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As global economies reel with uncertainty, the world's most stalwart purveyors of luxury view quality and distinction as more essential than ever. Quality and distinction cost.
Europe’s luxury sector has taken no time flat to resume warp speed following the global economic crisis of 2008-09, as the strong double-digit sales gains logged so far this year attest.
In fact, the rebound has spawned a new phenomenon—hyper luxury: products that are rare, exclusive, of extremely high quality, often handmade and unapologetically expensive.
It’s why Prada recently sent 20 limited edition crocodile handbags—each with a napa interior and an engraved metal plaque—to select stores, including ones in Paris, Milan, Monte Carlo, Beverly Hills and Las Vegas. (One bag, at Prada’s Galleria Vittorio Emanuele II store in Milan, was priced at 29,000 euros, or about $41,400.)
It’s why Christian Louboutin is having specialty Paris atelier François Lesage embroider pearl tassels onto black patent evening loafers that will be sold in Louboutin’s first men’s boutique, slated to open in Paris this September. And it’s why Fendi now sells roughly one in 10 of its coveted Peekaboo bags on a made-to-order basis—at prices that range from 2,900 euros up to 31,000 euros, about $4,140 to $44,275—to customers willing to pay a premium of at least 25 percent while allowing four to six months for delivery. Each comes with a handwritten note from Silvia Venturini Fendi.
Waiting lists for standard fare are so last decade; waiting for something no one else has is what today’s hyper-luxury customer craves. “I think that as the world becomes more and more impersonal and clothing and objects become increasingly mass produced that there is a longing for the ‘rare’ and ‘exceptional,’” says Tom Ford, who unveiled his signature men’s brand in 2007 with a Madison Avenue flagship, layering on women’s wear and women’s accessories in 2010. “I detected it in my own life. I could not find clothing, accessories or the service that I wanted in the market and so decided to create what I wanted to find as a consumer.”
According to Ford, the advent of hyperluxury is a reaction to the democratization of luxury that began in the mid-Nineties, a direction he was instrumental in forging during his tenure at the creative helm of Gucci and Gucci Group. “As for the economic factors propelling this end of the business, there has never in the history of the world been as much wealth created as there has been in the last 10 years,” Ford says.
“People got tired of buying mass-produced, unoriginal designs,” agrees London-based shoe guru Manolo Blahnik. “They want special, unique, excellent quality pieces that will last for years. If the item is exceptional, then people do not mind paying more. We always had customers who wanted special, unique pieces.”
If bling helped define the luxury craze before the economic downturn, then hyperluxury is based on different virtues: haute craftsmanship, noble materials and personalization among them. Take it from Lanvin’s Alber Elbaz, who says that products must be “very personalized” in order to be hyper-luxurious. “If a handbag is the price of a house,” he says, “the customer wants to make sure she’s the only one who’s got it.”
When Fendi introduced its bespoke Peekaboo service about 18 months ago, chief executive officer Michael Burke expected it would generate, at the most, 1 or 2 percent of Peekaboo sales. That it has taken off so dramatically, including in emerging markets like China, speaks to the sophistication of today’s wealthy clientele. Indeed, Burke prefers the term ur-luxury, a reference to the ancient Sumerian city of Ur, to connote a return “to what original luxury was,” where taste and patience were needed, in addition to financial means. To wit: Clients are seeking authentic brands with a “glamorous past, and they want something that is not made industrially.
“The hyper-luxury client is willing to wait. There’s the notion of delayed gratification,” Burke explains. “More than 50 percent of our fur business is bespoke, ordered in spring for fall delivery.” During the most recent campaign, in May and June, business doubled versus a year ago.
A wide swath of fashion houses and leather goods firms now offer handbags in precious and exotic skins—from Polo Ralph Lauren and Lanvin to Tod’s and Yves Saint Laurent—pushing prices into five figures. Swiss luxury firm Akris, for one, takes an understated, everyday approach to ultraluxurious materials, including crocodile skins that are almost as supple and matte as cashmere. But the family-owned house is now using other expensive, high-craft materials as well. When it ventured into accessories in 2009, it acquired Comtesse, an elite German handbag firm founded in 1929 and prized for its expertise with handwoven horsehair. “In our case, it’s hyper-refinement,” asserts creative director Albert Kriemler, lauding the material’s resistant, lightweight nature, ability to take color and the fact that it “gets more beautiful when it’s used.” Last year, handbags generated 5 percent of sales in Akris stores, mostly in horsehair. Those bags top out at $6,000.
