping profits despite everything. Which is the probable explanation and rationalisation of the bombardment of launches from their fragrance lion-share holder, parfums Guerlain, which we have been discussing here for some time now and which incidentally raised their prices of their boutique catalogue as of last week. But other players in the field aren't far behind as French beauty giant L’Oréal is set to open its first ever standalone combining two of its brands, the US-based Kiehl’s and Japanese makeup artist and beauty brand Shu Uemura, in Strasbourg, France, this month. A new shop with rather upmarket brands? Who would have thought it a good move. And yet! Diptyque has been issuing new products and is set to raise their prices too. Certain American e-tailers of niche fragrances on the other hand have been cunningly raising their prices without much fanfare while all the while advertising sales to their numerous customers, when the parent company of Euro-origin has not raised their own prices to the same products!

Furthermore, there are subdivisions within the luxury beauty market that is knowing a growth instead of a downturn: "The beauty business may be suffering as a whole in the US and Europe, but the natural personal-care segment posted double-digit growth in both regions, according to new data from US market-research group Kline & Company" [source].

The question of how to price luxury items and the outlook for the sector sparked a lively debate among two top executives attending the Financo event, namely between Mickey Drexler, chief executive of J. Crew Group Inc and Neiman Marcus's Tansky. The latter defended his end of the market with these words: "We've been forced to compete on price and price alone, and we don't like it," he said. "It's essential that we as an industry find a way to put a stop to this. There remains a segment who wants finer things. Unique and special merchandising is still selling better than mundane things. We have to retrain our customers. We are trying to think outside of the box that's not price-driven." To that there are other sympathizers and accolytes: "I don't think people are going to stop aspiring," said Marty Wikstrom, non-executive director of Compagnie Financiere Richemont SA, a founding partner in Atelier Management LLC, which specializes in buying and developing luxury brands. And furthermore, it's spelled out for us by Terry Lundgren, chief executive of Macy's: "It's time to make sure you've got exciting inventory. Certainly industry inventory has to be in line with consumer demand. It's been out of whack for too long. There's too much sameness. You need to have merchandise harder to find and have it special." Trunk shows, designer appearences, pampering of good customers is following too to rekindle the buying desire bug.

So there in a nutshell you have the direction the market is going to in the following months or even next couple of years. It is only the more mid-market brands that will try to interject more affordable new products in their inventory to try to attract and retain spending from their core clientele so as not to lose them. (Low-end market is considered non applicable as the initial outlay doesn't seem that important from the point of view of the consumer). Don't expect cut-backs from your favourite luxury and the select niche brands which will survive unscathed, however; on the contrary do expect them to raise their prices and agressively demand your choice over other competitors' products by making their merchandise -and I quote- "hard to find" and "special"!

It's high time we bring the luxury market back to task and remind them the time-honoured economic law of supply and demand.

Guerlain Mon Precieux Nectar: another new fragrance

A very limited edition is coming out of Guerlain's Boutique for serious collectors with a matching price-tag to rival everything we have been expecting. In times of recession there's nothing like some throwing caution to the wind, it seems!
Mon Précieux Nectar, is a super exclusive boutique offering in Extrait de Parfum concentration. "For the woman who relishes being unique and strives to set the trends instead of following them, Guerlain has created an extremely limited fragrance offering appropriately titled Mon Précieux Nectar. Only sixty two women in the world will be privileged to wear this scent, all but ensuring the wearers will never cross paths. Available as one full liter of perfume, the fragrance is floral and gourmand with a head of petitgrain and bitter almond, jasmine and orange blossom at the heart and a base of sensual woods, incense, vanilla and white musk". The mouth-watering and addictive fragrance comes in La Fontaine Impériale (imperial fountain), a hand-made crystal fountain with a silver-plated refillable atomizer that will be offered in a black leather box for the customer's convenience. Created by Sylvaine Dealcourte and Randa Hammami who had worked again with Guerlain on Cruel Gardénia. 1 L pure Parfum at the retail price of $9,000 or 6000 €, circulating in numbered bottles exclusively at Guerlain boutiques. (contradicting information talks about 100 numbered bottles ~this reminds me of something, but my tongue is tied)

At any rate, compared, Caron Baccarat "urns" seem like a steal...

Other upcoming Guerlain releases for the season (click the links for more info):
La Petite Robe Noire (out now)
Insolence Eau Glacée
Fleurs de Shalimar and Eau de Shalimar
Mitsouko Fleur de Lotus
Aqua Allegoria Mimosa-Tiaré and Aqua Allegoria Cherry Blossom
Terracotta Eau Sous Le Vent (also based on tiaré, the tropical Tahitian gardenia strung in leis)
Habit Rouge Sport



News & Pic courtesy of Sniffapalooza and mr.Guerlain collector via Basenotes

Arabian Fragrances Reading

There is a very interesting homage to Arabian perfumes and corresponding influences on Osmoz right now, with beautiful pictures to accompany it, focusing on the firmly established traditions of Arabian culture in regards to fragrance use ~from fumigation to rich oil preparations and sourcing exotic materials, such as oudh and viscous balsams. After all, it's those traditions which have inspired one of the most emblematic of the niche brands revered today among perfume enthusiasts: Serge Lutens.
You can read about some of the more popular Arabian perfumes, some of the essenses and how they have been translated to Westernised perceptions, as well as the influence they have generated to the insatiable western consumer.
For more information and musings on the traditions and uses of Arabian scents and aromatics, you can read on Perfume Shrine: Travel Memoirs Arabian Rituals and Arabian Attars, journey to the mundane?.

