SCOTTISH
ENTERPRISE
Textiles Global
Trends Research
June 2010
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Contents
Executive Summary .........................................................................................................2 Introduction ....................................................................................................................3 Research Background ......................................................................................................4 Post Recession Market Outlook .......................................................................................5 Key Markets .....................................................................................................................7 Primary Market Research Findings................................................................................11 Redefining Luxury – Global Trends ...............................................................................14 Provenance ....................................................................................................................17 Pointers for Success ......................................................................................................20 Conclusion: Implications for the Scottish Textile Industry...........................................25 Appendices ....................................................................................................................26 Appendix 1: Superbrands ..............................................................................................27 Appendix 2: Visual Brand Narratives .............................................................................29 Appendix 3: Case Study Bottega Veneta .......................................................................32 1
Executive Summary
01
The concept of ‘luxury’ has evolved over the last decade. Luxury is no longer synonymous with
indulgence and expense.
The defining values of contemporary luxury are individuality,
provenance, and social and environmental responsibility. Luxury consumers are looking for
deeper experiences and meaning behind brands and businesses: they want to know when, where
and how products are made combined with a greater appreciation of artisanal skills and human
qualities. Critical understanding of consumers and final customers is required to develop rich and
relevant brand narratives.
Within the luxury sector, interior and fashion markets exhibit similar characteristics regardless of
product segment or geographical location. Premium luxury markets are brand and lifestyle driven.
Consumers are looking for experiences, service and beautiful products, regardless of application,
which reflect their exclusive and refined luxury lifestyles. This is true on the ‘upside as well as the
downside’. Values and behaviours influenced by the current economic downturn are expected to
persist amongst consumers. In these circumstances, consumer confidence and spending on luxury
goods is likely to remain subdued until a stronger recovery takes hold in 2011-‘12. Luxury goods
spending (fashion, interiors, any other) may not return to pre-recession levels until 2014.
Emerging markets offer the most attractive prospect for luxury goods over the next three years.
This new era of luxury holds challenges and opportunities for Scottish textiles companies. In terms
of challenges, recent Scottish Government research (Product Origin Scotland: A Review of Industry
Practice and Evidence, Scottish Government, 2009) indicates that Scotland as a nation has positive
but indefinite consumer brand recognition. Whisky is the most recognised luxury Scottish product
with ‘cashmere a little bit’*. Scottish textiles brands do not have strong recognition in international
markets. Furthermore, Scotland’s provenance credentials are weak in terms of brands or sectors of
the industry without robust schemes in place to authenticate origin and integrity. Direct to the
consumer brand promotion and channels, i.e., physical retail and online presences of Scottish
textiles companies, are on the whole also limited. * (Retail Specialist Interview, New York 2010)
However, there are opportunities. There is potential to build a strong narrative around
Scottish textiles provenance and sustainability, linked to broader national policies for
renewable energy, tourism and complementary luxury sectors including food and drink. Also, coopting with national and international retailers provides scope for the articulation of brands into
contemporary consumers’ consciousness.
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Introduction
The purpose of this research is to identify key global consumer trends that may impact on the
growth of the Scottish Textiles industry over the next 18 months. Within this, there is a desire to
understand if there is any difference in trends impacting the markets for interiors and fashion
textile products.
Particular attention is given to three areas:
• The impact of the global recession on demand for premium textiles products, extending to
interior and fashion markets in the key geographical markets of: Japan, Russia and USA
• Consumer interest in ‘provenance’
• ‘Responsible luxury’, including ethical consumerism and sustainability
The report presents relevant trends in each of these areas together with stimulus for Scottish
textiles companies on how to respond.
Appendices are included as examples of the new principles of luxury being successfully
commercialized by major fashion brands.
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Research Background
02
The global textiles market is estimated to be worth over £230 billion; the Scottish textile industry is
worth approximately £1 billion.
The total number of textile businesses in Scotland is 655; of this 91% are small enterprises (0-49
employees), 7% are medium enterprises (50-249 employees) and 2% large enterprises (250+
employees). (Source: Inter-departmental Business Register (IDBR), 2008)
Over the past 15 years, the number of Scottish textile companies and employees has fallen as a
result of the movement of world textile production to developing countries. Nevertheless, this trend
has had the positive effect of accelerating the development of a more innovative, premium-focused
textiles industry in Scotland, geared to niche rather than volume opportunities.
As a result, brand management has become a key challenge for Scottish interior and fashion textile
companies at both the sector level (i.e., ‘Scottish Textiles’) and for individual brands.
Scottish
textiles companies targeting the luxury market face the same challenge as global luxury brands in
terms of understanding and aligning their brands with new consumer values of sustainability and
provenance and away from the conspicuous consumption of previous years. This applies equally to
textiles producers working in the interiors or fashion markets.
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Post Recession Market Outlook
03
Most major economies slowly began pulling out of recession in Q2/Q3 2009 with the UK the last of
the G7 to emerge from recession in Q4 2009. The IMF forecasts global GDP growth of 3.9% in
2010 comprising lower growth in advanced economies of 2.1% and higher growth in emerging
countries of 6.0%. The recovery is expected to be ‘V-shaped’ in emerging regions and ‘U-shaped’ in
advanced ones.
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Within Asia, Euromonitor forecasts that China and India will have the highest economic
growth in 2010 of 9.0% and 7.3% respectively.
