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Luxury's new 'superbrand' Premier League leaves mid-table players behind

Marcus Jaye
14 March 2023

Money goes to money. Or to quote Michael Ward, Harrods Managing Director, who said recently: "the rich get richer in a recession". While he was rather tone deafly referring to his department store customers, he could have equally been talking about the top-tier of luxury goods companies – Louis Vuitton, Dior, Hermès, Chanel – that he sells.

He went on to say the luxury department store was trading ahead of 2019 levels and that his customers increasingly bought goods from a few prestigious “superbrands”, leaving other brands exposed.

While a slightly dated term, superbrands, in this respect, means the small group of brands who have prestige, luxury and scale. Harrods still labels its fashion floors ‘superbrands’.

It’s no wonder the customers are buying considering how much the ‘superbrands’ have spent on marketing at Harrods in recent months. A full Christmas gingerbread takeover by Dior (main image) was followed by Louis Vuitton, who constructed a 15 metre-tall life-like statue of Yayoi Kusama, the artist, merrily painting her dots onto the entire store in Hans Crescent. Every single window was monopolised by these brands. These activations would have cost many millions of pounds.

The select and elite group of luxury brands at the top of the fashion pyramid have the budgets and brand awareness to dominate. These brands have turnovers in the billions and they only seem to be getting bigger. Both LVMH and Hermès posted record revenues at the beginning of this year. Many other designer brands have the ambitions to join this elite group, but very few make it. While some fashion brands are in the 'Premier League’ of fashion, they don’t feature at the top of the table or qualify for Europe every season. Like the best football teams, luxury fashion brands are big businesses and require huge injections of capital to keep lifting silver cups.

Ward also said or Britain’s only true global luxury house: “Burberry’s got a challenge, the constant trend is people going for more and more and more premium items. The rise of the superbrands is getting absolute, so that middle ground of the market is becoming tougher and tougher”.


Burberry AW23

Capri Holdings is in the luxury middle ground. Owner of Michael Kors, Versace and Jimmy Choo, it recently announced that revenue had dropped 6% to $1.51 billion year-on-year in the third quarter of 2023, missing analyst expectations, due to weakened wholesale demand.

Capri Holdings’ CEO said the quarter was “more challenging than anticipated”. The shares plummeted 24% on the news. The disappointing sales were squarely targeted at wholesale and this is where the elite aren’t exposed.

Businesses like Chanel, Louis Vuitton and Hermès have always been very particular about where their goods are sold. They don’t wholesale and rarely reduce anything. Even in Harrods they strictly control the retail environment.

Gucci, Prada and Burberry have pulled away and halved the exposure to wholesale over the last few years. Wholesale doesn’t allow you to control the point-of-sale or reductions as much, but it still generates considerable incomes for these brands.

To pull away even further, leaving the middle behind, the luxury elite are opening stores just for VIP customers. Chanel is said to be opening private boutiques this year in Asia to serve its top-spending clients. Categories like fine jewellery and watches helps cement this group at the top in HNWI’s (high net worth individuals) eyes and expensive exhibitions like Dior’s Designer of Dreams, which is now in Tokyo, continues to hammer home history, pedigree and ‘brand’.

One brand that has the potential to join the group is Gucci. Already in the fine jewellery category, it just announced its intention to reinforce its desirability with ultra-rich consumers by launching a new concept called ‘Gucci Salon’ for VIPs.

"It is an initiative to recruit an extremely high-end clientele, which we do not have at Gucci, but which has grown enormously in recent years in the world," said owner and chief of luxury group Kering, François-Henri Pinault. "The concept could be installed in certain shops, or via one-off events. We will have a dedicated location that will open in April on Melrose Avenue in Los Angeles," he said. "Then in the big flagships, we will dedicate entire floors. In the smaller shops, there will be Gucci Salon spaces. It's a concept that we're going to roll out from this year in all regions of the world".

Luxury fashion's top 50 social winners

Image: Gucci Instagram

Gucci said it will offer its customers products, specially developed over the last two years, with prices exceeding €40,000 and going up to €3 million, for high jewellery pieces.

Gucci too is opening the Gucci Cosmos exhibition scheduled to run from April to June in Shanghai and will then be extended to other key locations for the brand. An exhibition showing the house’s most iconic and timeless designs, it’s all part of the education process to entice those black credit cards from people’s wallets.

Gucci has the size, €10.5 billion in revenue for 2022, and a new creative director in Sabato de Sarno to fine tune its leap into the top of the premier league of fashion brands.

The brand seems to taking this chance for a reset, and to chase the ‘superbrand’ customer.

It will have to be less exposed, stop most wholesale and reduce the points of sale. If it can sell enough €3 million necklaces, then it is doable.

Expect to see gold horse-bits and red and green stripes all over the terracotta exterior of Harrods anytime soon.

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