American fashion brands are entering the luxury market

Although the US has contributed to the lexicon world fashion with casual pieces such as blue jeans, baseball caps and polo shirts, the top tier of fashion remains a European domain.

Estée Lauder’s though Tom Ford purchase in November— an American company with super-premium prices — may signal a shift in how the world perceives American brands. After loading the award $2.8 billion, the company has secured a seat at the luxury power table.

This is because Ford products are considered expensive even compared to other global luxury brands. A 30ml bottle of Tom Ford Lost Cherry costs $240, which is a big markup compared to the same size bottle of Hermès D’orange Verte ($132) or Miss Dior ($72). A Tom Ford suit starts at about $5,000, which is not as high as Kiton’s, which may be five figures, but more expensive than a suit from Dior or Zegna, which starts around $3,000.

This is not the usual location of a typical American fashion or beauty company, which tends to aim for affordable prices like those at Coach or Kate Spade.

Europe dominates high fashion

While France and Italy boast the lion’s share of the world’s leading luxury brands, American fashion and beauty has historically been made in mass and sportswear such as Gap or Nike, or in categories such as affordable luxury – think Ralph Lauren, Tommy Hilfiger and Calvin Klein.

Although they include some outstanding American dress designers, Oscar de la Renta and Vera Wang, these brands have never reached the size or influence of business juggernauts like Chanel. or Dior.

This is partly because, as a nation, the US was created without a formal aristocratic class. European monarchies were the cradle of luxury, explains Karla Martin, head of fashion clothing and footwear at Deloitte.

“If you think of Burberry in London, they started with a commission from the Queen. There is a strict apprenticeship model and for couture it is something where every single element has to be sewn by hand. It takes a long time to learn,” says Martin. He notes that trade was also nationalistic and exclusionary. “There were people who weren’t allowed to run businesses, and we’re a younger country of immigrants.”

A certain timelessness is also related to this. Chanel and Louis Vuitton do not dramatically change their look from season to season, but rather reinterpret already known house codes. This is partly why Kering in November broke up with Alessandro Michele after keeping the designer in her top creative post for seven years. Michele’s magpie eclecticism reinvigorated the brand in 2015, but sales slowed and his designs I thought it was too trendy and fashionable.

Martin points out that the true test of a luxury brand is whether it can stand on its own apart from its founding designer. Japan has given birth to acclaimed avant-garde designers such as Yohji Yamamoto, Issey Miyake and Rei Kawakubo, but even if they don’t come cheap, their creations fall flat. rather under designer fashion, not a grand maison.

“It’s very much the aesthetic of that designer and it’s hard to carry on when that designer is gone. Whereas when you think about Dior, he’s managed to be quite successful with a lot of designers that aren’t Christian Dior. Such is the house of Chanel versus a Japanese designer or Tom Ford or Ralph Lauren. The 100 years of history also matter,” says Martin.

Americans are especially good at beauty and lingerie

But the Americans have proven themselves in sectors such as high-end cosmetics. Tom Ford, for example, is known more for his fragrance and beauty than for his fashion line.

Even at luxury prices, beauty still remains relatively affordable, and thus in many ways more suited to American innovation. Seven of the top ten American billionaires in the fashion and beauty sector comes from a single fortune: Estee Lauder. After selling Tom Ford, its founding designer is in debt his billionaire status and that company.

Another category Americans have a firm handle on: underwear. Les Wexner built his fortune on the back of Victoria’s Secret, which was once the flagship of L Brands. Sarah Blakely became the youngest self-made billionaire with her shapewear company Spanx. Kim Kardashian has also found a lucrative niche with her line of Skims.

The gradual maturation of American fashion

It’s not just Tom Ford who is climbing the luxury ladder. Capri Holdings, the parent company of American outfits Michael Kors and Jimmy Choo, is looking for another European luxury brand to buy after its successful acquisition of Versace in 2017.

At the time of the Versace deal, there were fears that there would be a culture clash between the American group and the European label. But Versace integraction has it went well Capri is targeting $2 billion in sales for the Italian brand, and analysts have turned more positive on the group’s overall prospects.

Meanwhile, China has also created several aspirational firms, but Fung Group, Shandong Ruyi and more recently The Lanvin Group, all yielded disappointing results. Letter listed over SPAC recently, but the vast majority of acquisition investors backed away from the merger. At the time of writing, Lanvin Group’s shares were down to about half of their debut price of $10 a share.

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