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The Middle East and African region will benefit from the rebound in oil prices which began
in 2009 as will Russia with real GDP growth of 4.0% in 2010.
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Latin America will also see a recovery boosted by higher commodity revenues and an
upturn in the USA. Growth in Brazil and Mexico may reach 3.5% in 2010 although Mexico
will remain dependent on the US recovery owing to its export reliance to the USA.
By contrast, the recovery is expected to be sluggish in the Euro zone with subdued growth of just
1.0% on average in 2010. The recession will persist in some countries, such as Spain and Ireland,
where significant fiscal deficits will lead to public sector austerity measures and tax increases.
Unemployment in the USA is expected to remain at around 10% in 2010, slightly lower in Western
Europe, although may rise as high as 20% in Spain.
The psychology of debt reduction and cutting back on disposable expenditure is expected to persist
among the middle income earners in these countries for at least the next 12-18 months. The
substantial decline in house prices combined with static wage levels has led to wealth destruction
and a reversion to savings amongst consumers who would formerly have been reliable buyers of
luxury goods.
In these circumstances, consumer confidence and spending on luxury goods is likely to remain
subdued until a firmer recovery takes hold in 2011-‘12. Luxury goods spending may not recover to
pre-recession levels until 2014.
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Emerging markets offer the most attractive prospect for luxury goods over the next three
years.
The success of Collection Première Moscow (CPM), which took place in Moscow in late February
2010, was a positive indication that Russian consumers remain open to luxury purchase
opportunities. The show attracted 1,200 brands from over 30 countries and 17,200 visitors.
The luxury sector has also shown resilience in Asia, with fashion brands such as Chanel making
significant commitment to the Chinese market in 2009, launching major collections and store
openings. Even so, there are constraints here too. There is a strong culture of savings in countries
such as in China (savings ratio of 39.3% of disposable income in 2009) which may moderate over
time but is unlikely to change completely in a single generation. Lower per capita incomes in these
countries also means that potential is limited for ‘big ticket’ luxury items.
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Key Markets
04
The global luxury goods market has not been immune from the financial crisis of recent years;
however, by adapting its brand presentation to be more sober and in line with prevalent consumer
values, and by increasing exposure to developing countries, the industry will navigate through the
storm. Demand from the traditional ‘ultra high net worth’ demographic continues to be strong.
The biggest negative impact is being felt in the mid-market in Europe, the USA and Japan, where
consumer incomes have been hit hard and attitudes to luxury have moderated as a result of a
reduction in confidence as well as an increase in ‘alternative values’ to materialist consumption.
It remains to be seen whether these attitudes will endure when the economic environment
improves. From a strategic perspective, the change in consumer values may be a good thing for
luxury goods makers in the long term as it affords them the opportunity to ‘reinvent’ an authentic
concept of luxury, embedding the new consumer values of sustainability and provenance which
could stimulate renewed demand as a result.
These market dynamics are found consistently across all segments of the luxury goods marketplace
including textiles in fashion and interiors. Therefore, approach to market considerations for Scottish
textiles producers in Japan, Russia and USA will be the same regardless of whether they are selling
to fashion or interiors luxury goods suppliers or direct to consumer.
Japan
The aging population of Japan falls into two groups. Firstly, a majority group whose incomes have
been vastly reduced in line with state pension allowances. Secondly, a small segment in senior
management or holding assets who have become very wealthy.
This intra-generational wealth divide is combined with an inter-generational gap between younger
workers who have entered the labour market during the last decade with greatly diminished labour
rights and salaries a fraction of those of their full-time colleagues.
There is a trend in Japanese markets to cater for this disparity through the polarisation of the
market into a low-priced, budget sector, and a premium, value-added/luxury goods sector.
Supermarkets largely fill the needs of the budget sector whereas branded and high-end department
stores as well as boutique and specialists cater for customers looking for premium quality.
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Related to this is the tendency of consumers to spend heavily on some items and economise in
other areas, as they look to find a balance between luxury and economy. Future consumer
expenditure is expected to continue to divide along the two dimensions of luxury versus affordable,
as Japan’s economic and demographic evolution plays out.
However, there will always be a need for exclusivity and differentiation in Japanese consumer
culture, particularly within the menswear sector. Provenance and heritage, ‘getting behind the
brand’, are key factors for Japanese male consumers and have significant value. This contrasts
with the primary motivations of female consumers, for whom style and design are key drivers.
Russia
The Russian luxury goods market has attracted inward investment and notoriety in equal measure
over the last two decades. Sales of global luxury brands such Rolex and Rolls Royce have boomed
alongside niche luxury brands offering higher levels of exclusivity. (For example, Saville Row tailor
Stowers will open a boutique in Moscow later this year).
The drivers behind this consumer phenomenon relate to the previous era of Russian history where
most consumer goods were scarce. The improvement in the economy and development of an open
marketplace has unleashed a mentality of overt, ‘live for the moment’ consumption and the desire
to signal new found wealth and status.
Middle-income and wealthy Russians today are very fashion-conscious and follow fashion trends in
magazines, on TV and in domestic and international films. Lower income consumers and youth
remain fashionable by buying and altering used clothes, or through fake designer goods which are
widespread.
Western fashion trends are dominant, although they may take longer to reach Russia and, as a
result, many retailers successfully sell items from their earlier collections in outlet shops. There is
an emerging trend for traditional Russian fashions and the adaptation of Western styles to
accommodate this.