Concetta Lanciaux, who runs a luxury advisory in Switzerland, says today’s new wealthy class values objects that are handmade, long-lasting, personalized, artistic and reflect high standards of craftsmanship. “We’re not at all in the bling-bling period. We mean the real value of luxury,” she stresses, citing a “patrimonial notion” to buying hyper-luxury products that is especially appealing at a time of economic instability and volatile currencies. “This is where you park your money,” she says.
Many executives say they first detected an appetite for extreme luxury just before the financial downturn. “For those clients with strong spending power, we started to feel a need for more personalized luxury in 2007 when we launched the Cobra sandals in white gold, rubies and 3.5 carats of diamonds that retailed for 90,000 euros,” says Edoardo Caovilla, ceo at Italy’s René Caovilla. “We perceived the desire for hyperluxury from our clients who are always more informed and more exigent, comparing products and prices between stores in Dubai, Paris and Milan, for example.”
While some European fashion players lowered prices during the economic downturn to spur demand, others went in the opposite direction. At Christian Dior, president and ceo Sidney Toledano has spearheaded a deliberate upscaling. “People are looking for luxury; they’re ready to spend, they want better and better,” Toledano observes. “There is a need for excellence. The winning brands have been able to offer high-quality products.”
The house has seen demand spike for Lady Dior handbags in crocodile, other exotic skins and limited edition embroideries, as well as for Dior VIII watches, the bezels of which are set with baguette-cut precious stones. Toledano notes that two new handbag ranges, Diorissimo (for cruise) and Miss Dior (for fall), will each offer a variety of haute versions.
Like many executives, Toledano cites demand across the globe for extreme luxury, including fast-growing emerging markets like China, Brazil and the Middle East. The trend, he notes, is expressed not only in fashion and accessories, but also in exceptional automobiles, hotels and resorts.
Couture, too, is roaring ahead as wealth expands and demand for luxury spikes. Bruno Pavlovsky, president of Chanel fashion, recently cited “exceptional results” for Karl Lagerfeld’s spring couture collection. “The sales and number of pieces significantly increased, with numerous new clients in markets such as China,” he said. “We are convinced that traveling abroad, adapting to the needs of our clients, is where the future of Chanel Haute Couture lies today.”
When it comes to its handbags, Chanel strives to have an assortment of exceptional styles, including those boasting Lesage embroideries, in all its boutiques. They retail from 3,000 euros to 30,000 euros, or about $4,200 to $42,000 at current exchange rates. “When some customers see these products, they want to buy them immediately,” says Pavlovsky. “People want to feel exclusive. At this level, it’s less about the amount of money it costs. We feel there is more and more space for very high-end luxury products.”
Chanel has also witnessed strong demand for exceptional costume jewelry—made at Desrues, one of the couture ateliers Chanel owns—particularly its plastron styles. Indeed, each pre-fall collection, dubbed Métiers d’Art after the couture ateliers used to embellish it, is an all-out ode to hyperluxury, in ready-to-wear and all manner of accessories.
In the world of hyperluxury, lines can blur. Costume jewelry and other accessories at times assume characteristics of fine, and even high, jewelry. At the zenith of the Lady Dior bag range: a diamond-studded version priced at about $300,000. Louis Vuitton has offered—and sold out of—handbags in 24-karat gold that took 300 hours to make, as well as patchwork bags, signed, numbered and sold in Perspex cases. Currently, the house has an alligator clutch that can be “handcuffed” to the wrist with a diamond bracelet. Part of a range dubbed Les Extraordinaires, it boasts 1,766 diamonds mounted in white gold for a total of 47 carats. Beginning in November, it will be sold at the Vuitton flagship on the Champs-Elysées, with the price available upon a customer’s application.
“So little is truly exclusive or rare anymore. Even Hermès, which is certainly a luxury product, is available in airports,” says Vuitton’s artistic director, Marc Jacobs. “At Vuitton, they’re making me a Lockit bag to carry, but in crocodile. To cut one out of one animal, they had to wait 10 months to find one big enough. I’ve come to appreciate the rarity of something special.”
Jacobs notes that he has sold dégradé crocodile bags in his signature collection, and for fall, the line features a polka-dot mink bag in which the dots are all cut out and inserted rather than printed ($4,695). “The luxury of having your own shops is you can do those extravagant things,” he says, adding that they can trigger a trickle-down. “That one weird, baby-blue crocodile bag may attract other people to buy baby-blue leather bags. There’s a definite appeal of something that has that elusive, rare quality.”