Deluxe: How Luxury Lost Its Luster (37 page)

Everyone I met there was young, beautiful, and fashionably dressed in groovy clothes from the new H&M collection by Stella McCartney. Andersson—a tall, handsome Swede, just like you’d imagine—told me that he and the company’s creative director, Jan Noord, came up with the idea of inviting luxury designers to do capsule collections for the brand. “We wanted to do a big campaign for Christmas, something different, and we asked ourselves, ‘What would be the ultimate gift to women that would exemplify our motto of fashion quality at the best price?’” he explained. “And we started to talk about Karl. Women admire him, and he has constantly proven to be innovative. We called Karl and he loved the idea. He said, from his point of view, H&M is deciding what’s in fashion as much as Chanel does, that fashion is created by big fashion houses, but trends are set in the street by how people wear clothes. We came up with the idea of a limited edition, a tight collection, to combine mass distribution with exclusivity: ‘massclusivity.’ We want to be democratic, but you have to be there on a special day. You could never find Karl on sale.”

Lagerfeld did the designs and worked with H&M to choose the fabric, which came from Italy, and the clothes were manufactured in Turkey, Romania, and the Baltic states. Prices were
20
to
30
percent higher than regular H&M prices because, Andersson explained, “we wanted to do the best quality possible.” When the collection went on sale, the public reaction was explosive. “We created a fashion event,” Andersson remembered. “People would have breakfast and then queue up at H&M. Some items sold out in two hours, like the sequin evening jacket for women. It was all sold out by Christmas, which is what we had hoped for. As Karl says in a video we did, ‘Taste has nothing to do with money.’”

The success of fast-fashion luxury designer collections like Lagerfeld’s H&M line has rattled the luxury industry, and several companies have changed the way they do business to keep up. Ferragamo centralized inventory and established computer links to suppliers, cutting the design-to-delivery cycle by
20
percent, to ten weeks. Burberry began to offer four to five capsule collections each season. Other fashion houses, including Escada, have come up with midseason collections they call “hot fill-ins,” and are delivering clothes to retailers even before the seasonal fashion shows in Paris, New York, and Milan. To keep fashion shows relevant, French fashion association head Didier Grumbach has proposed holding them much earlier in the seasonal cycle.

More important, the emergence of luxury designer fast fashion has finished off whatever division was left between high-end and low-end fashion. These days, the rich buy Isaac Mizrahi designs at Target while the middle market shops at Gucci. Mizrahi calls the phenomenon “bipolar shopping disorder.” Lagerfeld thinks it’s just terrific. “We live in a time when expensive and inexpensive—not cheap, I hate that word—can live very well together,” he told me. “It’s the first time in fashion this has happened.”

“Before, cheap clothes looked cheap,” Andersson told me. “Today, it’s nearly impossible to see the difference, and that’s what we are trying to prove. We can never be as luxurious as Chanel, but luxury is more in your perception than what it says on the label. We see ourselves as competitors with everyone—Gap, Zara, but also Chanel. Why shop at Chanel if you can shop at H&M?”

T
ODAY, THE LUXURY INDUSTRY
is like Monopoly. The focus is no longer on the art of luxury; it’s on the bottom line. In early
2006
, Prada sold the money-losing Jil Sander to a London-based private equity fund called Change Capital Partners for a reported $
119
.
1
million. The Hamburg-based line is now designed by a young, well-regarded Belgian named Raf Simons, while Jil Sander herself, who lives next door to the headquarters, plots her return to fashion. Since
2000
, Arnault has unloaded several of his brands. He sold LVMH’s stake in Michael Kors fashion to Sportswear Holdings, Ltd., the group that owns Tommy Hilfiger and jewelers Asprey and Garrard; Ebel watches to the Movado Group; Pommery champagne to the Vranken Monopole champagne group; and Christian Lacroix to the Falic Group, the Florida-based duty-free retailers. Most are thriving. At the time I was completing this book, it was rumored that LVMH’s weakest fashion brands—Givenchy, Céline, and Kenzo—may have been on the block. Procter & Gamble shut down the Rochas atelier in
2006
but held on to the perfume license. Designers—once the founders and owners of luxury companies—are now hired hands that are as disposable as the clothes and handbags they create. “All these big companies don’t care about you as a person,” former Givenchy designer Alexander McQueen said. “You’re only a commodity and a product to them and only as good as your last collection.”

Presidents and CEOs primarily come from the global corporate world, and the revolving door spins so fast that there are now a handful of headhunter agencies that specialize in placing executives at luxury companies. Business schools now offer degrees in luxury business management. The job of luxury CEO is extremely well paid: Burberry CEO Rose Marie Bravo earned $
9
.
2
million in
2002
, and, according to
Forbes,
Coach’s CEO Lew Frankfort raked in $
55
.
99
million in fiscal year
2005
, making him the thirteenth highest paid chief executive in the world.

Brands are expanding their reach by licensing their names on anything and everything once again. Versace designed a limited edition Nokia telephone (covered in one of its rococo prints) and a Lamborghini. In early
2007
, Prada introduced a signature mobile phone with the South Korean electronics firm LG. “A mobile phone is more and more an accessory…an object of design and style, a status symbol which almost defines a person—definitely one of the most important objects in a woman’s handbag,” a Prada spokesman said.

