Is there a life for luxury fashion?

Asir Fatagar is the editor of Latest Malaysia and he writes about fashion too. In this article he dissects the power of luxury fashion houses.

Ever heard of the conglomerate named Kering? You surely heard of Gucci, Yves Saint Laurent, Alexander McQueen and Balenciaga. These luxury brands are owned by Kering. According to Forbes, Kering is worth $35.5 billion and currently employs an army of 38,000 people.

Mind you, Kering’s net worth is roughly 10% of Malaysia’s GDP in 2020. On one hand, these luxury fashion houses were almost dying off in the 1980s and 1990s, case in point Gucci. Gucci was a family owned and run business, this of course was until family drama stepped in.

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About Balenciaga, the founder of the house, Cristobal Balenciaga closed his fashion house in 1968 and he passed away in 1972. The house later reopened in the mid 1980s with a twist and an homage to the founder. Now, it is regarded as one of the most popular luxury designers out there.

On the other hand, we have LVMH, Moët Hennessy Louis Vuitton. According to Forbes, they are worth a whopping $142.5 billion, half of Malaysia’s 2020 GDP of $336 billion. They have roughly the same amount of staff as Kering has and owns a number of luxury brands such as Louis Vuitton, Christian Dior, Fendi, Kenzo, Rimowa and Celine.

Brand “hackings” through conglomerates

Ever wondered why in the past two years luxury brands are working together collaborating like there’s no tomorrow?

Case in point, the Gucci and Balenciaga collaboration. Technically, they are owned by the same parent company anyways, dealing with the technicality and the legality of two different companies are a lot smoother that way.

The collaborations of two powerful fashion houses can be shocking to many, which would lead to basic consumers thinking the items would go up in value. In some cases it can be true, with the Gucci x Balenciaga ‘hacking’ project, a large portion of the items sold out instantly and were then resold on Ebay for a higher price.

The Gucci x Balenciaga ‘hack’ that incorporated Balenciaga’s Hourglass shape and Gucci monogram. Currently its on sale for RM19,000. (Standard pricing for the bag is RM9,000).

The next best example is Dior’s collaboration with Rimowa. Both luxury brands are owned by LVMH. Dior being renowned for their clothes and accessories and Rimowa being known for their RM 3,000 and up luggage bags decided to create items that are a mixture of both houses.

Dior x Rimowa pouch, is currently sold by Dior for RM10,000. 

Their items are at an eye watering price as the cheapest items from the collaboration starts from RM10,000. It only goes up from there. One of the most popular items in this collaboration is the Rimowa luggage bag, turned into a pouch sized with a Dior logo stamped on it. It is meant for fashionistas to carry a cute miniature luggage bag around. The collaboration was even mentioned on Netflix’s Emily in Paris.

Luxury fashion turned to luxury capitalism

These fashion houses initially made beautiful clothes that were meant to last forever, with a handsome price tag of course. Now, after being owned by these conglomerates, they are turned into money making machines, which is the true nature of capitalism. However, how much of it is too much?

The prices of luxury goods have increased massively since 2019. Some brands have even increased their prices up by three times. According to MyTheresa, an online luxury retailer, they stated that the price increases have not impacted the sales of their items. In the United States, sales of luxury goods rose up by 28% even after the massive price increases.

MyTheresa is still concerned with the upcoming economic recessions that have somewhat started. However, “core customers are likely to be less impacted by spending slowdown concerns, but the landscape is set to experience some sequential deceleration in our view.”

Sustainability via officially reselling used merchandise

Balenciaga, the luxury brand that constantly innovates, has decided that they and other Kering owned brands might make it easier for their customers to resell their old clothes and accessories. According to the business of fashion, Balenciaga is partnering with Reflaunt a tech and logistic platform to achieve this.

Balenciaga’s Summer 2023 ready-to-wear collection 

Conglomerates see this as an opportunity to reach their sustainability quota and this may also increase their revenues. This is in stark contrast to still family owned companies like Hermes and Chanel, which claim that reselling their own goods will hurt their sales as their clientele would disapprove of that.

Research has shown that the luxury resale market has grown 10x since 2015. The US second hand market is now worth $57 billion. The business is still booming for luxury fashion, and with the current economic state, conglomerates like Kering are smart enough to invest in used designer items as they would also have a hand at resale profits.

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