Some people say there are ‘three Russia’s’: (1) Moscow and St. Petersburg; (2) other major cities
with populations over 1 million; and then (3) the rest of the country. Certainly premium apparel
opportunities are greatest in the two largest cities.
The most common market entry strategy by established niche Western brands has been through
opening or selling into fashion boutiques in one of the two largest cities. This enables
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experimentation on which styles most appeal to the Russia consumer and enables a period of
learning on how to cope with nascent Russian import and distribution structures.
It is also important to note that medium-to-high income, affluent Russians, typically do not
purchase luxury goods locally but rather do so when shopping in other international centres such as
Milan, Paris and London; due to lower prices and the perception of more scrupulous retailer
practices. This implies a strategy of presenting products in Russia as a means of driving sales in
other major locations.
There are signs that the ostentatious style presented today in Russia mostly by Italian brands:
(Gucci, Versace, D&G, Louis Vuitton, and Roberto Cavalli) is diminishing in relevance to the Russian
premium market, giving way to more classical styles and brands. Although this may take some
time [estimates indicate three to five years], history, authenticity and provenance will be important
for the premium/luxury segment, embracing the right balance between tradition and forwardlooking approaches.
USA
The US economy came out of recession in the third quarter of 2009 and growth in the fourth
quarter was 1.4%. Nonetheless, the sustainability of the recovery remains in doubt. Unemployment
exceeded 8.9% in 2009 and is expected to be 10.2% during 2010. Growth of 2.5% is officially
forecast for 2010, rising to 2.8% in 2011, although many independent economists doubt recovery
will be this quick or robust.
Personal consumption expenditure peaked in 2005 at more than 95% of personal disposable
income but has since fallen to around 92%. The savings rate has risen to more than 5% of
disposable income and is expected to reach 6% in the medium term.
The American retail market is polarized, the following retailers, reported the highest March to
March (like for like) sales growth: SAKS (Luxury), GAP (Urban/Utilitarian) and TJ Maxx
(Discounter).
The indigenous American textiles manufacturing industry has been vastly reduced in line with
globalisation and the migration of manufacturing to low labour cost countries predominately in the
Far East. Estimates suggest that 90% of products for the American market are now manufactured
off shore. Whilst very few companies are manufacturing textile products in the US, if they are, the
focus is on luxury – American made.
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Spurred by the popularity and fashion icon credentials of Michele Obama - who mixes home grown
designers including Isabel Toledo and Jason Wu with mass market brands such as Banana Republic
and J. Crew - a new sensibility is emerging, particularly related to the buying power of women, of
actively supporting American manufacturing.
In general, however, typical mainstream American consumers are globalised, strident and
unsentimental; geographical provenance is of little concern to them unless it is aligned to a
meaningful product and brand representation (Ref. Exemplars).
To build presence in the US market involves embracing and educating contemporary
urban/utilitarian consumers with products that are relevant to them. Co-opting with established
American retail brands, for example, J. Crew ‘in great company’ may be one strategy which could
raise the profile and awareness of Scottish luxury textile products.
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Primary Market Research Findings
05
Primary market research was recently conducted in Japan (Tokyo), Russia (Moscow) and USA (New
York) concerning consumer awareness and attitudes towards Scottish textiles brands. Eight local
experts were interviewed in each country and focus groups were conducted with male and female
consumers across a broad demographic. The key findings are as follows:
USA
The indigenous US textile industry and the manufacturing base have suffered a similar fate to that
of the UK.
Experts estimate that 90% of product ranges (fashion and interior) are now
manufactured in low labour cost countries. This impact of globalisation combined with the demand
for lightweight ‘season-less’ fabrics versus traditional medium to heavyweight wool and wool blends
must be considered when targeting US retailers and consumers.
The key points from the primary consumer research are as follows:
• There is low recognition of Scottish textile brands and very little perceived added value
attributed for being a ‘Scottish’ textile brand. In reality, most US consumers and buyers look
for fashionable, ‘season-less’ and light weight clothing textiles, at competitive prices, and are
agnostic about source.
• Some niche markets do exist which may have potential for Scottish products particularly the
‘preppy’ style of Black Fleece by Brooks Brothers, Thom Browne and Ralph Lauren. To appeal
to these markets, Scottish products must be re-orientated with urban rather than rural
associations.
• Sustainable and responsible production presented with honesty and clarity is perceived as
added value.
Russia
Italian designers and textile suppliers dominate the Russian market and Italian cultural influences
can be found everywhere in Russia, from the Kremlin (designed and built by Italians), to arts,
furniture and fashion. As one expert commented, ‘We were brought up on Brioni. This is the
highest standard we know’.
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Glitzy and showy styles are expected to moderate to a more restrained fashion over the next three
to five years, in both apparel and interior markets, providing opportunities for Scottish brands that
offer a more classic appeal.
The key points from the primary consumer research are as follows:
• Negative response to Scottish branding where this evokes traditional, ‘old world’ countryside;
Russian’s associate this kind of branding with the era of austerity in the old USSR.
• Much stronger preference for ‘Britishness’ (aristocratic-gentleman, ‘dandy’ style) rather than
‘Scottishness’.
• Positive response to the colour palette of some Scottish products including tartans and certain
Harris Tweeds.