Some applaud the democratization of luxury. “It means more people are going to get better fashion,” Anna Wintour, editor of
Vogue,
told me. “And the more people who can have fashion, the better.”

But not everyone in the business agrees. “What was once exclusive in Beverly Hills is now everywhere,” Fred Hayman told me. “It’s lost its cachet. The Gucci store in Beverly Hills was one of the most extraordinary experiences in retailing. Now it is just another Gucci store. When you get greedy, that’s what happens.”

“To me, luxury is something you want to reach for, that is unattainable,” said Ilse Metchek, executive director of the California Fashion Association. “Way back when, luxury was something you really wanted. You looked at society’s ladies and you wanted to live like them, and it was unattainable. Now we have Ikea and Desert Hills mall. Where is the difference between Jimmy Choo and the C. H. Baker? Three straps and a high heel at $
700
and it’ll still be out of fashion at the end of the season. There’s always a new heel and a new color. Luxury used to have a shelf life.”

Miuccia Prada’s mother concurs. “She says that the things [at Prada today] are not well made, that the fabrics are not as good, that everything was much better in her time,” Miuccia once said.

A handful of major brands—Hermès and Chanel in particular—strive to maintain and seem to achieve true luxury. The quality comes through in their products—the handmade Kelly and Birkin bags, Joseph Mul’s roses in No.
5
—and in their philosophies. Both firms over the years have bought or invested in old, traditional luxury brands that produced “exceptional products,” as Jean-Louis Dumas calls them, not for simply profit but because the executives wanted them to continue to exist. At Hermès, the brands included John Lobb shoes, Saint-Louis crystal, Puiforcat silversmiths, and Leica cameras. Chanel has a subsidiary that acquires esteemed French specialty companies that have provided fine handcrafted details and accessories for couture for decades and keeps them in business. Known as Paraffection (By Affection), it includes the embroidery house Lesage, shoemaker Massaro, milliner A. Michel, feather and flower house Lemarié, button maker Desrues, fabric-flower maker Guillet, and gold-and silversmith Robert Goossens, who collaborated with Coco Chanel to create jewelry for the house from
1955
until her death in
1971
. “You cannot advertise a couture dress then put garbage on it,” Karl Lagerfeld explained. “Indian embroidery is not bad. But French embroidery from Lesage is another story. As long as we are doing couture, we needed those craftsmen.”

The philosophy behind the move is the same as that which sets these two companies apart from their competitors. “Luxury is exclusivity—it is made for you and no one else has it,” Françoise Montenay, Chanel’s president for Europe, explained to me. “At a minimum, it must be impeccable. Maximum, unique. It’s the way you are spoken to, the way the product is presented, the way you are treated. Like the tea ceremony in Japan: the ritual, the respect, the transmission from generation to generation. At Chanel, luxury is in our chromosomes. It’s our credo, something we try to achieve all the time.”

The desire by customers to find that impeccable uniqueness for less than the price of a car or a house has created a new subsection in fashion: vintage. When I was a college student, “vintage” was a fifteen-year-old skirt that you bought from the Salvation Army for a buck. Today, “vintage” is a twenty-year-old Yves Saint Laurent haute couture velvet coat with a mink collar for $
3
,
000
. Collecting and selling vintage couture has become a good, bona fide business. Shop owners attend auctions and paw through closets of old-time couture clients to find gems for young Hollywood actresses, New York socialites—in fact, anyone who wants something beautifully made and most likely one-of-a-kind. “Buying modern luxury has become an investment,” says Cameron Silver, owner of Decades, one of Hollywood’s top vintage shops. “Vintage allows women to wear unique, high-quality clothes for a fraction of the price.”

Silver, a tall, dark and stylish thirty-six-year-old from Beverly Hills, got into the vintage business by chance. Back in the early
1990
s, he was a singer who specialized in German cabaret, and while touring the United States, he spent his free time in thrift stores and charity shops in cities such as Minneapolis, Seattle, and Miami, looking for hip designer men’s fashion. “On the racks I’d see all this great women’s wear and a lightbulb went off,” he told me. “I was looking at vintage not as vintage but as modern clothing that happened to be thirty or forty years old.” He returned to L.A. and saw a
1926
Deco building on Melrose a block east of the fashion mecca Fred Segal with a For Rent sign in the window. Silver signed the lease and opened Decades in
1997
.

At first, Silver specialized in
1960
s and
70
s fashion, because, he says, “that’s the birth of modern fashion: Courrèges, Cardin, Rudi Gernreich, Yves Saint Laurent, Studio
54
.” But as he learned more about the history of fashion, he said, “I could see the sexiness of a twenties beaded flapper dress or the glamour of a
1930
s bias-cut gown.” He started carrying a bit of pre–World War II Chanel, Lanvin, and Schiaparelli as well as anonymous pieces that were of extremely high quality. “When I buy something, I ask, ‘Does it look modern and does it look sexy?” he says. “Every woman at every age wants to look sexy.”