We will shortly come back with a glimpse of the opulent and ultra-luxurious Amouage line, a Valentine's Day article on seductive fragrancing with a twist, exotic Travel Memoirs and a corresponding scent to match the mood and an ultra-rare surprise vintage treasure that has never been reviewed before which I have been most lucky to lay my hands (and nose) on.
Stay tuned!!

Pic via Osmoz

Stephanie de Saint Aignan: new fragrances

In late 2006 a new fragrance designer,Stéphanie de Saint Aignan, came on the scene with a line that created a ripple on the pond with exotically inspired niche fragrances. After having had a baby, Sacha, she's set to be back on perfumistas' conscious as she has just unveiled 4 new fragrances:
L’Eau Nirique (a pun on the word onirique which means “dreamlike” in French ~and Greek, I might add...), an exotic accord of jasmine and lemon blossom.
Berbériades Extrême, an intense, spicier and more ambry version of one of her earlier creations, Berbériades.
Blanc d’Hiver, a pear sorbet over a trail of silky musks.
Li Altarelli, a fresh eau inspired by Mediterranean aromatic herbs and immortelle/everlasting flower.
The packaging changes its look, being designed anew by Laurent Dray. But the brand’s first 7 creations are still available. More info can be had on the official site: stephaniedesaintaignan

Info & pic via Osmoz.

John Varvatos for Women: fragrance review

When one's name is Varvatos and they're Greek, the plot thickens and the Gods might accuse you of hubris if you dare produce something light and innocuous. "Varvatos" means well-endowed, smelling of raw sex in Greek and the anticipation for his masculine fragrance was laced with a dollop of humourous mirth on my side and a sense of the joke being on the English speaking world who would be rather shocked to have known the truth. Luckily the scent was quite good, succulent dates captured in a leather jacket's pocket, with an individualistic streak that differentiated the fragrance from comparable scents already in the market.
But whereas the men's offering went for kick, the women's product went for meek. In other words John Varvatos for Women went for the road of least resistance and contrary to the axiom that men are less likely to take chances with their fashion or fragrance choices, it's the women's side of the pool that has beginner's steps, never venturing to Olympic scale depths. I guess Varvatos is not a concept in step with feminine sensibilities when thought of in relation to their own scent.

The scent is classified as a floral chypre, belonging to the "modern" style declination of the genre, which eschews the perfume-y aspects of yore and the mossy depths of murky sensuality to invest fragrances with modern abstract tonalities; an effect most successful in the almost classic by now Narciso For Her, judging by its immense repurcussions to the field of feminine launches of the last 4 years. John Varvatos for Women was developed by perfumer Rodrigo Flores-Roux (DK Black Cashmere, DK Wenge, DK Labdanum, DK Gold, Clinique Happy, TF Neroli Portofino, John Varvatos for men ) aiming to grab the demographic looking for a sexy attitude with feminine touches at a recognisable direction. In other words, nothing too daring, too strange or too opulent, although the lighthearted approach has its fans and as such is not to be trifled with. The official information wants the inspiration to have been Joyce, Varvatos' own wife, who has worked on the art direction of the fragrances, while the face of the advertisements is Louise Pederson, photographed by Alasdair Mclellan.

Smelling John Varvatos for Women I can't help not thinking it is one part re-issued Rumeur to two parts Coco Mademoiselle with an added fruity facet that doesn't add significant dialogue between the two parts, like neighbours living next door to each other barely lisping "g'day" when getting the dog out. The initial impression is of a descendant of the Narciso lineage (which the new Rumeur belongs to anyway) with the fresher, sharper aspects of almost champagne-like magnolia and white rose notes, while as it opens up its heart is suffused with fruity jellies of peach and mandarin that inject a girly aspect. After half an hour on skin, the resemblances with the clean patchouli, vanillic and white musks of Coco Mademoiselle are unmistakeable; and indeed how could it be different when 1 in 3 scents aiming at the mainstream feminine market utilize that base? Fans of the above mentioned fragrances might like the approach if they have caught the collector's bug. The flacon is actually very appealing, designed by Doug Lloyd of Pochet in a shade of dusty peachy pink like vintage underwear.

Notes for John Varvatos for Women: aromatic grappa, Georgian apricot, Damascus plum, golden mandarin, rubrum lily, Indian mango blossom, Egyptian jasmine, Turkish rose, oakmoss, patchouli, tonka beans and wild honey

John Varvatos for Women was exclusive to Saks Fifth Avenue before going into wider distribution and is available in 15 ml Parfum, 50 and 100 ml Eau de Parfum, and in matching body products.

I have one sample of the scent which will be given to one lucky reader. State your interest in the comments.