Tuesday, May 23, 2006

The changed face of global luxury brands

Luxury brands have a global appeal.
For years, Paris, London and New York have been the luxury style capitals of the world.
This has changed - Shanghai, Mumbai and Moscow have entered the global arena.
Their influence is not limited to having Prada fashion shows, local Armani boutiques or Bentley dealerships, but also setting trends.
As a result, the consumer profile of luxury goods has changed - and companies acted.

Especially the Chinese love luxury brands.
According to Ernst & Young, there will be around a quarter of a billion Chinese consumers who can afford luxury products in 2010.
Needless to say, companies maximized on this unique chance of business expansion: Giorgio Armani ( 30 new stores by the end of 2008); Louis Vuitton (13 new stores n 2007); Bulgari (6 new stores in 2006); Dolce & Gabbana (entering the Chinese market in 2006 with outlets in Shanghai and Beijing); Montblanc (200 shops countrywide by 2010).
In second place is India.
India doesn’t have luxury shopping malls or districts, which is a hurdle for opening branches. Notwithstanding, Burberry, Christian Dior, Gucci, Cartier, Chanel, Omega, Hugo Boss, Louis Vuitton and Versace want to get a foothold in the Indian peninsula during 2006.

Asian women are highly sophisticated and influential.
L'Oréal for one quickly realized that it had to cater to a whole new group of consumers.
Apart from the anti-aging and anti-wrinkle cream craved by American and European women, the cosmetics producer has to meet the Chinese and Indian demand for whiter skin.
The "wet lipstick" (the big runner in 2005) originated in the Asian market and was only later successfully launched in Europe and America.
Let's not forget the matter of local tastes - eye shadow colors must be bold in India, where the Bollywood-style reigns.

Needless to say, there is a difference between the affluent middleclass (looking for brandname products) and the megarich, who live by the same rules as their Western counterparts.
Their tastes follow the same pattern: designer clothes, real estate, art, and private jets.
Since they move in the same circles, there is an interesting cross-cultural osmosis.
As a result, a brand’s ethnicity is no longer an indicator of where its owners are from and where the goods are produced or sold. It forced companies to go global and leave their national image behind.
L'Oréal bought the Chinese cosmetics label Yue-Sai and Chinese entrepreneurs bought European labels Asprey, Mulberry and Lanvin. Apart from "foreign" ownership, production is ofter outsourced to low-wage countries. As a result, the "made in" label has lost much of its snob appeal.
Prada’s CEO Patrizio Bertelli caught the zeitgeist best by announcing that the Made in Italy label would be replaced by Made by Prada.

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