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Hello from Paris. Who can believe it’s only Wednesday? It’s been straight back into the fire for fashion people, particularly everyone working on the upcoming menswear and couture seasons kicking off at Pitti Uomo in Florence next Tuesday.
The year is starting with an inauspicious sign from the US: Saks Global is expected to file for bankruptcy any day now after missing a $100 million interest payment in December. A new loan being negotiated with creditors is reportedly aimed at keeping operations going during the bankruptcy — not avoiding it. But what will the owner of Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman sell? Hilldun, a factoring company that helps finance shipments for more than 140 of its brands, has paused working with the retail group in a major blow to confidence.
Big luxury brands don’t rely on factor finance the way indie labels do, but they’re still likely to take a hit from Saks’ broader troubles. Even when brands operate corners themselves as concessions, retaining control of inventory, the loss of depth and variety in the surrounding assortment will deter shoppers. Even if Nordstrom and Bloomingdale’s appear more stable, it’s an unsettling sign for the start of the year.
Elsewhere, a few of the brands who changed creative director last fall have started rolling out their refreshed collections in stores. Dior’s first products by Jonathan Anderson hit the shelves last week, with a Selfridges Corner Shop takeover scheduled to open Jan. 8 (Thursday). Gucci’s “La Famiglia” collection by Demna is soon to follow.
Which leads us to this week’s list. Together with The Business of Fashion‘s editorial director Vikram Kansara and luxury editor Mimosa Spencer, we had a brainstorm yesterday about some of the biggest stories we — and our readers — should be tracking this year. Are we scooping ourselves? Probably. Have you guys earned it? Maybe? Bonne année.
1. Landing Designer Revamps
Nine of the world’s 15 biggest luxury fashion brands changed designers in the year leading up to last September’s womenswear season. How will companies translate that renewed creativity to product, and how will customers respond?
Watching the market metabolise change might not be as sexy as change itself. But whether brands can stick the landing on commercialising their designer revamps will be key to turning around sales in a troubled market.
2. Pricing Recalibrated?
Much has been made of how recent years’ hikes priced out less-wealthy “aspirational” shoppers. But price inflation has turned off core clients, too, and fatigued plenty of ultra-wealthy VICs.
I have little hope brands will manage to broadly re-engage aspirational shoppers this year. But it will be interesting to see where they land in terms of taming inflation while working to boost runway creativity: What does “entry level” mean today, and who are entry-level products aimed at?
What’s going on with psychological thresholds like the €10,000 ($11,682) bag? Which was inviolable, until recently, for everyone but Hermès.
I noticed that Dior, which has been responsible for some of fashion’s most aggressive price hikes, managed to position Jonathan’s first Lady Dior bag just under the 10k mark despite being a limited edition with all-over embroidery.
3. Platformed Customers
You may have caught the duelling essays in late December by Bryan Yambao and Lauren Sherman about the virtues and pitfalls of luxury’s increasingly public relationship with clients. There’s no denying fashion has increasingly ceded authority to end consumers, albeit more gradually than other industries like media or music.
The voice of influencer-consumers — whose complaints can go viral in an instant — is likely to get even louder. These people, not conventional fashion reporters, are increasingly at the front lines of documenting what brands are actually selling, for how much, and whether anyone feels like they got their money’s worth — most of which used to take place in private.
4. A ‘Quiet’ ‘Luxury’ Reckoning
Those influencer-consumers were out in force at The Row’s sample sale in October — whose coverage made it seem like New York’s leader in understated luxury was no longer that understated or luxurious. This came on the heels of a viral rubber flip flop and an open letter from a pissed-off influencer. Can this brand continue to seem special now that the cat is very much out of the bag?
As the brand scales, it could prove a weakness that The Row seems to define itself so often by what it isn’t: no logo, no clothes on social media, no user-generated content from runways. I believe in this brand’s long-term prospects (it’s backed by the families behind Chanel and L’Oréal), but see growing pains ahead.
We’ll keep tracking other players in logo-free luxury, including giants like Loro Piana, Brunello Cucinelli and Zegna, to see which ones can keep up the momentum. These brands are annualising a long run of sales growth at the same time that rivals are shaking up their aesthetics to win back customers.
5. A Long Road in China
LVMH and Hermès both said sales in China returned to growth from Q3 — the latest sign that the troubled market is slowly turning around. Analysts are forecasting continued improvement this year, but nothing dramatic.
In December, the CCP announced an 11-point plan aimed at boosting consumer spending. Market reaction has been muted: Household savings in China are already at record highs, and restoring Chinese people’s optimism for their economic futures is a far thornier challenge than what can be addressed through measures like subsidies, trade-in programs and looser consumer credit.
6. C-Suite Accountability
There’s a fine line between empowering creativity and offloading responsibility to creatives: Expect more scrutiny on this point. After a year when new designer visions stole the spotlight, investors will be looking closely at the steps taken by CEOs as well as their top marketeers, number crunchers, retail directors and supply chain coordinators. Who is taking ownership of the strategy? Who is adapting for a market where brands need to create demand?
7. US Uncertainty
Luxury brands now depend on the US for around one third of sales, as the market has remained surprisingly resilient compared to other regions since the pandemic. But smooth sailing isn’t guaranteed: There’s the crisis at Saks Global. And while demand is strong among the wealthiest buyers, sales to aspirational customers remain depressed. Americans are also known to be particularly sensitive to equity prices, and while the US stock market has been on a tear, nearly all of those gains have been concentrated in a handful of AI and AI-adjacent stocks. If the AI bubble bursts, the US market will take a heavy hit.
