The Credit Crunch Moth – Why Fashion’s Super Brands Are Watching

Superbrands Burberry, Bulgari, Dior and Gucci are watching the demise of their high street counterparts with interest.

Despite spinning in a different orbit to stores such as USC and The Officers Club, the superbrands, such as Dolce & Gabbana, Dior, Gucci, Bulgari, Louis Vuitton and Chanel – synonymous with glamourpusses such as Britney Spears, Jessica Alba, Angelina Jolie, Christina Aguilera, and Beyonce – are keen to ensure damage limitation for their brands during the economic downturn.

The credit crunch moth

When French women’s clothing store chain Morgan went into administration at the end of 2008, it was just another example of the credit crunch moth eating into a well-known clothing brand (albeit French) with stores now set to close across the UK.

The proliferation of high street clothing stores biting the dust is just desserts, some argue, for some chains whose hefty profit margins were exposed by more competitively priced so-called ‘disposable fashion’ stores such as Primark and Matalan, resulting in a dramatic switch in UK shopping habits (over the past eight years, these brass end retailers have doubled their share of the market).

No High Street miracle, despite the influence of Zac Efron and Miley Cyrus

With the demise of household names like USC and Mark One, Britain’s clothing retail sector, it seems, has never had it so bad. Despite many stores tapping into the High School Musical and Hannah Montana market with its American youth-inspired lines, it’s not been enough to stop the downfall of many of the mid-priced stores. What is a celebrity shopper like Jade Goody or Lindsay Lohan to do?

The uncertain future for superbrands like Gucci, Dior, Bulgari and Dolce & Gabbana

Traditionally, companies at the luxury end of the market are hit hardest by a global economic downturn (Whittards, anyone?), so, surely, it’s only a matter of time before these big names go under.

After all, the company at the heart of it all, Lehman Brothers, pointed out that up to 60 percent of the luxury goods industry’s customers remain in classic, developed markets, which are notoriously pummeled in a recession.

A worrying time of uncertainty for any American Idol looking to wow the red carpets in that knockout Versace dress. Is it finally downsize time on the celebrity circuit?

Are we, the common men and women of Britain, to be confronted (and affronted) by the sight of Britney in a heavily discounted sequined top (pack of three) from Asda or have our eyes assaulted by the image of David Beckham stepping from his shiny Bentley in a hand-stitched white leather jacket (ethically sourced) for under £50 from TK Maxx (or, as my sister-in-law calls it for added chic mystique, Tee-kay-mah).

Editors and buyers, after all, are saying we are now entering the age of minimalism and austerity.

Mamma Mia or Mamma See Ya?

o Gucci president Danielle Vitale says the credit crisis will affect the G brand in the short term but she’s not too concerned thanks to healthy international sales and the fact that Gucci is a truly global brand with a wide customer base and that it has seen off recessions before

o Burberry has been particularly affected by the slowdown in the US economy, saying its US outlets are expected to place smaller orders this year. Hopefully Burberry CEO’s decision to diversify the label, giving their signature plaid a backseat, will prove to be a wise decision in 2009

o Yves Carcelle, Chairman and CEO of Louis Vuitton, has dismissed the economic downturn as having ‘no impact’ on his company. Explaining his bold claim, he states that when things are uncertain, Louis Vuitton thrives because it is ‘of eternal value’

o The move towards a less ostentatious 2009 in the fashion world seems to have been reflected in Bulgari CEO Francesco Trapani’s decision to sell his classic 137-foot yacht, which was known as the Bulgari yacht with Trapani sometimes conducting interviews on it

o Dior CEO Sidney Toledano isn’t worried about his superbrand or it’s survival during the recession, telling the Associated Press, “When times are tough, the mistake is to throw in the towel. I use this metaphor – when the kids are not hungry, you have to cook even nicer dishes to stoke their appetite.”

Ironically, it may be lower-end retailers, such as H&M and Kmart, who provide the lifeline for superbrands during the lean months of 2009, maintaining the link between chic and high street. They’re now providing the best of both worlds to consumers.

These brass end retailers have enjoyed great success with designer collections, such as Stella McCartney for Puma, Issac Mizrahi for Target, and Karl Lagerfeld for H&M.

And so the love affair between brass end high street retailer and superbrand seems to be allowing both to endure for now. In the words of another famous love affair, Romeo and Juliet, “What’s in a name?”

It appears, for now at least, the superbrands still smell as sweet…but alas, poor isolated Morgan is the latest to fall upon its sword.

Only time will tell if the Guccis and Diors of this world will suffer a similar fate.