In addition to the Melrose boutique, Silver now has a corner in the Dover Street Market in London and does trunk shows in department stores around the world. Prices run from about $
200
to $
4
,
000
, but can go as high as $
35
,
000
for an early Dior couture evening gown. He has about two thousand regular customers, including celebrities, their stylists, writers, producer’s wives, businesswomen. “Basically, anyone with great fashion sense,” Silver says. His biggest sellers are original Yves Saint Laurent, Pucci, Halston, and James Galanos. “Glamorous fashion,” as he calls it. “There’s not much glamour left in contemporary luxury fashion, and if there is glamour, it’s mass glamour.”

I
N THE LAST FEW YEARS
,
there has been the emergence of a new tribe in the luxury business, what I call luxury refugees: designers, perfumers and executives who grew so disillusioned with the compromises and greed of the luxury corporate world that they fled and started something small and independent that would allow them to do what drew them to the business in the first place: create the best that money could buy. “Luxury fashion brands today are too available, everything is too uniform, and customer business is too pedestrian,” Tom Ford, luxury’s most recent high-profile refugee, told me recently. “It’s like McDonald’s: the merchandise and philosophy behind it is very similar. You get the same hamburger and the same experience in every McDonald’s. Same with Vuitton. We helped create that at Gucci. It was the right thing at that time. Had we not done it, someone else would have it. The world was becoming a global culture. It was in the air and needed to be addressed, and I’m proud of what we accomplished. But it’s not what I’m interested in now. I’m in a backlash. All these handbag ads make me sick. It’s so formula. And it’s foolish to think that customers are not going to tune out, that they aren’t as bored with it as we are. I believe that the little companies are the big ones. There are lessons we can learn from small, old-fashioned luxury.”

When Ford left Gucci in April
2004
, he took a year off to figure out what he was going to do next. He started a movie production company called Fade to Black with the goal of producing and directing films. He published a coffee-table book of his work. He designed sunglasses and created Tom Ford Beauty, a cosmetics and perfume line with Estée Lauder. And he wrote a business plan for a men’s luxury fashion brand known simply as Tom Ford that will include made-to-measure, high-end ready-to-wear, accessories, and leather goods. “We’ll have $
25
,
000
watches, custom-made jewelry, and hand-made suits,” he told me in May
2006
, a year before he opened his first store, in New York. “We’ll be closed to the public part of the day, and you have an appointment and meet with your fitter. It’s a way to do a new big luxury. I’m not trying to create something for everyone. I am creating something for the highly visual, highly urbane customer, and I believe there are enough of these customers out there that business will be just as great as when you go mass.”

Perhaps my favorite luxury refugee is French shoe designer Christian Louboutin. He may be the most defiant voice in luxury fashion today. “I’m just back from a meeting with someone who wanted to buy my company again,” he told me when we met at his headquarters office one freezing April evening in
2006
. “I said no, again.”

Louboutin is a rare bird in today’s luxury goods industry: a highly successful, purposefully small, designer-owned-and-run company that produces impeccably made items. Louboutin’s silk satin stilettos and crocodile pumps can be found on the feet of the beautiful, the famous, and the fashionably in-the-know. Among his regular high-profile clients are Jennifer Lopez, Queen Rania of Jordan, Madonna, Elizabeth Taylor, and
Today
show news anchor Ann Curry, who occasionally flashes Louboutin’s signature scarlet soles on camera. Louboutin’s company is tiny by luxury standards. After fifteen years in business, he only has seven stores and thirty-five people on staff, including his salespeople. He sells in several upscale department stores, including Barneys New York, Bergdorf Goodman, Neiman Marcus, and Saks Fifth Avenue in the United States and Harvey Nichols, Selfridges and Harrods in the United Kingdom. He does no advertising. He has no marketing department. He does not actively pursue dressing stars for the red carpet. He sells about
100
,
000
pairs of shoes a year. When I ask him what he does in sales annually, he looked at me blankly. “I have no idea.”

What sets Louboutin apart from his confreres is his business philosophy. “I see these men who build luxury brands to make money, and I am working in the same industry but I feel I have nothing in common with that,” he explained. “Luxury is the possibility to stay close to your customers, and do things that you know they will love. It’s about subtlety and details. It’s about service. I cannot accept a place where people are badly received. I can’t imagine spending several thousand dollars on something and the salesclerk gets annoyed because you take fifteen minutes to look. Luxury is not consumerism. It is educating the eyes to see that special quality.”

This philosophy has been instilled in Louboutin since childhood. He was born and raised in a working-class neighborhood in east Paris. His mother looked after him and his four sisters. His father was a wood craftsman who made fine furniture and prototypes of French train car interiors. “There were models of interiors of trains all over the house,” Louboutin remembered. Louboutin spent afternoons hanging out at the nearby Musée national des Arts d’Afrique et d’Océanie. On the door was a sign with the image of a stiletto shoe crossed with a big red X; spike heels wrecked the parquet. At the time, platforms were all the rage. What on earth, Louboutin wondered, was this steep, slim shoe? He began to sketch it on schoolbooks and scraps of paper.