Brands situated at the upper echelon of the fashion spectrum are raising their prices. Louis Vuitton did. Gucci did. Chanel — whose classic quilted bag has reportedly skyrocketed 70 percent to nearly $5,000 in the past five years — is no stranger to the price increase, either. Hermès has raised prices. Céline, the LVMH-owned brand, which is not uncommonly criticized for its expensive wares, even increased prices a bit. And the list goes on. Most of these houses are upping prices and shunning entry-level products in favor of more pricey accessories in order to sustain their positions as brands known for prestige and exclusivity.
Hermès is arguably the exception; its higher price tags are mostly due to an increase in the price and scarcity of raw materials, as the house does not subscribe to the notion of raising prices to up its exclusivity factor. Simultaneously, these high fashion houses are also attempting to reiterate their distinction from the affordable luxury brands that may or may not be encroaching on their territory, but which are, nonetheless, garnering a lot of attention.
And still, there are brands that are approach the market from both ends: the high-end and the more accessible. Chloé, Balmain (a few looks from the house’s diffusion collection, Pierre Balmain, are pictured above), Alexander McQueen, Alexander Wang, Marc Jacobs, and Mary-Kate and Ashley Olsen, among others, have their main collections, while also maintaining lower-priced “diffusion” lines, of sorts, and it seems that now, maybe more than ever, these little sister lines can be of real value.
If executed properly, diffusion lines (as distinct from collaborations with mass market retailers, such as H&M and Target, which largely serve a different purpose) are an asset to brands, especially now that consumers’ proximity to fashion is notably close. Thanks to live stream fashion shows, designers/brands’ heavily-manned social media accounts and the array of fashion-inspired reality shows, blogs and other publications, consumers are situated more closely to high fashion than ever before, and the result is demand. The problem is: The average shopper isn’t looking to spend $2,000+ on a dress. In this way, designers/brands’ diffusion lines may serve an important purpose, by catering to those who are looking for affordable luxury. But maybe even more so now with the strong financial gains being held by accessible luxury brands, these designer diffusion lines may serve as a serious source of revenue for brands willing to target the slightly above average consumer, while allowing them to maintain the cache of their main collections.
Due to the increasing desire for high fashion among the general public, the so-called accessible luxury brands are thriving in a way that feels like an all-time high. Not surprisingly, some of most successful are those that cater to consumers’ desire for an entrée into a luxury lifestyle. It is the Michael Kors, Tory Burch, and Kate Spade brands that, while they may not necessarily be stealing a terribly significant portion of the sales of the legitimate luxury brands (although a recent Bloomberg report suggests they are), are growing fairly rapidly and fairly consistently. For instance, in 2013, Michael Kors reported a 72% gain in sales for a total of $2.2 billion and Kate Spade experienced a 67% jump, with its sales amounting to $1.3 billion. And, in addition to an impressive bottom line, these accessible luxury brands are noteworthy, as they are vying for consumers’ attention, and consumers are obviously giving in.
But is widespread consumer appeal of any real concern to brands like Prada or Louis Vuitton or Chanel, which, for the most part, have a very specific customer base and an even stricter brand vision to uphold? Maybe not. It seems that Louis Vuitton, for instance, which reportedly rakes in annual sales of about $9 billion, more than half of LVMH’s operating profits, doesn’t need much help in terms of profit or in growing its potential pool of customers. However, if we use Prada as an example, it is – to some extent. The Italian design house, under the direction of design (and business) genius Miuccia Prada, launched its own lower-priced collection, Miu Miu, in 1992. While Style.com’s Tim Blanks says, “the Prada revolution wasn’t in full force yet” at that time, it seems Prada foresaw the need for a younger, trendier, and more price conscious collection. Still a far cry in terms of price from the average accessible luxury brand, as a Miu Miu dress may retail for upwards of $2,000, the brand, which has since aggressively repositioned itself as a stand-alone one, is still quite symbolic of a high end brand providing a step-down collection, and thus, reaching a different audience (slightly different in this case, in particular), one that is larger, one that is spending. It seems Prada may also have predicted decline in loyalty amongst luxury consumers, who, with the recessionary economy and with a decline in the stigma of lower priced lines, now, are far less loyal to their favorite high-end European brands, branching out more than they have in the past. The result is the seamless mixing high-end and low-end brands.
See by Chloé may be a better example. “This frisky 10-year-old line for the Chloé brand”, is how the New York Times’ Suzy Menkes referred to it in 2012, calling attention to the fact that for French brands, there is always a sneaking feeling that a second line is second best, and yet, things are changing. Like Miu Miu, See by Chloé stages runway shows during the Fall/Winter and Spring/Summer shows. So, too, does Versus (Versace’s sister collection), Marc by Marc Jacobs, and Elizabeth and James (the Olsens’ step down from The Row) – just to name a few. These brands provide some freedom, some flexibility in terms of gaining profit and market share. Geoffroy de la Bourdonnaye, chief executive of Chloé, has addressed this point, exactly, saying: “The things you can do in the second line you cannot easily do in main line.” One of those things may be competing with these rapidly growing affordable luxury brands without negatively affecting the image portrayed by the main collection. Because isn’t that in large part what the secondary line is for? Making money?
That seems as though it could be a take away, especially for brands that are not quite as highly esteemed as Chanel or Dior, for which pret-a-porter is a step down: Beating these rapidly expanding accessible luxury brands to the punch by offering consumers, who are either one step below your main customer or on the same level but in search of an instant gratification buy (as de la Bourdonnaye refers to See by Chloé), with something to buy into, without diluting your main collection. Hence: the secondary line. These secondary collections may be a more useful tool now that brands like Kate Spade, Tory Burch, Coach, Rebecca Minkoff, and maybe even J. Crew, if we consider the more high end aspects of the company (think: its “Collection”, which consists of $700 leather trousers, $3,200 python jackets, and $700 embroidered dresses), are vying for the attention and dollars of the upper-middle classes, not only in the U.S., but very heavily in Europe and China, as well. Thoughts?
* This article was initially published in May 2014.