Japan
There is a very strong interest amongst affluent male consumers for more extensive narratives
about Scottish textile products, including authenticity, history and provenance. As such, there is an
opportunity to significantly increase communication and promotional activity in the Japanese
market to better communicate the benefits and ‘story’ of Scottish textile premium products. Other
key findings from the primary research are:
• There are potential sales opportunities for Scottish and ‘British’ style manufacturers with major
retailers such as Beams, Tomorrowland and United Arrows.
• There is a need to provide localized styling.
• Many Japanese have only a vague understanding of the distinction between Scotland and
England. (The Japanese word ‘Igirisu’ (イギリス) was quoted several times by interviewees. This
word is used to mean either England or the United Kingdom and for many Japanese the
concept of the UK and the difference between England and Scotland is not clear).
This last point is worthy of note by Scottish textiles producers pursuing authenticity and
provenance based strategies which seek to add value through association with the place of origin,
i.e., Scotland or a particular region of Scotland. In order for this to be successful and for a clear
distinction to be made in the mind of the consumer, a significant amount of product/brand
education and sustained communication will be required. Alternatively, producers may feel that a
broader concept of place within which their product sits (e.g., ‘British’) is adequate and choose to
emphasise other aspects of the marketing mix.
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Across all three markets, it was notable that the same benchmark was applied for luxury textiles,
namely Italian fabrics and in particular Loro Piana.
This brand was mentioned frequently with
respect to the quality of product, innovation and service levels. Italian style and market share is
extremely strong in Russia and the USA.
Interviewees also emphasized the importance of physical market presence – such as through
flagship boutiques or retail partnerships – to increase brand awareness and adoption.
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Redefining Luxury – Global Trends
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The evolution of the concept of luxury over the last decade has given rise to a new and distinct
segmentation of the luxury market.
Traditionally, luxury was for the wealthy elite; a niche market, desired because it separated
discerning consumers from the masses.
The transformation of the nature of luxury can be
represented as follows:
Figure 1: Luxury Market Segmentation
Grand Luxury is the province of High Net Worth Individuals; examples of grand luxury consumption
include couture, private jets and arts philanthropy. At the apex of the triangle is ‘grand luxury’.
Examples of grand brands include: Chanel, Louis Vuitton and Armani. In general grand or uber
luxury is the province of global superbrands, and enjoys mutually beneficial media relationships.
For Scottish textile companies to compete at this scale, in terms of physical and financial resources,
is unrealistic.
Niche Luxury includes the expanding trend of micro markets, driven by fluid demographics (e.g.,
the baby-boomer generation) redefining the concept of luxury toward niche segments and the
individual. Examples of niche brands include: Hasbeen Clogs, Edun and Kilgour. Niche markets
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offer greater chances of success to develop luxury and premium ranges which have resonance
through re-orientating product categories to specific micro consumer groups. If product ranges can
be delivered with new meanings to consumers there exists opportunities to adopt ‘masstige’
strategies. However, masstige strategies are determined on defined product and price framework
strategies combined with the credibility and control of channels to market.
Masstige relates to the concept of ‘mass+prestige’, that is, luxury or premium goods which are
targeted at the mass market and are designed and distributed to have aspirational appeal.
Examples include the accessories and perfume lines of major superbrands, including Gucci, and
designer collaborations by Jimmy Choo and Sonia Rykiel (amongst others) for H&M. It is important
to have a price/product architecture to support diffusion strategies – each product range must have
its own distinctive personality and price point - and must be clearly articulated and understood by
both customers and consumers.
Masstige products are ‘premium but attainable’; they have a price architecture which is situated
between mass market and grand luxury. Democratisation is a key driver of luxury but a major risk
is vulgarisation, there must be a balance between product diffusion and deeply ingrained design
and style approaches to creativity and new product development. Building creative cultures within
textile fashion and interior businesses is critical to success and the development of new approaches
to design-led innovation and collaborations.
Co-creation
Co-creation is a trend encouraging a new form of value creation – in which value is not created by
a company and then exchanged with the customer - but in which value is co-created by the
company and the customer or consumers. Co-creation involves customers or end-users in one or
more stages of the innovation process. Deep insights into the needs of customers and getting
inside the imagination of end-users are vital for creating new design-led products and experiences.
Co-creation approaches:
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Encourage companies to become more consumer-oriented
•
Improve understanding and the relationship with customers
Within an increasingly virtual world and a dynamic digital age (Web 2.0) understanding and
implementation of these new innovation networks can create consumer-led innovations in both
product, experience and service design systems which are relevant to target markets and
audiences.
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Co-creation, hacking, open innovation and participatory design are all synonyms predicated on
creating new forms of engagement in design, marketing and business models as a future
mechanism towards establishing inclusive networks (collective creativity: pro-ams, customers,
consumers) towards delivering new value and exchange.
For example, Alice by Alice Temperley is a diffusion line created through the principles of cocreation by involving consumers who were the target audience. Alice brought together Alice Dellal
and Georgia May Jagger amongst others, asking them to bring their favourite fashion pieces, which
in turn inspired the lower priced collection aimed at the younger more fashionable consumer.
Furthermore, co-creation approaches encourage integrated strategic approaches across new and
traditional media channels and interfaces; these approaches are being adopted throughout design
led industries to facilitate product, service and interactive design solutions.
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Provenance
Provenance: authenticity of origin, quality of production, values and practices has become a
defining dimension of luxury/premium brand identity. Many luxury brands now seek their aura of
distinction and pedigree through allusions to time, history and place.
