Fendi Fall/Winter 2013-2014
The 9th annual edition of the BrandZ™ Most Valuable Global Brands has been released, identifying four luxury brands within the top 100.
Making headlines; the ascension of Google to #1, knocking Apple off its perch after three years at the top. The technology category alone represents nearly a third of the total brand value and almost a fifth of the brands. Apparel is the fastest growing category with the Top 10 apparel brands growing by 29%.
The value of brands within the luxury category – brands that design, craft and market high-end clothing, leather goods, fragrances, accessories and watches – rose by 16%, as a broad range of consumers became more comfortable with luxury, treating it as a medium of self-expression.
The Millward Brown study ranks brands’ value by their earnings and revenue potential, effectively measuring their worth as indicated by consumer spending. It is, therefore, somewhat unsurprising that Louis Vuitton is the highest-ranking luxury brand within the Global Top 100 (#30).
“ This year Louis Vuitton is a more valuable brand than Starbucks, BMW & Nike ”
Though the French powerhouse dropped one spot in the ranking since the 8th edition, its brand value increased by 14%, reaching $25.9 billion. A distinct turnaround from twelve months ago, when the same study confirmed a 12% drop in brand value for Louis Vuitton over the 2012-2013 period.
In our 2012 analysis we attributed this fall to Vuitton’s arrival at a ‘tipping point’ and a loss of balance between exposure and exclusivity. This year LV is a more valuable brand than Starbucks (#31), BMW (#32) and NIKE (#34), and one of many luxury brands that has recently focused on ‘rebalancing’.
“Vuitton is among luxury-goods makers introducing more expensive products with fewer logos and tightening sales networks,” explains Andrew Roberts at Bloomberg.
“ Hermès, Gucci, Prada & Louis Vuitton all reported increases in brand value ”
“Wealthy shoppers are switching to brands they perceive as being more elite. First-quarter fashion and leather-goods revenue at Paris-based LVMH rose at the fastest pace in two years, indicating that the Vuitton revamp is working.”
Good news for Vuitton, but what does this year’s ranking suggest for the overall luxury industry? It once again confirms the sheer power of luxury goods brands and their significance in the minds of consumers. Louis Vuitton and Hermès both ranked within the Top 50, higher than HP, Mercedes-Benz and IKEA.
Hermès (#41), Gucci (#60) and Prada (#96) – alongside Louis Vuitton – all reported increases in brand value between 6% and 27%, suggesting both interest-in and sales-of these brands continues to rise. As previously mentioned, ‘luxury’ as a category rose by 16%, following a 6% rise just one year ago.
The 10 Most Valuable Luxury Brands
Looking specifically at the luxury category, it is interesting to notice the very same ten brands as 2013, with only slight changes in rank between Chanel (#7) & Cartier (#6), as well as Fendi (#10) & Coach (#9). Brand value increased for eight out of ten brands, by an average of 21%. Clearly, luxury is again on the rise.
Of particular note, an increase in brand value by a whopping 40% at Cartier, fuelled by a growing increase in luxury jewellery. “An indicator that post-recession, people are ready to purchase items that are purely decorative rather than utilitarian,” according to Millward Brown.
Burberry’s brand value also increased by an impressive 42%, thanks to extensive social media and digital marketing activities and a focus on men’s clothing and accessories. In the past twelve months the brand has also aggressively promoted its fragrance activities, after bringing its beauty business in-house.
“ Burberry’s brand value increased by an impressive 42% ”
Perfect timing, as, according to the study “logo key rings are out, but fragrance remains an entry point”. Burberry clearly agrees, revealing that wholesale revenue from beauty will grow about 25% at constant exchange rates in 2014, as the British house announced full-year adjusted pre-tax profit growth of 8%.
What did come as a surprise was a drop in brand value of 17% at Fendi. The LVMH-owned Italian brand has seemingly followed the formulas of its Vuitton-Hermès-Gucci-Prada counterparts, expanding beyond ready-to-wear and leathergoods for women, into menswear and childrenswear, as well as watches, eyewear, fragrance and homewares.
The brand is also digitally active, under the leadership of co-creative director Silvia Fendi, who was one of the first designers to send high-quality leather iPad and iPhone cases down the luxury fashion runway.
“ What did come as a surprise was a drop in brand value of 17% at Fendi ”
According to Millward Brown, Fendi was also amongst the brands that took steps to reinforce exclusivity by cutting back on less expensive merchandise. So when compared to the very similar activities of the other brands, most of which grew at an average rate of 21%, this drop seems illogical at best.
“Fendi slumped 17 percent to $3 billion as a lack of investment by owner LVMH led to the fashion house being seen as less relevant by new luxury consumers” according to Anastasia Kourovskaia, vice president for European, Middle East and African operations at Millward Brown’s Optimor consulting arm.
Which may very well be true, but the Fendi slump does also reinforce the fickle and illogical nature of the luxury industry and its consumers. And the recurring landscape of brand results where some prosper and some falter under the same conditions, often within the same group.
Gucci Cruise 2014
But when we think about a rebounding Vuitton or record-revenue-generating Céline, one can be confident that Fendi will remain a powerful brand under the leadership of LVMH.
Indeed, the overall outlook for the luxury industry remains positive. More and more brands are sharing their stories with the world using social tools, whilst beauty/fragrance stories continue to charm the attention of new aspirational consumers.
The challenge in the future – as always – will be balancing the need for awareness with exclusivity, to remain desirable to those with the power to purchase.
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