With an increasingly competitive global luxury market, luxury brands are truly having to go the extra mile in order to impress and retain customers.

To this end, Louis Vuitton has announced that their new maison in Rome “will house a small cinema showcasing art films from contemporary artists“. This follows a trend that has seen cafes and restaurants in stores (Armani and Gucci), concert halls (Chanel), book stores (Marc Jacobs) and art galleries (Louis Vuitton). This announcement also follows Conde Nast’s announcement that they are starting a film and television devision to leverage their editorial products in a new medium.

As luxury blog Material World says on the matter:

“Luxury has moved beyond simply buying celebrities or dressing them, on or off screen, to thinking about how they can use their own celebrity to pull people in.”

As video content is set to make up 62 percent of internet traffic by 2015, this may well be another wise decision by LVMH.

I have recently written on the link between luxury brands and Corporate Social Responsibility, or CSR, so it was with interest that I read the Financial Times blog post “Luxury conquers its CSR fear” which reported that the luxury industry is slowly beginning to talk about sustainability and CSR more openly.

The article gives the example of luxury jewellery brand Tiffany & co. who have recently launched a new website dedicated to CSR. This is interesting because a few years ago the author of the Financial Times piece ‘graded ‘some public luxury companies in CSR categories, and Tiffany did particularly badly, in part due to a lack of public information.

Tiffany & Co: CSR section of the website

It looks as though, the article argued, luxury brands have realised that in an age of transparency it is better to have information out there for consumers to see, rather than hiding information behind closed doors in the fear that consumers will pick holes in it.

It is not just Tiffany that is doing well – LVMH also has a section on CSR on their corporate website, with an environmental charter.

This article illustrates that the luxury industry is beginning to change, and  I believe that sustainability and luxury are no longer mutually exclusive terms. This not only makes good sense for the long-term prospects of the brands in question, but can also be a positive attribute in luxury marketing – particularly if the brand aligns its CSR initiatives to core brand values and identity, and resonate with consumers.

Champagne, certainly a drink of choice amongst luxury connoisseurs, has seen a large decline in demand, revealing perhaps how much the luxury industry continues to suffer.

Famous champagne houses such as Taittinger, LVMH, Moet & Chandon are now pushing for an historic reduction in yield as a way of ensuring that the drink remains an expensive luxury. “Everyone agrees that production has to be cut because no one here wants to see prices fall” an industry insider was quoted saying in The Times.

These merchants are now demanding drastic reductions in grape yield, leaving the possibility of 50 per cent of Champagne grapes to be left to rot on the ground. Although this will have a huge negative impact on grape producers in the short term, such cuts may be necessary for the long term positioning of the product. Stable prices are preferred to a price collapse, as the latter could damage Champagne’s image as the ultimate festive luxury drink for a long time to come.

Tiffany was in the news this week, not for a new line of diamond rings or earrings but because it lost the long-running lawsuit it’s had with eBay about the sale of counterfeit Tiffany goods on the site. Tiffany maintains that eBay knowingly encouraged sellers to dilute Tiffany’s value and trademarks by not putting a stop to counterfeit Tiffany listings on the site. Rather than resting with eBay, the burden for identifying counterfeit goods rests with Tiffany, who have to report counterfeit listings to eBay and have eBay remove them. EBay argues that like YouTube it’s up to the trademark holder to report false listings, and they already take enough action against counterfeit items because these are bad for their marketplace.

This American ruling is interesting because it diverges from recent findings in European courts. In Germany a ruling for Rolex found that eBay must make greater preventative measures against the sale of counterfeit Rolexes, and in France eBay was ordered to pay Louis Vuitton 40 million euros in damages for the sale of counterfeit goods.

Counterfeit goods damage brand value–if discovered, they’ll upset people who purchase them and receive them as gifts; they mock the effort that people make to show their love and appreciation for one another. The takeaway from this case is that one needs to be careful when make purchases from a source that hasn’t been completely vetted. When a deal sounds too good to be true, it probably is.

[Photo by minxlj]

Last month a discussion at the Paris Fashion Group heralded the continuing success and integration of Fair Trade and sustainable goods into luxury products.  Comments from the panel suggested that luxury consumers are not necessarily interested in ethical considerations, but rather in finding a unique and “industrial” product.  And this new type of demand seems to be increasing; some are even calling it a “meta-trend” for this generation of luxury shoppers.

Sylvie Benard, a spokesperson from LVMH, also noted that the brands her company represents–such as Moet-Hennessy and Louis Vuitton–do not publicise the great strides they are making in their production process.  Nonetheless, they are reducing the amount of water being used to produce their champagnes, cutting the amount of electricity being used in their flagship  Louis Vuitton store in Paris, and working with producers in the developing world to build their local economies. Although they don’t talk about this, Benard noted, “To be extravagant out front you need to be impeccable out the back.”

[via AFP]

Two articles worth sharing from the Sunday Times of London this past weekend; they both concern the idea of “buying status” through the purchase of expensive spirits and handbags.

Ordering a spirit and mixer at a bar in posh places throughout the world is increasingly becoming an exercise in name-dropping: “I’ll have a [Grey Goose or Zubrowka or Stolichnaya or any number of "prestige" vodka brands] and Coke.” This is happening for two reasons–(1) in many places (in the US certainly) house spirits can be of a decidedly dubious quality, and (2) a nice spirit is one of those affordable, aspirational luxuries that people feel can enhance their status (without necessarily enhancing their status). This name-dropping is welcomed by spirits manufacturers, because while you can’t tell a vodka by looking at the glass (unlike the immediate recognition that a handbag commands), people tend to be very loyal to their chosen spirit (unlike how a handbag might be switched by season).

Speaking of vodka and handbags–in addition to owning brands like Louis Vuitton and Dior, LVMH also owns Belvedere vodka. The other article discusses how handbags are increasingly important to luxury companies–they can be purchased easily, without the need for sizing, and net profits up to 13 times their production costs. There’s a great quote from fashion designer Miuccia Prada:

With the bag . . . there are no left-overs because there are no sizes, unlike shoes or clothes. It’s easier to choose a bag than a dress because you don’t have to face the age, the weight, all the problems. And there is a kind of an obsession with bags. It’s so easy to make money. The bag is the miracle of the company.

You can read the whole spirits article here and the whole handbags article here.

Will handbags remain so popular? Probably. The question is whether luxury brands can maintain their high class image while they face a threefold attack: from smaller new brands that can seem more exclusive and hip, from counterfeit bags that celebrities are starting to not mind carrying, and from the ‘unwashed masses’ who carry their bags but don’t make good brand ambassadors.

For all the doom and gloom in the diamond industry at present, the problem is clearly not at the demand end.

LVMH profits leapt way above expectations in the first half of the year to 817m Euros–easily beating the analysts’ consensus estimate of 766m…

Watches and jewellery were strong performers, but perfumes and cosmetics were the star performers.