This heritage may be
asserted through historically provable facts, such as a patent date, brand history or reference to
traditional artisanal skills used in manufacturing products.
Works of art, antiques, wine and first edition books are examples of provenance based product
categories. However, age and origin alone do not constitute provenance, the product must be
associated with proven systems of authenticity, collectability and added value.
Provenance increasingly features within luxury sector advertising and marketing campaigns (Ref.
Appendix 1: Visual Narratives) with associations of craft, heritage and nostalgia.
Provenance and luxury are not necessarily inter-dependent. Provenance can exist in non-luxury
and premium sectors, as particularly exemplified in the food and drink sector e.g. olive oil. Where
provenance exists without luxury or premium credentials in fashion and interior markets it tends to
have connotations and associations with craft e.g. Arran sweaters.
Provenance-based brand strategies must be underpinned by legitimate, ideally independently
monitored, quality assurance schemes. This is common in the food and drink sector where many
brands now pursue ‘protection of origin’ status (PDO, PGI) which is legally approved at EU level;
and also in retailer-led provenance scheme, usually related to animal welfare, that may be
monitored by organisations like Scottish Food Quality Certification (SFQC).
Brand value can be seriously damaged if a provenance strategy is compromised by company
actions. For example, the recent complaint, upheld by the UK Advertising Standards Agency,
against advertising by Louis Vuitton depicting the hand-stitching of a product that was in fact
machine made may undermine the perceived value of the brand in terms of its provenance-based
luxury credentials. Equally, this situation is an opportunity to be exploited by some Scottish textiles
brands, such as Harris Tweed, which have industry structures based around statutory protection of
the brand and product definition (under the 1993 Harris Tweed Act), thus creating exceptionally
strong provenance credentials.
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Responsible luxury
‘Responsible luxury’ is an ethical and environmentally responsible attitude to the production of
products, including manufacturing processes, supply chains and human values which do not harm
the planet or people within their manufacture, marketing or retailing.
The responsible luxury market is growing rapidly.
In 2005, £29 million was spent by British
consumers on fair trade, organic or recycled clothing, with a rise of 79% in 2006, to £52 million
(Ethical Consumerism Report 2007). The Soil Association estimates that the British market for
organic cotton products will more than double, from £45 million in 2006, to £105 million, with
Mintel forecasting £175 million in total ethical fashion sales in 2008.
Research indicates that ethical consumption is as significant to older consumers as it is to young
‘eco-warriors’. Older consumers are ‘quiet activists’ rather than noisy campaigners; they use their
choices of consumption to secure the social and cultural changes they desire.
One restraining factor on responsible luxury is that consumers have become wary of being misled,
and distrustful of brands and businesses ‘green washing’ them through superficial ethical
marketing. As with provenance, this emphasises the importance of objective, verifiable systems to
authenticate brand claims.
Provenance and responsibility are the dominant trends of the moment in the luxury market and
look set to shape consumer demand for the foreseeable future and possibly even in the event of a
significant improvement in the global economy.
However, luxury products and strategies that do not seek to build on these trends are still possible;
that is to say, it is still possible to have ‘just luxury’ in the old sense of beauty, indulgence and
expense without provenance or responsible credentials. Textile companies adopting this type of
strategy will seek to derive their added value from the traditional aspects of luxury reinforced by
clear brand communication and strong design, however, making sure not to become regarded in
any way as an ‘irresponsible’ brand, which would be extremely limiting.
Emerging Markets
In developed markets the anti-ostentatious values of consumers are apparent.
However in
emerging markets e.g. Russia, India, China, there is still the tendency of the new monied to exhibit
wealth through ego-brands and the emphasis on ‘bling’.
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There is anecdotal evidence that these attitudes are changing slowly in emerging markets with new
attitudes to authenticity and longevity. However these changes will take time and within the next
18 months the attraction will be to the known and recognised logos of superbrands.
.
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Pointers for Success
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Introduction
The following ideas and frameworks are presented as creative provocation and strategic stimulus
for Scottish textile companies considering how to respond to the trends outlined in this report.
•
The first section, ’New Definitions of Luxury’, provides short definitions of the key concepts
that are reshaping and driving the market in textiles, fashion and all other luxury segments.
•
The second section, ‘Opportunity Pointers for the Scottish Textiles Industry’, elaborates the
strategic implications arising from the new concepts of luxury and presents ideas and potential
new directions for Scottish producers to consider.
•
The third section, ‘Counter Intuitive Strategies’ illustrates how breaking with orthodox
interpretations of luxury could help Scottish companies develop unique insights, strategies and
products
New Definitions of Luxury
Source: Luxury Report 2010
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Exclusivity
The basis of exclusivity as a driver of luxury has been reinterpreted from ‘rarity-based-on-expense’
to ‘individuality-based-on-values’. The traditional model of status and power linked to exclusive
products has been replaced by a model based on niche knowledge and patronage of artisanal
producers.
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Responsibility
Responsibility at all levels of the business agenda, including ethical, environmental and social
responsibility is beginning to resonate more strongly with luxury consumers. In Europe, Japan and
the US, 30-40 per cent of luxury consumers, claim to be concerned with purchasing responsibly
(Sylvie Benard, Environmental Director LVMH).
However, products have to be desirable and business behaviours need to live up to the credentials
and claims being made.
