The Brand Man Speaks

Limited Brands to expand luxury retailer Henri Bendel

Throughout my childhood there were two stores in New York that were synonymous with luxury and uniqueness. They were Henri Bendel's and Berdorf Goodman's.

Both luxury retailers were one of a kind stores blocks from each other in mid-town Manhattan. They represented some of the most exclusive fashion designers and presented some of the most desirable and expensive accessories to consumers from all over the world.

In 1985 Henri Bendel's was purchased by The Limited Brands best known for Victoria Secret, The Limited and at that time Lane Bryant and Abercrombie and Fitch.

The strategy was to take the Bendel's luxury brand and expand it all over the country like Bloomingdale's. They planned for 40 stores but the chain was deemed a failure just after 8 stores were launched. They were all closed except the main New York store.

Fast forward to 2008 and The Limited Brands has decided to try this expansion once again despite the recession economy. They are launching mini stores that feature only Bendel branded items mostly accessories and home decor. They have opened a store in Boca Raton, FL and plan one additional one in the Miami area and in San Diego. They also have a test store in the corporate HQ's city of Columbus, Ohio which has been re-designed for this new strategy.

Will free-standing Bendel's branded stores work this time? I think there remains a problem with this strategy given that outside of New York very few people have ever heard of Henri Bendel's or even seen/purchased or received as a gift something from their own branded line. If the Henri Bendel name doesn't have wide recognition or appeal outside of New York then it is unlikely the brand will be relevant or meaningful to consumers in cities beyond those frequented by New Yorkers.

The Limited's management feels this is a good time to launch a new luxury branded retailer because given the weak economy the concept's brand positioning will have to be strong for the retailer to succeed versus a more prosperous time when it might succeed because consumers were more aggressively buying luxury products. I think that is weak spin to rationalize a concept that was already in the hopper before the major influences of a recession started taking hold.

Watching out for you everyday.

Eli

Waterford Crystal shifting production out of Ireland

Irish Waterford Crystal just a decade ago one of the most important luxury brands bought by Americans is facing significant financial difficulties requiring the venerable entity to shift production to Eastern Europe.

Waterford's cut crystal had become a part of nearly every upscale bride's wish list and for some time was the top selling luxury crystal brand in the world leading other notables such as Baccarat, Lalique and Orrefors.

Increasing demands from labor unions in Ireland and reduced interest in "old-world" crystal among generations X and Y have contributed to the shutdown along with a weak dollar.

The company will continue to keep a "tourist" glass making operation in Ireland which attracts over 300,000 visitors per year but will produce the vast majority of its product oversees. The company has not officially announced where oversees but likely Slovenia and Brazil. They are being careful with the issuance of this news for fear of alienating Irish Americans who are very brand loyal to Waterford.

This production shift is likely to undermine the brand and its heritage. Waterford has actively in the past promoted its Irish based production by sending glass artisans to the US for demonstrations. They also prominently showed "made in Ireland" on each product. It is very possible that the brand's identity could be permanently damaged by this production shift reducing the brand's prestige and dominance world-wide. It could even lead to the end of the Waterford brand.

Increasingly some of the most beautiful and value oriented crystal has been coming out of Eastern Europe at prices nearly half of what Waterford charges in the US market for comparable pieces and styles. Lack of unions and other lower production costs in Eastern Europe have helped shift crystal production to this part of the world. China has also become a major producer of crystal but the quality is significantly lower than product produced in Europe.

Watching out for you everyday.

Eli

Playboy brand in financial trouble

Citing the weakening economy globally, Playboy Enterprises, specifically its publishing arm, will lay-off 55 people and eliminate 25 jobs currently not filled.

Christie Hefner, Hugh's daughter, who runs the company said that the economy was to blame for fewer sales and the need to tighten up staffing.

Interesting more hard-core porn "sales" seem to be doing well in this down-turn. Is Playboy too "clean" and wholesome a brand to survive this recession?

This is not the first time that Playboy has faced financial difficulties. In the 80's lack of interest in its Playboy Clubs (due to changes in morals and culture) lead to the closing of all operations world-wide and the Playboy key card was no more.

More Playboy news. Hugh apparently is changing out his "Girls next door" for some new ones both for his reality show and real-life live-in companions. Up-dating the roster of ladies is something Hugh does to keep his "brand" up and strong.

