Affordable Luxury Brands Help Investors Fashion Profits

Luxury fashion must find the right balance between exclusivity and availability to keep consumers motivated by designer and brand satisfied that their designer handbag has a strong luxury pedigree.

Luxury fashion must find the right balance between exclusivity and availability to keep consumers motivated by designer and brand satisfied that their designer handbag has a strong luxury pedigree. Photo: Mike Mozart | FlickrCC.

Luxury fashion commands media attention and generates headlines. And that’s where it stays for most consumers. They simply can’t afford the gown Lupita Nyong’o wore to the 2015 Oscars. The price tag for this Calvin Klein design was $140,000.

Famous people wear one-of-kind couture creations. Regular people buy products created by designers like Tory Burch, Michael Kors, and Kate Spade, who design couture to grab headlines and affordable designs to make a profit.

Affordable luxury brands like Tory Burch, Michael Kors, and Kate Spade attract investors like Bill E Ford, Chief Executive Officer of General Atlantic. He sits on the Tory Burch board of directors, recognizing that Burch’s vision of luxury retail at a fair price has nothing to do with trends and everything to do with stable, long-term growth.

Michael Kors took his company public in 2011 and had great success with handbags and watches. In the next few years his products expanded and became available in high-end retails stores and online. Popularity created profit, but popularity also meant less exclusivity. Consumers don’t want to buy a handbag that everyone can buy. As more stores carried Kors’s products interest waned, and investors grew concerned.

Kate Spade & Company reported a jump in share value of 28.8% in March of this year, which can be attributed to improved store and e-commerce sales. The opening of additional Kate Spade stores has improved the brand’s base without weakening its connection with luxury.

Kate Spade Saturday was a lifestyle brand with a lower price point. Conceived as stand alone stores for the Asian market, the line won approval from US fashion critics. Unfortunately, it ended up diluting the sense of luxury consumers prefer. Kate Spade Saturday will now be integrated as a small line within their larger retail space.

Tory Burch decided against pursing an IPO for her namesake company. Companies decide to go public in order to provide profits to their investors. During that process the owner of the business loses some of their authority. Burch resisted the temptation and balked any change that might tarnish the perception of her brand as a destination for luxury lifestyle products. “I think being a private company is a luxury, and that is something I have always thought,” explained Burch.

Fashion designers are also business owners. To succeed they must have strong supply chain, manufacturing center, and distribution strategy. Behind the fancy boutiques lurks a messy and complicated world that’s all about the bottom line and hard work. Romance and beauty are produced for shop windows and marketing campaigns.

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