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Reward
Luxury is changing and this extends to re-evaluating business practices. This represents an
opportunity to innovate and develop new profitable rewarding business models. New strategies
may involve co-opting, collaboration and limited edition product lines, articulating the authenticity
and provenance credentials.
Superior service combined with the best distribution channels, branding and stories are of prime
importance - small degrees of fineness in products - will not make a significant difference. The
benefits have to be tangible and product ranges differentiated.
New web based channels are emerging including Couture Lab which offer exclusive internet based
luxury experiences underpinned by exemplary service. More manufacturers and retailers are
expected to develop and implement comprehensive marketing strategies tailored to the virtual
luxury market.
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Meaning
Consumers are becoming more sophisticated in their buying motivations, beyond the conspicuous
drivers of status and prestige, to more discerning and considered factors.
Experiential luxury which encompasses the act of purchasing and its relationship to time means
that consumers are looking for products that provide them with lasting value - the return
consumers get from – the experience of owning, wearing or giving fewer, better things.
Commitment to new distribution channels, new business models and enhanced service-levels are
becoming increasingly important, rather than PR or marketing ‘spin’ focusing on making ‘luxe’ more
meaningful through authentic and credible visual and rich narratives e.g. Loro Piana.
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Personalised
Within the luxury market there is a growing interest in personalisation, or the ‘one-by-one’ concept
(Mark Henderson, Savile Row Bespoke 2010), as exemplified by Tom Ford’s own label which
focuses on consumer awareness, attention to detail, quality, style and luxury bespoke experiences.
In some respects this aspect of the luxury market is much more aligned to art, particularly modern
or contemporary art, than fashion, with the creative force represented as the artist behind the label
holding both social and cultural influence, and creating one-off personalised products.
This approach eschews lifestyle marketing and focuses on excellence in specific categories, with
consumers beginning to place more value on knowledge, design, artistry and skill. The luxury
environment is subsequently becoming more individualised celebrating the sense of the ‘self’.
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Experience
Luxury consumers have a growing interest in authenticity and the story behind their products.
Stories enhance deeper consumer experiences; where the product was made, what materials were
used in its construction and the purchasing environment.
As luxury manufacturing increasingly moves off-shore, consumers are beginning to pay more
attention to where goods are made and the experiential value; perceived value being higher in the
traditional luxury countries of France and Italy.
Creating such stories involves developing deep and rich insights into consumer’s particular habits.
Perceptions of value is not limited to cost, but extends to other areas of gratification including
upholding personal philosophies.
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Opportunity Pointers for the Scottish Textiles Industry
EXCLUSIVITY
Provenance
Expedites
Exclusivity
Develop product provenance
and production process
stories based around
exclusivity ‘Made how?’:
‘What you do’ and ‘How
you do it’
RESPONSIBILITY
Green is the New
Black
Articulate ethical and
environmental credentials
and business behaviours
honestly ‘The way we do
it’ embracing care and
responsibility
REWARD
Purpose Drives
Profit
Innovate and develop new
profitable business models
through leadership reorientating the:
price/value/
longevity/quality/service
equation
MEANING
Profound Levels
of Engagement
Create product and brand
stories which are
experiential; celebrate time,
heritage and nostalgia and
develop products providing
lasting value and
meaning
PERSONALIZED
Our Brands,
Ourselves
Consider limited,
personalised, individual
editions. Heirloom or legacy
luxury for investment
celebrating the sense of ‘self’
23
EXPERIENCE
An Aura of Wonder
Intimately understand
consumer’s personal
motivations e.g.
superlative service and
quality, style over tradition
and advances in technology
Counter Intuitive Strategies
PRODUCT
PRICE
PLACE
Luxury and
Fashion
Strategies are
Different
Luxury is
Superlative,
Never
Comparative
Distribution
Channels must
Manage
Exclusivity and
Rarity
Does your product have
enough flaws?
Luxury is artisanal -touched
by the hand; heritage and
history are key. Hedonism
takes precedence over
functionality.
Luxury sets the price,
price does not set luxury
Luxury never communicates
directly on price, presumed
price should be higher that
actual.
There is no luxury
without service
The luxury purchase is a
lengthy act – luxury and time
are interlinked.
Retain ‘authentic’ credentials
PROMOTION
Think
Multisensory
Compression – A
Dream – A Deep
and Personal
Desire
The role of advertising is
not to sell
Keep ‘stars’ out of
advertising.
Cultivate closeness to the
arts.
24
Conclusion: Implications for the
Scottish Textile Industry
08
The ‘decade of plenty’ followed by the global financial crisis and its ongoing economic repercussions
has led consumers to re-evaluate their priorities and lifestyles.
The result is a significant shift from conspicuous consumption to discerning consumption and
positive attitudes towards products and brands which reflect individuality, authenticity and social
and environmental responsibility.
This fundamental change has implications for all players in the luxury textiles sector from global
super brands to niche luxury businesses, in fashion and interiors markets, including Scottish luxury
& premium textile businesses.
As economic conditions continue to be challenging, now more than ever consumers of luxury goods
are searching for quality, authenticity, sustainability, purity, and a connection to origin. Consumers
are beginning to ask not just what an object costs and who designed it, but also where it was
made, how it was made and whether in that process it exploited its maker or harmed the planet.
Based on these findings, we offer a number of recommendations for the Scottish Textiles Industry:
1.
Scottish branded textiles companies should develop new or enhanced brand narratives based
around provenance, authenticity and responsible luxury.
2.