Watching out for you everyday.

Eli

Luxury brands and retailers feeling pinch from global economic meltdown

Luxury brands and retailers who had expanded into emerging markets such as China, India and Russia in the past few years were betting that the failing US economy would not dramatically hurt their sales and profits---so they said just a few months ago.

Today the Wall St. Journal reports that a majority of these companies including Bulgari, LVMH Moet Hennessy Louis Vuitton, Gucci, Prada and even Bottega Veneta are being hurt and are scaling back operations including new store openings and major new product introductions. Virtually all major markets world-wide are in some type of meltdown now with luxury brand consumers noticeably reducing their spending. Even fabulously wealthy investors and celebrities are taking a hit and cutting back spending. The psychological impact of losing $100 million on paper even if you still have another hundred million hanging around does change one's mindset about the need for so many luxury items.

The Chinese who were most likely going to be the saviors of this tumbling world economy are also feeling the effects and their more affluent populace has already cut back on luxury items especially cars, jewelry and electronics.

I thought it quite arrogant when I read some months ago the Louis Vuitton folks along with Bulgari puffed their chests out and were quoted as saying they would NOT be impacted by the US economic woes. It seemed inevitable that since economies are tied together globally these days that no one would escape unaffected. Hermes, who still claims modest but sales growth nonetheless world-wide, along with Louis Vuitton went as far as to raise prices around the globe to "prove" they were invincible to petty US financial troubles. Well, I think they over-hyped their success and won't be so arrogant in the future.

Watching out for you everyday.

Eli

AIG Insurance executives formally inducted into Club CLT

In a previous post I wrote about a "new" brand called CLT...and the elite "club" the brand was forming. CLT stands for Cheaters, Liars and Thieves and its club embraces the individuals in the country who have cheated, lied or stolen their way to prosperity and success on the backs of ordinary Americans.

The first major entry (from tens of emails I received) is an entire executive group from one company, insurance giant AIG.

If AIG is familiar to you it is because it is one of the US companies being bailed out to the tune of $85 million.

While Congress and the Federal Reserve were working on a bailout program, top executives of AIG "partied like it was 1999" as the song goes at the super expensive luxury California resort, St. Regis Hotel and Spa in Monarch Beach.

This "business" trip cost nearly $500,000 including $23,000 for Spa treatments. Chief Executive Martin Sullivan thinks there was nothing wrong with this trip and its costs and his team deserved it. (Read CNN Online story about this extravagant trip, also watch Anderson Cooper's 360 series that will feature the top 10 "most wanted" CLTs this week).

So here's to AIG executives behind their free-spending leader Sullivan....you are all now members of Club CLT. Hopefully this membership leads to some serious action against you and the company including the forced return of all that money from each individual who participated in the luxury trip on essentially tax-payer dollars.

Greed, greed and more greed. I wish we could put these folks in jail is the sentiment readers of my blog have expressed. So do I.

Watching out for you everyday.

Eli

Brooke Shields changes auto brands from Ford to VW

Actress Brooke Shields has just changed automotive brand affiliations. No, she hasn't bought a Prius after dumping a Mercedes for personal use...(at least not that I know of), however she has changed her brand spokesman affiliation.

Shields helped Ford introduce its utterly unsuccessful full-size Ford 500 model (now re-branded as new versions of the Taurus and Sable) on Television and in other notable media just a short-time ago. Now the "Lipstick Jungle" star is stumping for VW promoting their new family-friendly van.

The question is, should a brand take on a highly recognizable celebrity spokesperson from a competitor so soon after the split or even at all? Does this move de-value the celebrity and her influence on consumers?

Some might say that consumers forget advertising so quickly that the new association with the VW brand is a no-brainer...especially since the Ford 500 was canned. That may be true but this decision to use Shields comes with the risk that some consumers "keep seeing her in different auto brand ads" and find her a shill and not a positive influencer. This could also reduce Shields' marketability as a spokesperson for other non-automotive brands such as cosmetics.

Don't get me wrong, Brooke is a beautiful woman who has enhanced her image greatly with motherhood and maturity. I probably would not have used her this soon after her alliance with Ford to give distance to that association. Further, there are plenty of appropriate attractive motherly actresses out there these days that could have been excellent alternatives to Shields.

Watching out for you everyday.

Eli