More Scottish textile companies should consider luxury (as opposed to fashion) in their
strategic thinking (taking advantage of new narratives).
3.
Scottish textiles companies need to improve their business performance in the key areas in
order to better serve the luxury market including: ordering, packaging, replenishment to
luxury consumer standards.
4.
Develop a strategy and take co-ordinated action at a national industry/sector level to promote
Scottish luxury textiles through a collaborative brand marketing programme.
25
Appendices
26
Appendix 1: Superbrands
This appendix aims to contextualize the luxury environment which is in the main dominated by
global brands and superbrands.
These brands have global recognition and multimillion dollar
turnovers, supported by fragrance, cosmetics and accessories sales.
It is widely acknowledged they have interdependency with the international fashion media. Led by
the reputation of couture, the message of these internationally branded fashion products is that the
label you buy is critical. This is an international message feeding into the notion of super-luxury,
rarity and quality, demonstrated by the significant take-up and awareness of products in this
category by emerging economies, including China, India and Russia influenced by global media,
class, celebrity and money.
French luxury conglomerate Louis Vuitton Moet Hennessy (LVMH), is one of the world’s largest
luxury groups and had revenues of £Sterling 15.36 billion and profits of £Sterling 1.58 billion in
2009 (LVMH Annual Results, 2009).
It is the parent of around 60 sub-companies that each
manages a small number of prestigious brands, including: Fendi, Donna Karan, Givenchy, Kenzo,
Marc Jacobs, Celine and Thomas Pink. These companies are, to a large extent, run autonomously.
The group was formed after mergers brought together champagne producer Moët et Chandon and
Hennessy, a leading manufacturer of cognac.
In 1987, they merged with fashion house Louis
Vuitton to form the current group.
Christian Dior, the luxury goods group, is the main holding company of LVMH; Bernard Arnault is
the majority shareholder of Dior, Chairman of both companies and CEO of LVMH. His successful
integration of various famous aspirational brands into the group has inspired other luxury
companies into doing the same. The oldest of the LVMH brands is wine producer Château d'Yquem,
which dates its origins back to 1593.
PPR is a French multinational holding company specializing in retail shops and luxury brands. The
company was founded in 1963 by the businessman François Pinault and is now run by his son
François-Henri Pinault.
PPR had revenues of £Sterling 14.89 billion and profits of £Sterling 887 in 2009 (Annual Report,
2009).
27
Its subsidiaries include the Gucci Group who owns the luxury brands: Gucci, Balenciaga, Yves Saint
Laurent, Sergio Rossi, Boucheron, Bottega Veneta, Alexander McQueen (50%), and Stella
McCartney (50%).
Compagnie Financière Richemont SA is a Swiss luxury goods company that was founded in
1988 by the late South African businessman, Anton Rupert. It has four main business areas:
jewellery, watches, writing instruments and clothing.
It had revenues of £Sterling 4.78 billion and profits of £Sterling 1.42 billion in 2008 (Annual Report,
2008). It is the third-largest luxury goods company in the world by turnover, behind LVMH and
PPR, its two main competitors in the luxury goods market.
Its portfolio of luxury brands include: Cartier, Piaget, Baume et Mercier, Chloe, James Purdey &
Sons and is a significant shareholder of Shanghai Tang. In March 2007, Richemont and Polo Ralph
Lauren announced the formation of a joint venture, the Polo Ralph Lauren Watch and Jewellery
Company, S.A.R.L., of which each company will own 50 percent.
In addition, online fashion retailer Net-a-Porter has recently been acquired by Richemont for a
reported £350 million (The Telegraph, April 2010). Acquiring Net-a-Porter will give Richemont the
channel to sell its own brands including Cartier, Alfred Dunhill and Chloé on the luxury internet site.
Net-a Porter reportedly have traffic of 2 million consumers logging on to the site per month and
delivered a 67% sales increase in 2008 to increase their revenues to £55.2 million.
Whilst not a global superbrand, Loro Piana, is the most cited luxury [cashmere] textile brand by
consumers.
They recently published a book about their 10-year baby cashmere project, which helps sustain the
lifestyle of nomads in the semi-deserts of Outer Mongolia.
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Appendix 2: Visual Brand Narratives
1. Gucci
Gucci’s current 2010 advertising campaign, ‘forever now’: The man. The passion. The dream.
Guccio Gucci lived the artisan's life of Florence in 1921. Authentic. Enduring. Dedicated to
perfection. His spirit inspires our traditions today. The beauty of what he began nurtured by
generations of craftsmen for 90 years. His desire to create what lasts forever moves each of us.
Touching our past as we craft our future. Compelling us to carry his iconic legacy forward - now
and forever.
2. Dolce & Gabbana
Likewise, Dolce and Gabbana opened their Spring/Summer Catwalk show profiling Domenico Dolce and
Stefano Gabbana in their atelier sketching and most hand crafting their signature tailoring ‘Sartorialita’:
http://www.dolcegabbana.com/dg/tailoring-lesson-video/
29
Gucci’s current 2010 advertising campaign, ‘forever now’: The man. The passion. The dream. Guccio Gucci lived the artisan's life of Florence in 1921. Authentic.
Enduring. Dedicated to perfection. His spirit inspires our traditions today. The beauty of what he began nurtured by generations of craftsmen for 90 years. His
desire to create what lasts forever moves each of us. Touching our past as we craft our future. Compelling us to carry his iconic legacy forward - now and forever.
30
Likewise, Dolce and Gabbana opened their Spring/Summer Catwalk show profiling Domenico Dolce and Stefano Gabbana in their atelier sketching and most
importantly hand crafting their signature tailoring ‘Sartorialita’: http://www.dolcegabbana.com/dg/tailoring-lesson-video/
31
Appendix 3: Case Study Bottega Veneta
32
Bottega Veneta Case Study
Bottega Veneta is a division of Gucci Group, which in turn is owned by
Shop Veneta Artisan was founded in 1966 by two artisans: Renzo
Zengiaro and Michele Taddei, in Vicenza, specializing in hand crafted
leather goods. In the early 1970’s Zengario developed the iconic leather
weave which identifies Bottega Veneta today; by 1973 the artisans had
transformed into a fully integrated luxury leather organization with
Taddei responsible for the commercial development and Zengiaro creator
However by the 1980’s the company had lost its direction with more than
70% of product lines - representing the core business - consisting of
synthetic/nylon materials that do not require fine craftsmanship or the
artisanal skills that has always distinguished the company. Subsequently,
the Gucci Group acquired the company in 2001; Shop Veneta was
financially bankrupt, in addition, the brand image was severely damaged,
positioned far from the discreet luxury that now characterizes it. In May
2001 Patrick Marco joined the company as CEO with Tomas Maier joining
slightly after as Creative Director. Maier presented his first collection in
Spring-Summer 2002, to immediate acclaim. The underlying goals driving
re-establishment
of
the
brand
were
Bottega
Veneta’s
exclusiveness: design, high quality materials and craftsmanship,
all key attributes to establish luxury products which are
innovative, functional and timeless. Currently Bottega Veneta is
situated as one of the world's leading luxury brands with its product lines
distributed internationally.
advantage of the diversity of its brands favouring decentralization of
operations and proximity to the area and the customer. PPR’s strategy is
based on two principles: to ensure revenue growth and profitability of
the group and to assign each of the brands within the portfolio its own
individuality. Throughout the organization decentralization gives broad
autonomy to the Managing Directors -based on sound management
and designer of handbags.
the
the French luxury group PPR. PPR has based its development on taking
skills, image, a rigorous excellence of products and a highly sophisticated
distribution network.
Bottega Veneta’s individual mission within this
[Gucci] brand portfolio is: ‘the personality of the client must always
emerge’; and the individual identity prevails, not the brand or logo, this is
summarized in their discreet approach: ‘When your own initials are
enough. This factor is largely unique in the luxury market. What identifies
Bottega Veneta beyond the brand name is their artisanal braided leather
technique, which dates back to the early 1970’s and is primarily
associated with the brand as opposed to a prominent logo. Due to the
hand crafted nature of the plaited leather technique this has become
their signature – or mark of distinction - assembled with several strips of
leather, this is a technique which cannot be done by machine only by
skilled artisans. The technique requires extreme precision as all the strips
of leather must be equal in length and shape and have the same shade
of colour. As such a classic Bottega Veneta bag takes more than three
hours of manual labour to make, and is one of the easier designs.
33
The Cabat requires two skilled craftsmen to work for two days; the Knot is
Our stores make customers discover the world of Bottega Veneta and for this
composed of crystals assembled to the skin.
reason we must always pay attention to details in the store interior and exterior,
The artisans who work in the
ateliers are highly specialized. Accordingly in 2006 Bottega Veneta founded a
products and displays. "
‘leather school’ to maintain this tradition recruiting young students keen to
undertake and train in the profession. The school was designed in conjunction
(Excerpt from the manual of conduct distributed to staff stores EU)
with the School of Arts and Crafts in Vicenza, within which was established a
laboratory equipped completely by Bottega Veneta. The students are required to
Interestingly within this highly sophisticated distribution and sales network
attend courses run directly by the artisans of the company; alternating classes
particular attention is paid to customers buying ‘gift purchases’ where possible
with both theoretical and practical lessons, they have the opportunity to develop
these are identified and logged separately in the sales inventory.
their talents according to their specific skills
A further aspect of Bottega Veneta and the luxury brand profile is their alignment
with art, particularly modern art and this has been the cornerstone of their
The distribution network of Bottega Veneta (2008) revolves around directly
advertising and media campaigns ‘The Art of Collaboration’ with Sam Taylor-
owned retail stores; in Europe they have 25 directly stores, 10 franchisees and
Wood and Steven Meisel in previous seasons and Nan Goldin for the
185 further outlets. The flagship of the company are direct owned stores (DOS),
Spring/Summer 2010 campaigns – these artists are responsible for the artistic
these boutiques reflect the company's philosophy emphasizing the unique
direction of the campaigns each working intuitively with the product and their
tradition and supreme quality:
own artistic practices – accompanying films of the process are also part of the
media campaign.
"The intent of the new concept is to create an environment which gives a sense
of luxury, but is also functional, where the product is the focus. All Bottega
Veneta Stores are product oriented and, above all because they are
http://www.theartofcollaboration.com/#/videos/spring‐summer‐2010/nan‐goldin
customer oriented focus on the satisfaction of clients' needs,
aspirations and desires. What we want to convey in the store concept is an
idea of timelessness, where a sense of serenity and luxury is perceived. We want
to make any customer entering our stores feel at home and to reach the target
by creating a more and more pleasant and warm atmosphere through the store
layout and the cordial welcome.
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